Construction Loan #2


Details:
Single-Close Construction Loan
4.50% on 7/1  ARM @ 1 point

4.592% APR (annual percentage rate)

This single close construction loan program is also the permanent financing.  It is a 7/1  Adjustable Rate Mortgage.  After the first 84 months, this loan adjusts annually for the next 23 years.  The loan has a 2% annual cap, a 2% first adjustment cap, a 6% life cap over the start rate, and a 2.75% margin over the 1-Year LIBOR (London Interbank Offered Rate).  The construction period is 12 or more months, during which time the loan is interest only on the amount drawn, at the above interest rate.   This loan has no prepayment penalty.

ASSET DEPLETION EXAMPLE:

$1,000,000 LIQUID ASSETS.  SUBTRACT $100,000 FOR POST CLOSING RESERVES NEEDED.  TAKE THE REMAINING $900,000 AND DIVIDE BY 36 MONTHS, = $25,000 IN MONTHLY INCOME ADDED TO OTHER INCOME FOR QUALIFYING.  USING A SIMILAR FORMULA FOR 70% OF RETIREMENT ACCOUNTS MAY REQUIRE BEING AGE 59 1/2.

The maximum loan amount is based on the lesser of total costs or the appraised value.  The appraisal will be done from the plans, and a value will be determined that represents what this house would be worth in today’s market if already completed as planned.

Loan-to-cost/Loan-to-value ratios:

80% to $1M, 75% to $1.5M and 70% to $2M.

Ground up construction or rehab/remodel both available.  No owner builder or construction supervisor options.  Owner builder if borrower a GC possible.  A licensed general contractor must being doing the work.  Pre-starts OK.

Full income and asset documentation required.  No stated income available.  Qualify at the start rate on this 5/1 Year ARM, with 43% maximum debt to income ratio.  Twelve to 24 months of PITI (principle, interest, taxes and insurance) required in reserve after close of escrow depending on loan amount.

No spec.  No rental properties, no manufactured (modular OK).   No commercial or mixed use.

Minimum loan amount $200,000.

Note: APR (Annual Percentage Rate) is based on a loan amount of $500,000, middle credit scores of 700+,  and 12 draws.  The APR is so low because if this loan were adjusting today, it would adjust to under 3.50%

Fees, points, and program parameters subject to change without notice.