NEW HOME CONSTRUCTION FINANCING - How it Works

Eagle’s Nest Homes, Inc. has established construction to permanent loan banking relationships throughout the United States. Currently our largest lender is IndyMac Bank, operating through a designated source to facilitate Eagle’s Nest Homes customer’s loans.

STEP 1 OF THE BUILDING PROCESS: DETERMINE FINANCES AVAILABLE
Do nothing until you know how much money is available for your building project. This will be determined by pre-qualifying for a construction to permanent house building loan. Take the amount you have qualified for and add any additional funds available to determine your maximum budget.

Most lenders will require a reserve hold back for unforeseen building contingencies which could increase costs. This is prudent and protective for the borrower. The amount is usually 5 – 10%; therefore, if you are approved for a $150,000 loan and the lender requires a 10% contingency reserve, you can only submit a cost breakdown of $135,000 and $15,000 is in reserve.

Once the home is “dried-in”, waiting for interior work, most lenders will release the reserve so the owner can “upgrade” items if they wish. Generally, a lender will not hold back a reserve from a borrower who is asking for less money than is approved for the project. Why? There are funds available in the loan to cover contingencies.

The loan will be in the name of the owner/builder, who will pay the bills from a series of draws or advances established by the lender at certain completion states.

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