Jeremy Santy, Other/Just Looking in Seattle, WA

I am looking for a 500K construction loan. Should I go with a bank? lender?

Asked by Jeremy Santy, Seattle, WA Wed Nov 14, 2007

My wife and I are building next year starting in March. We are just starting to look for construction loans.

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Best advise would be for you to talk to a couple very reputable realtors in your area and ask about a good construction loan bank or broker to go through. I would recommend getting 2 or 3 quotes and if you apply within 14 days of each other, the credit pulls will only count as 1 instead of 2 or 3 different ones. I would also recommend 1 of the recommendations be a local bank, just for comparison. Be sure to not only pay attention to the rate but also the costs (ie. draw fees, funding fees, ect). Ask how long the rate will be locked for (90, 180, 320 days?) and the costs associated with the lock. Also, with the construction loan be a 1 time closing or will there be 2 closings? If 2 closings, there could be more closing costs involved. If you ask the right questions you should have all the information you need to make the right decision on who to go through and your local realtors will have been through this so many times with so many banks and lenders that they will be able to direct you in the right direction. Good luck.
4 votes Thank Flag Link Thu Nov 15, 2007
Hi Jeremy - Wayne gave you good advice.. As a borrower, I suggest a few more questions to ask:
(1) Term - In my area, construction loans are 6 or 12 months. Get the longest term you can because new construction frequently runs over. We built a large house and really had to hustle to get it done within the term of the loan.
(2) Penalties - Some loans have very, very stiff penalties if you do not do your "take out" mortage by the end of the 6 or 12 month period. I'm talking like 1% PER MONTH if you run over. Over and above your interest payment.
(3) Up front points - Some lenders charge upfront points on a construction loan, some do not. On a conventional mortgage, these points may lower your rate over the life of the loan, which may be up to 30 years. On a construction loan, these points are over six months or one year, not 30 years, and that is very material. In our case, we paid .75% upfront. When it came time to do the take out mortage, the lender did not give us a competitive rate. We went with a different lender on the take out but felt we wasted the money on the upfront points.
As Wayne said, get the terms of the take out mortgage spelled out at the same time as the terms of the cconstruction loan. In our case, since we built the house to sell it, we did adjustable rate and that makes it a bit harder to nail it down. If your take out mortgage is adjustable rate, not fixed, I would really try to avoid the upfront points.
You are on the right track by looking at this early. Btw, if you already own the land, (as we did) a lender will consider the construction loan a refinance. And then if you do your take out mortage with a different lender than the construction loan, it will again be considered a refinance. We had to explain why we were doing what looked like back to back refinances. Next time around, we will do as you are doing, look at it early and plan it out.
4 votes Thank Flag Link Sun Dec 9, 2007
We just got done with our building project so I have empathy for you :-)
Do you own the land? If not, are you looking at a all-in-one type loan?
Given the current lending situation and since I just had a lot sale flip because
the buyer was unable to obtain financing, I would make sure who ever you
talk with is very familiar with the current programs and have done these
types of loans often in the recent past. The lender that I work with and have worked
with over the past 15 years could have done it but didn't specialize in these types of loans.
So she referred my to a lender in her office who does these loans on a regular basis.
If you are interested I can give you their website and contact info.
Good luck and remember when it is all over it is worth it.
Oh, lender vs mortgage broker. Lender may be limited to their inhouse programs. Broker will be able to shop for best program that fits your scenerio. The gal that I used is a broker who's company has its own money so is a lender also. Best , in my opinion, on the eastside. :-))
1 vote Thank Flag Link Thu Apr 24, 2008
You don't need to ask an agent for a lender name although if you have an agent you trust then you could certainly go to them. I am asked for referrals for this kind of thing all the time. Many banks will offer construction loans but you might want to get familiar with the typical terms before you go shopping for one so you can have an educated conversation with the loan officer.

Some banks will do construction loans direct - like HomeStreet Bank, Countrywide, WaMu and others. How much they'll offer for a loan will vary from day to day depending on what the lending market is doing. You might even contact your own banking institutions to see if they have a program they can offer you.

A mortgage broker gets paid to shop the loan for you and they have contacts with several lending institutions - some of which may not be banks but are other kinds of financial institutions or organizations with money to lend (ie, insurance companies or investment groups). For construction loans you'll likely not get a loan from one of these types.

