By Ron Blessey, Senior Morgage Banker, Peoples Bank NMLS#215672
Peoples Bank offers a Construction Loan program with a maximum twelve month build out period at the most competitive rate in New Mexico. Program guidelines allow for a maximum loan to value or loan to cost, whichever is less up to 90% on a loan amount up to $417,000.00. Based on a loan amount over $417,000, 80% loan to value or loan to cost is allowed.
The Bank requires certain due diligence to be performed throughout the process. The builder will be vetted and will have to provide references from suppliers and happy homeowners. Selecting an experienced builder familiar with the process will assure all goes as expected.
Your builder will discuss with you all the details of the process and will work within your budget to come up with a total cost to build. This comes in the form of a cost breakdown that is a list of all materials and operations with a corresponding cost for each. This will be used during the process as monies are drawn out at various intervals to cover the cost of the project as it progresses. A contract between the guest and the builder must be provided and should include detailed terms between the parties.
There are title insurance requirements that must be met along the way to make sure all funds are paid to the general and subcontractors when requested, and lien waivers are signed as payments are made. This ensures clear title throughout the process and protects the guest, the bank, and the contractors.
Right at the outset, we will obtain a preliminary permanent loan approval in order to complete the up front construction loan process. Within 60 days of completion of the project an updated file must be re approved. The permanent loan rate can be locked and closing will occur when the final funds are disbursed to the general contractor and a certificate of occupancy is obtained.
Ron Blessey is a regular guest on All Things Real Estate weekly radio program. For more info visit ATREradio.com