Determining what financing best fits your needs early in the process will help guide you through the design and pricing stage. Since not everyone has the same financial needs, your first step should be a call to your lender to determine the maximum mortgage amount you qualify for and the mortgage program that best fits your needs. A pre-qualification can be done in a matter of minutes over the telephone.
The mortgage pre-approval is a crucial step which answers the initial question of: “How much can we really afford?” or “What is the easiest way to finance the construction of our dream home?”
At this time the lender will determine whether you should make a full application or apply for pre-approval. Both the application and pre-approval can be done over the telephone or in person within certain geographic areas.
A pre-approval gives you a commitment letter that is good for 120 days, allowing you time to finalize a design that fits your budget. The commitment letter will give you the confidence of knowing exactly how much house you can afford and the opportunity to take advantage of an interest rate you are comfortable with. When you have completed this process, your financing is in place and you are ready to begin.
The documentation we will need from you for application includes (but not limited to):
Application fee and lock deposit (if applicable)
- 1 month of current pay stubs
- 2 years most recent W-2’s
- 2 months of current bank statements or most recent quarterly statements showing sufficient money to close
- 12 month’s mortgage or rental history
- Sales agreement or deed for land
- Complete set of plans, specs and a fully executed builders contract
- Record of any deposits paid to builder/ contractor/ manufacturer
- Copy of drivers license or passport (Photo ID), copy of US Resident or Alien Card if applicable
- Commissioned employees current 2 year complete signed Federal tax returns
Step 2: What the lender will do
Once your information has been taken over the telephone, an application is sent to you for your signatures, and the required documents listed previously, must be collected and submitted with your application. Upon receiving your application package back, it will delivered to the processing department for underwriting approval. After all documents are reviewed and the required guidelines are met, the underwriter issues an approval.
When you receive notification of your approval, an appraisal will be ordered. The appraised value of your home will be based on the value of your land, plus all cost necessary to construct your new home.
A customized construction disbursement schedule of funds is developed by our Construction Department. We will work closely with your Harvest Homes builder/dealer to determine at what phases of construction these disbursements will be issued. During construction of your home, inspections are ordered after receiving written or verbal requests from you or your builder/dealer. A variety of payment options are available depending on your construction process.
Locking your interest rate can be confusing. Talking with your lender through this process will help you. Some points to remember:
The construction loan interest rate can be locked at application.
The permanent mortgage rate can either be locked at application or you may elect to float your rate during construction.
If you locked your permanent rate at application, your lock is good for 30 – 270 days depending on the option you choose. You will need to know when your home is expected to be completed to select the best rate lock option.
If you wish to float your permanent rate, it will float until you call to lock or it will automatically be locked 5 days prior to modification
Step 3: Time for a closing
After the appraisal is received and all documentation for the construction and permanent mortgage are complete, a settlement (closing) will be scheduled near you for your signatures. Some closing costs are paid at this time, any liens against the land are paid off, and the construction phase of your home starts.
You are required to make interest-only payments to the lender on the funds that have been disbursed to the builder/ dealer/ manufacturer during construction. Once a final home inspection is completed and a certificate of occupancy is issued, your construction loan is ready to modify into your permanent mortgage.
A modification package is sent to you for signatures on final documents and to pay the balance of your closing costs. After modification, your interest-only payments will no longer be required; instead you will start making your regular monthly mortgage payments.
Now it is time to enjoy your new Harvest Home. Thank you for taking the time to learn how easy financing your new home can be.