The Closing for a construction to permanent loan is very similar to that of a conventional, or any other mortgage loan. However, we will collect fees to cover the costs of inspections during the building process.
Inspections are completed by a First South Bank officer and are required before each draw disbursement will be paid to the builder.
The Construction Phase
Your initial construction disbursement will take place sometime after closing. Any personally contributed funds by you will be used prior to your loan proceeds. Before we are able to make the first construction draw, we must have the following information:
- Construction Inspection -- completed by a First South Bank officer
- Foundation Survey
- Proof of hazard insurance -- either in the form of a builder's risk or homeowner's insurance policy
- Building permit
- NC Lien Registration -- completed by your mortgage loan office
- The funds for a construction loan are disbursed periodically as work is completed and verified by our construction inspector.
- Construction draw requests are typically made by the builder. You will, however, be asked to authorize the builder's ability to request the funds before any draw requests will be granted.
- Construction disbursements are generally disbursed through our branch locations.
- The amount of the disbursement is based on the work completed, as specified by the construction draw request and verified by our construction inspector.
Your Payments During Construction
While your home is under construction, you only make interest payments on your loan each month. The amount of interest you will pay will be determined by the amount of funds disbursed.
During the construction, we will not collect escrow for your real estate taxes or hazard insurance. We will, however, collect escrow for flood insurance during the construction phase if your property is located in a special flood hazard area. You will need to pay any bills you receive from your local tax authority or insurance providers.
You will not make payments toward the principal of your loan until the construction process has been completed and your loan transitions into permanent financing.
We are always here when you need us. Reach out to a mortgage loan officer to schedule an appointment, we're ready to help!
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