Austin Construction Loans
Austin Mortgage Loan Officer and Branch Manager Joel Richardson offers the following free construction mortgage FAQ to help you with your construction financing plans. Please feel free to use this resource as you begin to research your customer construction mortgage needs.
How does the equity in my lot work?
If you’ve owned the lot for more than one year, we can use the equity that you have earned. If you’ve owned it for less than one year or are buying it as part of the construction loan, we will use the cost of the lot as the value.
If I am remodeling, can I use my existing equity?
You bet. The remodel loan is simply a refinance loan where you get your equity. We take into effect your appraised value plus the costs of the remodel into the appraisal.
When does the construction loan term begin?
A construction loan term begins on the date the borrower signs the loan documents. The term is typically defined in your builder contract plus added days for closing the permanent mortgage.
Where are the funds sent?
At loan closing, the borrower signs a Construction Disbursement Account Information form that gives specific information about the bank account being used for the project. We recommend opening an account specifically for the project. If any change occurs to the checking account, you should notify us immediately in writing.
What are hard costs?
Hard costs are direct costs associated with the labor and materials used for the actual construction of the home. Hard costs are also known as “direct costs,” “board and nails,” “on-site costs” and “hard cost improvements.”
What are soft costs?
Soft costs are indirect or “off-site” costs not directly related to labor or materials for construction. Examples of soft costs include building permits and architectural fees.
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