Posted by CarolynCO on 7/28/05 2:11pm
Msg #55374

Florida question

I have a construction loan signing for Saturday morning. Property is located in Cape Coral (Lee County), Florida.

1. Florida requires TWO witnesses, am I correct?

2. Also, when I called Borrowers with initial call, they are Oriental which doesn't matter one way or the other except that we are having difficulty understanding each other and have to speak S-L-O-W-E-R, they told me that they are not happy with the interest rate that is on the docs they received. I've never done a construction loan before, but it appears that the interest rate and the APR are the same ??, i.e., on the Note the interest rate is 8.990% yearly; on the Construction Rider to the Note: "During construction, the fixed rate interest is equal to 8.990%; the TIL is estimated at 8.983% APR; and the loan app is 8.990%. There are no other interest rates -- is that correct?

I have a call in to the title company but have not received any answers. Signing is not until Saturday, but they own a liquor store that is only a few blocks from me and I'm going up in 45 minutes to look at their paperwork and to try to explain the purpose of having to have witnesses, which caused more confusion and got them upset on the phone -- so maybe I can do a better job of explaining it in person.

Reply by CarolynCO on 7/28/05 4:03pm
Msg #55397

Re: Continuation question ...

Okay, I just met with the Borrowers and I *think* they now understand the purpose of the Witness(es), although they did ask if I spoke Vietnamese (fair-skinned, blue-eyed blonde, I don't think so). Do they offer Vietnamese in school ?? (I can, however, go to France and get a glass of water at the library and sit by the window -- that's the extent of what I remember from my French classes.)

At any rate, the Title Company still hasn't returned my call. Their package mailed to their house contained a commitment letter showing the initial interest rate lower than the interest rate in my docs (I don't have a commitment letter in my package);
and then it breaks down the Index, Interest Rate Cap, Max. Periodic Adj. Thereafter and the Max. Lifetime Adj.

Can someone explain to me what these figures mean/represent? -- remember, this is a construction loan.

I don't think this commitment letter is any good because it is dated July 8, 2005. There is a paragraph at the bottom:
"By electing to "play the market" you understand that the Initial Interest Rate, Origination Fee, Discount Points, Indes, Margin, and Rate Caps are not guaranteed. These loan terms will be established when you elect to lock-in. You may contct the Lender to lock-in your Interest Rate, Origination Fee, and Discount Points up until five business days prior to your closing. If your closing date is scheduled and you have not contacted the Lender before the fifth business day prior to closing to lock-in these terms, THE INTEREST RATE WILL BE THE RATE ESTABLISHED BY THE LENDER IN ITS DISCRETION AS ITS PREVAILING RATE FIVE DAYS BEFORE CLOSING. IF LESS THAN FIVE DATS' NOTICE IS GIVEN FOR CLOSING, THEN THE RATE WILL BE LOCKED ON THE DATE OF NOTIFICATION."

They never signed or returned this commitment letter, so they haven't locked in anything, right? And I would assume from the the above, that the title commitment is moot ???

Reply by CarolynCO on 7/28/05 4:33pm
Msg #55407

Re: NEVER MIND - I am now educated ...

on construction loans. I finally got through to a cell number for someone at the TC who thoroughly explained construction loans to me. Long story short, borrowers are not responsible for paying the construction loan -- the builder is. Upon completion of the home, then the borrowers will get an *end loan*and they will then be able to get a better interest rate for when they actually start making monthly payments.

A construction loan is really quite an interesting process.

Reply by Becca/FL on 7/28/05 5:16pm
Msg #55417

Re: NEVER MIND - I am now educated ...

Carolyn - Florida does construction to perm. loans. During the building process, the builder pays the interest on the constrution loan and the buyers will sign modifications to the loan as the construction progresses. The bank or lender then doles out money to the builder for each building phase. When the house is COed the final modification is the home loan to the buyers.

Is there also a lot closing in the pkg? If so, you have a double closing, charge accordingly. On page 1 of the HUD you may see a builder credit for unused portion of funds to be disbursed through future modification. I know, it is VERY confusing if you have not done one before, but you are likely to get two or three more assignments out of it.

Good luck and feel free to call me if I can help. Search zip code 32960 to find me.

Reply by CarolynCO on 7/28/05 5:55pm
Msg #55427

Re: Thanks Becca

I have put the package away, but will look at it more closely tomorrow to see if there is a lot closing.

I understand the construction loan process much better after finally talking to someone on the phone and especially after your post. Thank you.

I may be calling you if I need you to hand-hold me a little. I'll owe you big time.

Reply by IrisWA on 7/28/05 11:34pm
Msg #55531

I was just about to ask about construction loans

when I came across your post ... I have no signing, but the fact that it was running through my mind may be an indication of one to come soon???

When I was working at the title company, I handled primarily refinances, a few P&S, and a few construction loans. They ALWAYS confused the heck out of me and I have not a clue about what the documents are. I do remember that someone paid interest only on the loan until the house was built and then the loan was somehow converted to a P&S.

If you'd care to share about what you learned CarolynCO, I'd be most appreciative.

Thanks.