Building a home is a dream for so many, but keep in mind that in many ways there are many more steps compared to buying an existing home. A construction loan process for stick built and modular homes has a lot moving pieces. In addition, building a home has so many decision to make as well. So after choosing a house plan, a popular question is, “How does the construction perm loan process work?”.
Construction Loan Process
First of all, it is a good idea to complete loan application and get preapproved. Next, provide the required documentation to firm up a preapproval. Knowing where you stand before going through too much of the building process is paramount. Here are the basic steps when it comes to a construction and permanent loan. There are additional steps which lenders and builders complete, but this gives a good idea of the process.
- Builder approval or choose from approved builders
- Complete builder contract price
- Structure the loan amounts for construction plus permanent VA loan
- Loan terms disclosed and discussed
- Appraisal based on as completed value
- Submit for VA loan underwriting
- Clear all conditions per approval
- Submit for construction loan approval
- Construction loan closing
- Building commences
Once the house is nearing completion:
- Update income, asset, & credit documentation
- Lock interest rate for permanent loan
- Close permanent loan which pays off the construction loan
- Move into your brand new, never lived in home!
So keep in mind that these are not every single step and each scenario may be different. But this gives a good idea of the process flow on a construction to perm loan.
For more details or to qualify for a construction perm loan, contact us today!
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