Construction Loans

Single-family homes. This includes stick-built, modular, and timber frame or log kits.

Construction proceeds are disbursed per your approved construction draw schedule. Your mortgage loan officer or processor will provide a draw schedule template. An initial advance to your builder up to 80% of your land value may be itemized on the draw schedule to be disbursed by Mortgage Servicing after the loan has closed.

Subsequent draws will be for completed work and require a draw request with inspection. Advances for special order items, such as custom cabinets or windows, that are itemized separately from labor on the draw schedule may be requested, with payment to be issued directly to the vendor.

Final payment for modular or kit home delivery can be requested without an inspection.

No. The Construction to Perm Loan may only be used with the property that is intended as an owner-occupied primary residence or second home. Our Business Lending department can assist with construction to perm financing for investment properties and builder construction only.

Yes. Even though you might pay your builder, if your builder does not pay the subcontractors or material suppliers, they can file a mechanics lien against your property.

No. A qualified general contractor or builder is required to oversee the project.

The Borrower is responsible for paying the overages out of pocket. If requested, the borrower may include a contingency reserve in their construction draw schedule to buffer any change orders or cost overruns.

No, you may not start the project before loan closing. An early start may hinder our ability to obtain proper title insurance coverage and may prevent us from closing your loan.

Interest is based on the funds advanced calculated at the note rate for the loan.

No, you do not. The lot may be purchased simultaneously with closing the Construction to Perm loan.

TEGFCU will use the appraiser’s estimate as to what your taxes will be at completion. Your local tax assessor may be able to answer any further questions.

No. We consider this equity into the project and credit towards your down payment. Cash back to the borrower is not allowed. You may use the equity in your land for an initial disbursement to your builder to get the project started.

You may request an extension for your project to allow time to complete construction. If granted, conversion to the permanent phase will still occur at the end of your scheduled construction term, and you will begin making principal and interest payments on your loan amount. An interest-bearing escrow holdback account will be established to fund the remainder of your project.