Your questions about construction loans

Wize Guy answers:

If you are soliciting borrowers on behalf of someone other than yourself or your employer you’ll need a mortgage broker’s license. (assuming you use the term “construction loan” as it is commonly understood.)

Wize Guy answers:

When it comes to looking around for construction loans, remember the commercial lender will levy a steep administration fee as their charges for the step-by-step supervising of your construction procedure. At times, this fee can be 3, 4 or 5 points (percentage points of your home’s worth). As there is a lot of work involved in dealing with builders and subcontractors, many a times, the administration fees are worth it as you are free to use your time for more constructive activities. Also to motivate you to retain your entire business with them, most banks will actually refund major part of the administration fee when it is time to opt for a mortgage. You can get a regular mortgage with zero points or you can get rebate points that you can apply to the principal.

Wize Guy answers:

intrest rates are hovering around 5% for a 30 yr fixed I didnt check helocs but maybe you should go to bankrate.com and do the math to see which route save’s the most money

Wize Guy answers:

You need to have this information:

Whats the house worth now

What will it be worth with the work done

How much do you currently owe on the house

How much will repairs be

We do construction loans in Utah……….

You can ask questions on our Live Chat at our website…..

Open Book Advisors™

Wize Guy answers:

For a lender to come in and refinance her out of the construction loan, the home must be completed – including the siding. It sounds to me like her bank is being stupid.

When you are that close (and for the sake of argument, I’ll assume the only thing left to do is the siding), the construction loan bank will usually give you an extension on the loan term. They don’t want the house – they just want to be paid off. I am in MN and we often run into trouble late in the year due to weather (tough to do things outside when it is snowing and 5 degrees….but I digress). Typically the bank will give the borrower an extention on the loan until the weather breaks (which may be April….damn, digressing again). I have never had a construction loan go to the next phase – foreclosure. The bank can accelerate the loan and make it due immediately. Your friend will be in default if they do this and the foreclosure process may begin.

If her current lender is not going to give her and extention she should contact another bank and see if they can do a “construction-to-permanent” loan, or give her another few months to finish the home.