New Construction FAQs
Will New Century Bank provide a construction loan for site built homes as well as modular?
• What is the difference between a modular and manufactured home when it comes to financing?
• I have never built a home before, how does the process work?
• Can I get the same interest rate for a modular home as a site built home?
• Can I use my VA eligibility and build a new home?
• How long does the process take to get approved for a construction mortgage?
• I own land, may I count the equity in my land as a down payment?
• How much down payment or land equity do I need for a new construction mortgage?
• Are construction loans interest only?
• I own a home now, do I need to sell the home and move to temporary living quarters before I build my new home?
• When can I lock my interest rate during construction?
• What is the minimum credit score to obtain a construction loan?
• How do I get a permanent fixed rate mortgage after construction?
• How do my contractors get paid and how many draws are available?
Interest rates, terms, and appraisals for modular / system-built homes is exactly the same as site-built homes. Manufactured homes or mobile homes require only mobile home comparable sales for appraisals and the interest rates are higher.
Please look at our PowerPoint© on the lending process or our brochure for more information regarding the process. A shortened answer is: 1. Pre-qualification for mortgage, 2. Document the application, 3. Select a piece of property 4. Select a home and obtain written bids from contractors, 5. Appraisal on the home and land as if completed, 5. Loan Commitment obtained through FNMA underwriters. 6. Open a construction loan with New Century Bank, 7. Build the home, 8. Final inspection, 9. Close permanent mortgage loan that pays off construction loan, 10. Live happily ever-after!
YES. Modular homes are regular homes and Fannie Mae offers the same interest rates.
At this time we do not have a VA construction loan available.
Pre-qualification can take place with a simple two page application within 24 hours from the time we receive it. The rest of the time-line depends on how long it takes for the documentation to arrive at the bank including the contractor bids. Appraisal times range from 1 to 3 weeks, underwriting a few days and closing 3 days.
YES, Land is considered the same as cash. The appraisal of the “as-completed” project will determine the amount that land counts toward the total appraised value which determines down payment equity.
Down payment can come in the form of cash or land equity or a combination of the two. Each application is subject to lender review to determine the minimum down payment.
The construction loan charges interest only on those dollars borrowed for the days borrowed. The loan will bill the client one week prior to the due date with the amount due. Each month as the loan principal grows, the interest payment also grows. Loan Estimates provided by the bank will give you average and high monthly payment estimates prior to closing your loan.
You may be able to build, first, then sell your home and move one time. This question needs to be further examined by the bank and is somewhat dependent upon the client financial information. New Century Bank construction loans are often able to serve as a bridge loan, meaning a client may be eligible to stay in their existing home while the new home is being built.
The interest rate can be locked for the permanent mortgage after the home is complete, all the construction invoices are paid, a certificate of occupancy is issued and the appraiser has completed the final inspection. Interest Rates can be locked for 30 days without additional expense to the client. Longer rate locks are available at a cost. It is always better to wait and save the expense.
Contact New Century Bank for current credit requirements to obtain a Construction Mortgage.
The mortgage commitment with New Century Bank is for both the construction loan and permanent mortgage. Only one application is needed. When the new home is finished, the permanent mortgage will seamlessly payoff the construction loan.
New Century Bank receives invoices from our client with authorization from the client to pay the invoice. New Century will record payment on an accounting summary and pay the contractor direct within a few days. Though there are no specific limits on the number of draws, we ask that common sense be applied to reduce workload.