Rural 1st has the lending expertise and rural focus needed to offer construction financing packages tailored to your specific needs. That’s why we’ve developed this video series for people wanting to build their dream home in the country.
Once you’ve discussed your ideal loan with your Rural 1st loan officer, found a builder and know how much cash you’ll need and what kind of down payment you’d like to pursue, you’re ready to apply for a construction loan.
Documents for Your Construction Loan
Just like any other loan application, you’ll share required documents with your loan officer through our secure customer portal. These include your complete application, latest income and asset documents and any mortgage statements.
You’ll also share construction details, letting our team know what you’d like to build and how much it will cost. Design elements impact the cost of the project and should be included in the specs and build sheets that you’ll provide during your application process.
Loan Approval and Final Costs
Once complete, your application will go through processing and underwriting stages where our experts will determine how your loan will be structured. Our team of rural lending experts will review all the required documents, plus your application and title work, and order an appraisal.
Once reviewed and approved, you’ll have the final cost of your construction loan. These costs will include the funds available, as well as cash reserves and the down payment needed. Costs can vary depending on your builder type, so it’s important to talk with your loan officer up front if you’d like to use someone other than a general contractor for your construction project.
Best Practices When Applying for Your Loan
- Do not finance any large expenses. This can impact your debt-to-income ratio which can affect your credit approval decision depending on how large of an expense you incur. Hold off purchasing that new car or boat during the loan application stage.
- Reserve your cash unless you have to spend it. As you’ll see in the loan documents, construction loans require not only a down payment, but cash reserves set aside for unexpected expenses or cost overruns. It’s critical for your loan approval that you have the required reserves. Spending your cash on pre-purchasing items for the home can seriously deplete your funds.
- Don’t change jobs during the loan process. This decision could also impact your approval. In addition to cash reserves, your loan approval is also dependent upon your income.
- Don’t start construction just yet. Until your loan is approved and closed, you won’t have access to your construction funds and breaking ground too early can change your timeline and approval.
While there are a variety of factors to keep in mind, your Rural 1st loan officer is here to help you. If anything changes that may impact your loan approval, please contact them to discuss next steps.
Continue watching this video series to learn more about what happens after your construction loan closes . If you’re ready to get started, reach out to our team of rural lending experts today.
