PA Construction Loan Program
III FAQs --- Pennsylvania No doc Construction Loans. $100,000 minimum loan.
3/27/2008 This program has been temporarily suspended by lender. We
offer a new, primary residence, stated income construction loan for 660+
credit. General contractor required. More details to
follow soon.
Q:
How does PA Construction Loan Program III work?
A: Construction
loan III is for home buyers who
already own land, or want to
purchase land, in conjunction with building their
home or investment property. At the construction mortgage closing, funds are disbursed, if
necessary, to assist the borrower in acquiring the land. The balance of the
loan proceeds are administered and disbursed as work is completed. The
Construction Loan features an initial one-time closing prior to commencement
of construction. After 6 months (or 9 months with an optional extension),
the loan needs to be paid off. This can be accomplished by refinancing.
We can help you with that.
Q: Is the borrower
required to have a general contractor?
A:
No. No construction experience is required. the rate starts at
4.99% for the owner builder vs. 3.99% when there is a general
contractor.
Q: What if the borrower
already owns property or has existing equity in property?
A: The Lender must
always be in
the first lien position for both property and home with any construction
loan. Any existing land loan is
paid off by the lender at closing. Existing land equity is recognized as part of the
Borrower’s required down payment. It is possible to need 0 at closing
with land equity.
Q: What PA property types are
eligible for this program?
A: 1
to 4 Family Owner Occupied, Single Family Second Homes rental, or Spec
Homes.
No manufactured or rehab homes.
Q: What types of
construction are eligible for this program?
A: Residential stick
built, Modular, panelized, kit homes and log homes.
Q:
What lock terms are available for program
III?
A: 180 & 270 day
locks for construction loans.
Q: Is secondary financing
(equity loan) allowed?
A: No. Secondary financing
is not allowed.
Q: When can a construction
loan be locked?
A: A construction loan
is locked when you apply but the lock time does not start ticking until
closing. There is a free float down up until closing.
Q: Are extensions
available?
A: If the property cannot be completed during the initial rate lock
period, the borrower may be
allowed to extend the construction period for 90 days for a 0.5 fee.
Q: What is the minimum
credit rating for approval for construction loans?
A:
All credit submissions must have a 540 min. credit score.
Q: What is needed for
builder registration?
A:
If utilizing a builder, and benefiting from a lower rate, the builder must
complete a questionnaire stating building experience with references of
previous customers and suppliers. A Tax ID number is also
required.
Q:
What fees are there?
A: Points (vary with
credit score), Lender plan review $995, lender document review $495.
Q: What is the process for
requesting a construction draw?
A: A Construction Draw
Request form must be faxed to the Construction Lender. Specific information
for this procedure will be provided to the borrower at closing.
Q: When can the final draw
be requested?
A: In
order to request the final draw the home must be 100% complete and the
Construction Lender must
receive and approve all required documentation. All
remaining funds will then be disbursed.
Q:
What payments and impounds will be required from the borrower during the
construction period?
A: The borrower will be
billed at closing for the first 3 to 4 mortgage payments. (Lot equity can
cover this cost). There will be no mortgage payment during the first few
months. Billing
statements will be mailed directly to the borrower. The borrower will remit
payments to the lender. The collection of escrows for taxes, insurance and
mortgage insurance is not applicable.
Q: What is an Escrow
Account?
A: An
Escrow Account is established to pay for the following items: Hazard
Insurance, City Taxes, County Taxes,
Mortgage Insurance, and Flood Insurance. The borrower is
responsible for providing initial deposits to open their escrow
account to convert the loan
to permanent financing.
This is not required with this loan.
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