Building a home
Granite, concrete, quartz?!? Bamboo, cork, hardwood?!? There are thousands of decisions that go into building your home, so let us help you make borrowing the money a no-brainer. We have been helping people build homes with our construction loans for decades. So, spend your time looking at paint swatches, and let us help you with the financing. It's just one of the many reasons why we are Your Bank of First Choice.
Before you get started, come see us to get pre-qualified for a construction loan. We can help you determine how much you can spend building your new home. We will first look at the amount of your down payment. Next, we will determine a monthly payment you can afford. From this, we can determine the total amount you can spend building your home. Typically, we can loan you up to 80% of the lower of the total costs or appraised value of your new home.
When it comes to a construction loan, your down payment can come from various sources including:
- Equity in property you plan to sell (like your current home)
- Sweat equity (anything you plan to do yourself)
- Current equity in the lot or home site
Buying a lot
Now that you are pre-qualified, you can start shopping for the perfect place to build. This can be a residential lot or land. Your realtor can help you identify lots that are for sale in the area you would like to build. Additionally, our subsidiary, Western Plains Service Corporation, has several lots for sale in the Hays and Victoria communities. Learn more about buying a lot.
Design your floor plan
You can choose to design a floor plan on your own or enlist an architect or contractor for help. Either way, this step is crucial as these plans are relied on for all future decisions.
Get an estimate
With your finalized floor plan in hand, you can work with a contractor to obtain a bid for the project. It is important to identify all the costs involved in the project. Your loan officer can provide you with a spreadsheet that lists all possible costs to help ensure everything is properly considered in your construction budget.
Review the appraisal
As your lender, we will order an appraisal for your new home. The appraiser will review the plans, the cost estimate, and the site where you plan to build. From this analysis, a final fair market value of the property as complete is determined.
Construction loan closing
We will keep you informed on the progress of your construction loan and schedule a loan closing as soon as everything is in order. Please keep in mind that no work can begin on your home until the loan closes.
You will receive a Closing Disclosure at least 3 days before closing. The Closing Disclosure is the one-stop shop when it comes to your construction loan. You can see what you will be expected to pay in monthly interest and what we anticipate your housing expenses, like real estate taxes and property insurance, will cost you on a monthly basis.
You and your contractor can start building your home. This process typically takes between 6-9 months. However, if unforeseen circumstances (like the pesky Kansas weather) prevent the project from being finished on time, we can extend the maturity date of your construction loan.
Your contractor may bring unpaid bills for your construction costs to us. However, we will contact you first before paying any funds out of your construction loan. Contractors and the main sub-contractors will be asked to sign lien release waivers when they are paid.
During the construction phase, you will pay only the monthly interest due on the amount advanced on the construction loan.
As your home nears completion, we will start talking to you about converting your construction loan into a permanent home loan. This means the funds you advanced to build the home will be seamlessly transferred into a traditional home loan. At this point, we will also help you lock your interest rate if you have chosen a fixed-rate home loan. Check out our home loan offerings here.