Construction questions? We’re here to help! (Part 1)
Starting a new construction project can be both exciting and overwhelming at the same time. To make things a little less daunting for you, we’ve answered some of the most frequently asked questions in regards to our products as well as closing on construction loans.
What Construction Products does Great Midwest Bank offer?
We offer a variety of Adjustable Rate Mortgages (ARMs). These products include a “One-Time Closing” provision with a construction period of up to a year. The rate is locked for the initial term.
What does a “One-Time Closing” mean?
We combine your construction loan and permanent mortgage into one loan. You have one closing and only pay one set of costs. Once construction is complete you begin to pay a monthly mortgage payment. You may want to consider a refinance into a fixed rate upon completion.
When can I lock into a Fixed Rate? Are there extra costs?
You may be eligible to apply for a low-or-no cost fixed rate refinance as the home nears completion. We often can use the original appraisal for this purpose.
What Down Payment is required?
Great Midwest offers some of the lowest down payment options among area banks. Down payment is due at the time of closing and your funds will be disbursed before loan proceeds are used.
Will the equity in my Lot be considered part of the Down Payment?
Most likely, yes, as the appraisal will take into consideration the current land value.
Can I start building before selling my existing home?
Depending on your cash available and/or home equity position, you may be able to do so. This assumes that your income supports both monthly mortgage payments along with any other monthly debts.
How much does a Construction Loan cost?
Typically around $1,500 plus a one-time fee for optional Owner’s Title Insurance, which we recommend. The cost of this insurance is based on a standard statewide schedule.
What is Owner’s Title Insurance?
Owner’s title insurance protects you as an owner of the property and assures that your property is free of any liens, judgments, and encumbrances other than the mortgage filed as part of the construction loan. It is purchased as a one-time cost at closing and is valid for as long you own the property.
Still have questions? Call (888) 485-4400 or stop in today to speak with any one of our experienced loan officers. Also, come back for more helpful information in Part II of our Construction FAQ series!