WHAT IS A CONSTRUCTION/PERM LOAN?
A Construction Perm loan, also known as a C/P loan, is a hybrid loan that allows for a Construction period and then, when the Construction phase has been completed, the loan changes, or modifies, into a Permanent loan. This product bridges the gap of Construction financing and separate “End loan” (Permanent) financing. The FBC Mortgage, LLC C/P loan is a great way to avoid having to pay two sets of closing costs since you only have one closing rather than two (once for the Construction Loan and then again for the Permanent, or End loan).
The way that the C/P loan works is really quite simple. During the period that the home is being built, we act as a construction lender and provide you with money for the construction phases. During that time, we disburse draws to you and your Builder depending on how much work has been completed. You, or your Builder, only pay interest on the amount that you have drawn out rather than having to pay on the entire loan. Once your home is ready to move into, the loan becomes permanent and you would be paying your normal monthly mortgage payment.
The C/P loan now allows you to no longer be limited to either existing homes (resales) or new homes in a Builder’s subdivision. You are free to choose your Location, Design and Builder of your dream home. You can design your own home to fit your own needs. You can choose your own lot in any area that suits your individual location desires. Perhaps, best of all, you can choose your own Builder so you know the quality standards that your home will reflect. Now, if you are thinking that you need to already own your own lot or have to pay cash for the lot or have to buy the lot first and have a separate loan on the lot…you would be pleasantly surprised to know that you don’t. With the FBC Mortgage, LLC C/P loan you can incorporate the purchase of the lot into the C/P loan itself! Once again, you would only have one closing where the lot would be purchased, the home would be constructed and, at the end of construction, the loan would become permanent.
Like any other loan application, you would speak with an FBC Mortgage, LLC Mortgage Loan Originator to discuss your loan options. The Mortgage Originator would walk you through the process gathering your typical documents needed in order to confirm what type of C/P loan and what loan amount that you would qualify for. Here, at FBC Mortgage, LLC, our C/P products include Conventional, FHA, VA and Jumbo loans.
Once you know what loan type and how much you will qualify for, you can choose your Builder and supply your own lot, or put a contract on a lot or choose a lot from the Builder’s own inventory. Once you have made your choices, FBC Mortgage, LLC will review your Builder and Contract to ensure accuracy and compliance with lending and industry guidelines. Since FBC Mortgage, LLC does not approve the builder nor warrant their work, we do review their current licenses and insurances as necessary to determine if they are currently eligible to perform work on your project and will advise you of our findings.
Once you and your Builder have agreed upon the Plans and Specifications for your new home, an appraisal will be performed by a licensed appraiser in order to provide us with a value of the finished home, based upon the Plans, Specifications, and Lot chosen.
When your loan package has been approved, your closing will be scheduled. At the closing, you would provide your downpayment and the lot would be purchased. In the event that your downpayment would not cover the entire cost of the lot, which it usually does not, we would disburse the balance of the lot cost from your loan, at closing. Additionally, we would normally disburse additional funds to you and the Builder at closing so they can start getting permits, paying impact fees, and doing the initial site work for your project to begin. Subsequent loan disbursements will be made based upon the amount of work that has been completed, according to a draw schedule that has been agreed upon between you, your Builder and FBC Mortgage, LLC.
Once you and your Builder have made a request for a draw, we will send out a local inspector to inspect and verify the progress on your home. Based upon their findings, they will provide an opinion as to what percentage of the work has been completed, based upon your draw schedule. The inspector does not evaluate the quality of workmanship, just the amount of the work that has been completed. Since FBC Mortgage, LLC has our own draw disbursement department, upon receipt of a fully completed draw request, we can typically provide draw funds within 48 to 72 hours — so your project can move along without delay. You will receive monthly statements, beginning with the month following your first disbursement. Your statement will include interest accrued on the loan funds disbursed through that statement date.
When the home has been completed and the Certificate of Occupancy (C/O) has been issued, we will have a title insurance update performed to ensure that the title is clear so you can transition into the permanent phase of the loan.
FBC Mortgage, LLC ROLE IN CONSTRUCTION LENDING
During the period between January 1st, 2013 and August 31st 2014, FBC MORTGAGE, LLC was the #1 New Construction Lender in the State of Florida with over 1,500 closed New Construction Loans. More Builders and Borrowers trusted FBC Mortgage, LLC with their New Construction Financing than any other Lender, according to MortgageDataWeb. We pride ourselves on meeting our Customer ‘s needs and providing them with the highest level of expertise in the field. FBC Mortgage, LLC has fully staffed Origination, Processing, Underwriting, Closing and Draw Administration Departments to meet your and your Builder’s needs for all phases of your New Construction/Permanent loan. With offices throughout the State of Florida, as well as our Central Florida Construction Perm Operations Department being located in Orlando, we understand the process and the Florida specific requirements that will ensure that your C/P loan is handled correctly and efficiently with no surprises. We will be with you every step of the way from your initial application until that day when you turn the key to open the front door of your dream home. When it comes to Florida Construction Perm financing, FBC MORTGAGE, LLC is the Lender that can get the job done for you.
If you have any questions about the C/P loan and to see if it is the right loan for your project, please contact our Construction Loan Manager, Ed Ross, at 407-872-3407.