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Is There Anything We Should Know About Construction Financing?

ANSWER: Your loan will be approved well in advance and you will want to be prepared as your home progresses and you prepare to close. The following is a list of six helpful hints: 

  1. Be sure you understand and can comply with all of the conditions of your loan approval.
  2. Let your lender know of any changes to be made to the house, the sales price or any contract changes.
  3. Do not make any changes to your financial position without consulting your lender. It may not be wise to buy a new car before closing your mortgage loan if it affects your loan approval!
  4. Save copies of all major paperwork that might influence your loan. For example, save copies of any bonus checks you might receive.
  5. Notify your lender when you are within 60 days of closing. You will probably be at the building site and in communication with the builder to know this approximate date.
  6. It is important to notify your lender so that any updates that are necessary can be accomplished.

Use extreme caution concerning setting your closing date and time. If you give notice where you are currently living and must be out by a certain date, it will be very uncomfortable if the home is not complete and will not pass final inspection. Many times buyers get approved for their home loan, begin construction and then forget that the lender will require that the file be updated prior to funding into the permanent loan. When the house is finished, the builder will want his money. He or she probably won't appreciate any delays and your lender will appreciate your advance notice and preparedness.