Expect a timeline of completion to be required, which will vary by your project type and scope, and there will likely be a period where you go from being on a draw (with completion dates/sign-offs/approvals required) to an adjustment to a standard type amortized loan. During construction you will likely pay interest only.

Be aware, ask lots of questions, do your homework and you should be able to find a suitable loan for you.

Good luck!

Reba Haas
Team Reba of RE/MAX Metro Realty
425-970-3697 office
1 vote Thank Flag Link Fri Dec 7, 2007
Hello laurence, Here you go again, once a week UK Spammer for this mortgage guy - will. Please do not fill the borad with your AD.

1 vote Thank Flag Link Sat Nov 24, 2007
Sylvia Barry,…, Real Estate Pro in Marin, CA
You may wish to contact the local builder's group in your county to see who they use. I know CTX, the builder, had a mortgage company which specialzied in construction loans. Your contractor may be able to help you as would a good mortgage broker and don't overlook your credit union. The credit unions many times are not on the hook with having to meet "conforming" loan limits and/or underwirting guidelines.
1 vote Thank Flag Link Thu Nov 15, 2007
Hi Jeremy

A reverse mortgage is a loan for senior homeowners that uses a portion of the home's equity as collateral. The loan generally does not have to be repaid until the last surviving homeowner permanently moves out of the property or passes away. At that time, the estate has approximately 6 months to repay the balance of the reverse mortgage or sell the home to pay off the balance.
All remaining equity is inherited by the estate. The estate is not personally liable if the home sells for less than the balance of the reverse mortgage.…………
0 votes Thank Flag Link Sun Oct 6, 2013
looking for a low int. or reasonable rate loan of 500k to refinance investment real estate
0 votes Thank Flag Link Mon Jan 7, 2013
but were only able to fund construction and lot loans in California!
0 votes Thank Flag Link Sat Aug 21, 2010
Hi My name is Brian Becker, Construction loans are now becoming more available through a broker or the lender directly. You do need to check them out and look into the agents if wanted but they are out there and there waiting for you... lot loans and construction loans are back with us as well as a very few others!
0 votes Thank Flag Link Sat Aug 21, 2010
Hi Jeremy -

I recently researched the same thing for myself and found that I really will end up going with a mortgage broker when it comes time to actually start the process. There just seemed to be more options.

Good luck!
Web Reference:
0 votes Thank Flag Link Wed Apr 30, 2008
Hi Mr. Steven,

I'm afraid that such an advertisement for your services is not permitted on Trulia Voices. Please review our Community Guidelines located at and check out our Agent Best Practices blog post at the link below for more helpful information.

Best Wishes,

Leslie Taylor
Trulia Voices Moderator
0 votes Thank Flag Link Tue Apr 29, 2008
The best thing to do is your homework, and not only ask around (referral) but see who would have the best numbers for you, sit down and discuss your loan with whom ever you are considering. Don't forget brokers will shop around for you also.
0 votes Thank Flag Link Thu Apr 24, 2008
I have worked with people that have done both and not a huge difference, its just very important that when you are working with a brokerage lender be sure they are trustworthy. you can always check the BBB for complaints. Ask around, call Your Realtor, we usually know all the good lenders. we try not to work with the "Bad guys"
Web Reference:
0 votes Thank Flag Link Thu Apr 24, 2008
Hi Sylvia,
This is the third identity this person has used. Ruth spoke of David. I flagged another poster on Thanksgiving day and Jamie and Pete quickly responded. This person is simply determined to spam. The quicker his posts are removed, the better. If Trulia is quick, these types of posters will lose incentive to create new identies. Hopefully we will hear from Trulia soon.
0 votes Thank Flag Link Sat Nov 24, 2007
Deborah Madey, Real Estate Pro in Brick, NJ
I would carefully shop for the best rate and terms. Loan programs are very volatile these days. I would check with a local Realtor for some recommendations of loan sources they use as well as friends, family, etc. When you say "lender" I think you mean broker. A broker can outsource to many different lenders. However, they need to get paid also, sometimes increasing the cost. Be sure to ask for a good faith estimate before you proceed and review it with your accountant, escrow company, etc. for hidden fees.
0 votes Thank Flag Link Fri Nov 16, 2007
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