Austin Construction Loans
Austin mortgage loan officer Joel Richardson offers the following free, helpful home construction loans FAQ to help you with your home construction financing plans. Please use this resource as you begin to research your customer construction mortgage needs.
How does the equity in my lot work?
We can use the equity you earned if you’ve owned the lot for over a year. 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 remodel costs into the appraisal.
When does the construction loan term begin?
A construction loan term begins when 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. On this form, the borrower provides information about the bank account from which the borrower or builder will draw funds. We recommend opening an account specifically for the project. You should notify us immediately in writing if any change occurs to the checking account.
What are the hard costs?
Hard costs are direct costs associated with the labor and materials used to construct 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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