Building a Home: CONVERTING TO PERMANENT FINANCING


Once construction has been completed, certain documents and information must be provided in order to disburse the final draw and complete the conversion of your loan to permanent financing. The documentation requirements vary by loan, and your mortgage loan officer can help you understand exactly what is needed. However, in general, we will need:
  • Final inspection by our construction inspector indicating 100% completion of your home
  • Certificate of Occupancy, typically provided by the builder
  • Fully executed Completion and Acceptance letter verifying construction is complete
  • Final lien waiver/affidavit provided by the builder
  • Documentation provided to your mortgage loan officer showing you've paid the first year's premium of your homeowner's hazard insurance

Modifying the Loan


A Modification Agreement comes into play when the terms of your loan - once it becomes permanent financing - will differ in any way from the original note. For example, if construction is not completed within 12 months, you will be asked to sign a Modification Agreement changing the due date of your first permanent mortgage payment.


Payment of your Permanent Loan


Up until this point, you've been paying interest only payments as discussed earlier. When your permanent loan period begins, you will begin making monthly principal and interest payments. 

You will also now have the option of including escrow for your real estate taxes, hazard insurance, and other applicable fees. If you don't want to include escrow, your escrow waiver request must be approved prior to locking in your interest rate.

First South Bank will send you written notification of your new monthly mortgage payment and the ways in which you can make that payment.

The process of building a home can seem overwhelming. But, with First South Bank by your side, you can be assured guidance through the entire process! When your mind is at ease about your financing, you can focus on the really important details, like...what shade of paint would look good in the kitchen. We're  ready to help you get started, reach out to a mortgage loan officer to schedule an appointment. 

Check out our Construction to Permanent: At a Glance for a quick reference guide.



A First South Bank loan officer will be with you every step of the journey.

Look for more information about your first home? Check out our You First Academy, where we offer short, 3-7 minute, tutorials on topics you are interested in.

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