Ready to Learn More?
The details of financing a home can be daunting. Educate yourself and learn more about the process, what you'll need, and what to expect.
- What is a Construction Loan?
A construction loan provides the financing for the construction of your new Dream Home over a period of 12 months as well as pre as pre-qualifying you for a permanent mortgage that will retire the construction loan. This two-closing program offers flexibility on the permanent mortgage to allow market values of property to potentially cover equity requirements.
- What types of construction will lenders Finance?
We offer financing for both primary residences and second homes within our market areas.
- What is LTV - Loan to Value?
Loan to Value is the comparison of your total loan and the value of your home. SO 100% LTV means that the full value of your home can be financed with no money down. 90% LTV would mean that you need to provide 10% Equity which could be money or land that is paid for or worth more than you owe.
- What type of loans are available?
There are numerous loan programs and typically one is the best for your situation. Consulting one of our trusted mortgage partners can tell you whether a conventional or government backed mortgage is the best for you and your situation. Full value or 100% loans are available.
- What are the credit score requirements?
Credit scores are important measures, but there is typically a program for everyone, or some means to improve your score enough to ultimately purchase your Dream Home. Some government programs like USDA Direct make funds available that could not be achieved with other programs.
- What if I need to fix my credit?
Most of our trusted mortgage partners are able to direct you in the best methods to clean up and improve your credit. They can run your situation in rescore programs to advise what moves would have the best effect on your score. In other situations, they can guide you to a source that can assist in repair. No one is a lost cause; we see these issues everyday and we witness the exciting stories of success.
- What types of government loans are available?
Both VA and USDA are 100% Loans with no equity required. There is also FHA which is only 3.5% equity. Consult one of our trusted mortgage lenders today to learn what may be a good fit for you.
- What is a typical conventional loan?
Most conventional loans are 95% loan to value and second homes would be 90%.
- What are today’s rates on the various programs that you offer?
Rates fluctuate constantly but contacting one of our trusted lender partners can tell you what the rates would be today.
- When can I lock the interest rate of my loan?
Most loans can be locked for no charge at 60 days from permanent loan closing. Longer term locks can likley be purchased, as low as rates are currently, maybe not a bad thing to consider, ask your mortgage professional.
- How long is the construction period of my loan?
Most programs are twelve (12) months from the date of your loan closing. Red Door Homes typically builds homes in a third of this time, but permits and such still need to be acquired so construction can take 30-60 days form loan closing depending on the municipality.
- Can my construction loan be extended?
Yes. If you were to encounter some sort of unknown problem and construction was delayed, the loan can typically be extended in 60-90 days increments.
- Can we avoid PMI Insurance?
Private mortgage insurance is required on loans with less than 20% equity. There are some creative ways to avoid this, always ask the mortgage professionals what works for your situation.
- Can I make changes to the plans and specifications during the construction period?
Once your home is under construction, the appraisal is complete, and the loan is fixed. Changes can be made at the discretion of the Contractor, but likley cannot be added to the loan.
- What payments will I need to make during the construction phase?
You will pay interest only payments during the construction period of the loan based on the amount of money that you have been advanced to date. Interest is billed in arrears, you will receive a monthly interest statement for the interest accrued in the previous month.
- Will my Lender advance construction funds prior to the work being completed?
Absolutely not. Lenders always perform in-person inspections and only release funds for completed work.
- Can I convert my construction loan to my permanent mortgage prior to the scheduled conversion date?
Yes. You may convert early if the house is 100% complete ahead of schedule. Please contact your mortgage loan originator should this occur, and you desire early conversion.
- Will Lender pay the real estate taxes and insurance that come due during my construction period?
They will not, you are responsible for payment of any taxes during this period. Of course you can arrange for escrowing of insurance and taxes through the permanent mortgage.
- Can I act as my own general contractor and build my own home under this program?
Most lenders require a licensed General Contractor to build your home. Typically, they also reserve the right to review and approve your builder in conjunction with your loan request. Red Door is approved with numerous lenders and can make the steps to a closed loan simpler for you and your family.