Susan Turner Mortgage is Here to Help.

We have developed this  Frequently Asked Questions section to inform you of the Loan process. If you have any questions please fill out our contact form below and we will be in contact shortly.

1) While I am paying interest on the loan, what disincentives are in place to keep the builder from not being timely?

During the build out process of the home, the primary and huge incentive for the builder to build on time and quickly is that we ONLY reimburse builders – we do not fund a ‘draw’ up front.  Now, we will issue at lot closing an initial ‘pre-construction draw’ that is meant for capital to go and get permits, clear the site, and so on.   But, after that, the builder requests draws from the Bank, we first inspect, take photo’s and report if in fact the work was completely and as per the plans.   So they have effectively used their money first, and want to be quickly reimbursed as you can imagine.    But they cannot call us and ask us for funds – they fund it themselves, and we reimburse.

2) If the builder is the land owner, will this contract require that I will take title of the land regardless of how the rest of the project goes? I am not sure why I (versus the build) would be financing the project otherwise under these circumstances?

During the build out process of the home, the primary and huge incentive for the builder to build on time and quickly is that we ONLY reimburse builders – we do not fund a ‘draw’ up front.  Now, we will issue at lot closing an initial ‘pre-construction draw’ that is meant for capital to go and get permits, clear the site, and so on.   But, after that, the builder requests draws from the Bank, we first inspect, take photo’s and report if in fact the work was completely and as per the plans.   So they have effectively used their money first, and want to be quickly reimbursed as you can imagine.    But they cannot call us and ask us for funds – they fund it themselves, and we reimburse.

3) Would there be a settlement process for the land w a title company? Would a second title be required for the home and full mortgage later? Curious about the legalities of transferring ownership?

You will need to confer with the builder, but yes, more than likely.   Builders who have to finance their own project all the way through – pay higher bank expenses and the use of a land/construction permanent loans gives you as the owner significant tax benefits, as in lower transfer taxes, and a tax deduction immediately.

We do our loans as a True one TIME closing, therefore the components of a construction to permanent loan INCLUDES the land.   Any and all costs associated with the title and the final modification from beginning to end are factored in right up front and issued at the closing early on.  There are no closings later or refinancing needed.  However, I do have you on automatic updates for market changes so if something significant happens and it is to your benefit I will most certainly give you a call and email.

4) During the phase verification, is the draw based on only your inspector's satisfaction or is my satisfaction also considered?

We do our own bank inspections including photo’s from an outside agency, but yes, if you as our borrower had concernsplease let us know.

5) you speak of loan rate lock in. However. If it drops, am I to continue to shop this or is your company help with monitoring?

On our land/construction and permanent loans – we allow you to lock in at today’s low rates before the rates go up.   That means that what you lock into today is what you will have for the next 30 years or however you choose to pay the loan.   No, there is no ‘float down’ because of that if the rates get better.  I highly doubt it but if there is a rate drop at completion of the project, but, we can revisit the terms of the loan at completion, and if it is worth it we can refinance it at that time into a lower rate.   If the market is the same or frankly higher, you have nothing to do other than when you move in – you will do your walk through, and verify the draw issuance, and then we will begin billingyou as principal and interest – taxes and insurance will be picked up at that time for Escrow accumulation.  So the RATE you locked in at for example is 4.25% - and during the first 12 months – the ‘interest’ on the money used for the build out was charged to you ONLY as we the bank confirmed the house is being properly built – upon completion and final use and occupancy permit from the county – now your SAME rate will be amortized over another 30 years for principal and interest payments now Plus the taxes and insurance (homeowner fire policy at that time).

 

6) what does the section on the opportunity to "curtail the principle loan balance" mean? If it means I could put more money against the loan, why is there a charge?

Curtailing to principal interest means this:Let’s say, for example, in many cases – most of my clients have a ‘home to sell’ – however, they also want to get the new home started for building.   Let’s use $600,000.00 for the Project Cost of the new home – and ultimately you want to have a mortgage when you move in at 80% loan to value, or in this case, $480,000.00 to keep the payments and expenses within your budget.    That is absolutely fine and a goal we work to achieve with you.  But typically clients do NOT sell the homes they are currently living in to achieve that part of the missing down payment (20%).   So, what we suggest and review for qualification with you – is, close and start the land- construction – and permanent loan with a smaller or minimal down payment to initiate the construction loan.  So, for example, you may have access to 5% (or in this case $25,000.00 +closing costs estimate) – and if approved we can close using just your $25,000.00 initial down payment.   Knowing, that during the build out phase, it is your intent to sell the home and use that EQUITY you will get upon the sale of your current home – at any time, BEFORE final loan modification, or even after modification (loan changes to the FIXED rate principal and interest), you may REDUCE your mortgage by simply applying the amount of money you want to “Curtail” the current mortgage down.

Example: Loan closed to begin the house build at an amount of $575,000.00 (we applied your 5%, $25,000 downpayment to the initial construction to permanent loan and it was approved).

House is built over 6-12 months

You sell your existing home and achieve $200,000 in Equity funds from the sale of your current home AND you want to now apply that money to the existing loan with us in order to REDUCE the monthly payments.   That is called a ‘principal curtailment’ – and it is NOT a refinance.   There may be a small administrative fee of $200 if you change and want us to ‘RECAST” your mortgage (re-amortize the balance of the loan you now reduced thereby accomplishing your goal of REDUCING your final housing payment WITHOUT – A- losing your Excellent locked IN MORTGAGE RATE.  B- or incurring refinancing charges and fees not the least of which is cumbersome new paperwork to refinance in order to achieve just that.  Normally, that is the ONLY way you can PAY DOWN your mortgage AND have the Bank recognize it and ‘curtail and recast’ the remaining balance to accomplish your payment goal.  That is a HUGE benefit with us and one you can use multiple times in the future as a financial strategy.

You send in your $95,000.00 additional money you received from the home sale – and we apply that as principal to your current mortgage – and ‘recast’ it.  That then drops the mortgage payments to your original GOAL all without having to sell your other home first – or disrupt your family and move twice.

**Quite often, depending on the situation, we may be able to provide a line of credit on the current home or some other vehicle to use short term funds for your project.   Talk to me about that if that is applicable to you.

You move right in, with your new mortgage payment matching and even lower than your original goal.    Your other home is sold – and now you have an additional $100,000 to invest.   Ask me about the Rule of 72 and I will show you what your money will do in 5 years conservatively.

 


If you have any questions I invite you to fill out this form and we will contact you promptly.

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