Frequently Asked Questions...

Do you offer 100% Financing on Construction Perm?

No, however, we believe we are the ONLY broker  in our market who offers you the ability to obtain a loan based on the "Subject To" value at 95% with a 660 score.  We treat your transaction as a refinance, even if you don't yet have title to the land.  If you buy the right lot at the right price, and build at a good price, where the appraised value upon completion is 5% more than the total project cost, you will not need to bring a downpayment to closing.  Be prepared to bring atleast a 5% downpayment because you will not know this until much later in the process when final plans and specs are sent to your appraiser with the breakdown.  If the appraisal comes in higher; you will be pleasantly surprised by not having to bring a downpayment to closing!

Speaking of closing - are there two?

No, this is a one-time close.  You pay for one closing and it is underwritten just one time.  At the closing, the seller is paid for the lot, or if the lot is owned, any lien on it is paid off.  The construction $$ are put into the lenders escrow account and the mortgage broker gets their fees.  No escrows for taxes and insurance are collected.  Upon completion of the project, you will go back to sign a "modification" of the note for the permanent rate on your loan.  At that time, escrows are collected.

What if I lose my job during the construction process?

The beauty of the one-time-close is that there is only one underwriting process on the loan.  This is an advantage to the builder.  Because the loan is not in his name, he has no risk if you lose your job.  The lender will still pay the builder to finish the collateral.  Additionally, as long as you continue to make your payments, there is no reason the lender would care or even know about this unfortunate event.

How hard is it to get a builder approved?

Not hard.  They must fill out the 2 page form early on in the process.  We do check references and look to see if the contractor has outstanding liens.  This process takes 3-5 days.  Once the builder is approved, the approval is good for 1 year.

Can I do an Investor Construction Perm Loan?

No, this would be considered a "spec home" and we do not offer this type of financing.

What if during the construction process, there are cost overruns?

Overruns would be your responsibility.  This is why we like to see that you have reserves.  You can finance in a "contingency reserve"  if you have room in your loan-to-value and loan amount.

Can I act as my own contractor or do some of the work myself?

No.

When do I have to choose what type of loan program I want?

When the credit file comes in for underwriting, the loan must be underwritten for the program that you want at the end of construction.  We recommend that the loan be submitted at a rate 1% above current market so that you are covered in the event of a rate fluctuation.

Will you allow a "Cost Plus" contract?

No.  When we close the loan, it is for a set loan amount.  A cost-plus contract is where there is no set price for construction.  This is not allowed.

Will I have to stay involved during the construction process?

No,  our local Construction Lending Office will handle everything.  If you chose one of the "floating Prime+" options during construction, we will need to lock your rate near the end of construction.

Click here for a construction checklist

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White Star Mortgage - 8292 Highway 92 Suite B-140 - Woodstock, GA 30189
Office Phone: (770) 973-0629 Fax: (770) 200-3720 Cell Phone: (770) 713-1662

We lend in the following states: AL,FL,GA,IN,KS,KY & MO

Licensed by the Department of Banking & finance State of Georgia Mortgage Lender License # 15600

Licensed by the Department of Banking & finance State of Florida Mortgage Lender License # MLB0702203

Our Home Office of America's Mortgage Broker is licensed in MD, MI, NC, NY, TN & VA --- call us for details on financing in these states.

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