Posted by CHRISTINA KHANDAN on 9/22/05 8:31am
Msg #66621

construction loan in california

Good Morning everyone,
I have a quick question. I have done signings for a while now and never had a construction loan until today. I personally don't have the loan docs the lender/broker is bringing them with them to the signing. Now my question, what do I need to know about a construction loan and what items need to be notarized or not?

Thanks for your help!

Reply by Kiso on 9/22/05 9:53am
Msg #66643

I've never done a construction loan myself, but just think of it this way, it's basically like doing a loan with a lender whose docs you've never seen before. Sign where it says to sign, initial where there's a place for initials, notarize where it has instructions. If someone from the lenders office is going to be at the signing with you, then they'll probably be taking care of most of it for you. Best thing to do is to call them and ask them, just in case

Reply by Iris_WA on 9/22/05 10:14am
Msg #66646

Christina -- I'm not able to be of much help having done only one or two of these about two years ago. One of the highlights I (think I) am remembering accurately is that the Borrowers are going to be paying interest only on the loan until the construction is finished, at which time, it converts to a regular loan.

Also, although I am not certain of this next statement ... it vaguely tugs at my memory that it was something like a credit line. ???

I am eager to see the input from those more experienced with construction loans. I'd love to learn more about it.

Good luck!

Reply by B__CA on 9/22/05 10:56am
Msg #66664

Hopefully the lender/broker will know more about the loan than the ones I have dealt with on the loans I have done. Sometimes there are documents that list supplies and such in the package. Some of the documents may have forms that the builder needs to sign and they generally need notarized. In that case they may also send him a package. I did have one loan with the borroers, builder and broker, took two hours. Allow extra time as these generally take longer when the lender is there.

There are generally more notarizations to do than a standard refi.

The question that arises in most that I have done is how or when does the builder get paid. That is not a question that we can answer, but they expect us to know. The lender generally doesn't have the answer surpisingly. I do know on my own construction, it was setup so that after the builder completed a certain amount of work and got an inspection, he got a check each time. Most have it this way.

If the borrower asks you a question, give the question to the broker if it is one you shouldn't be answering. "That's a good question, but it should be directed to Mr. Broker, he is working with them and is more qualified to answer." Maybe they will get the hint and direct future question to the broker. I'm just trying to save you from being frustrated with the situation.

On all the loans that I have handle refi, pruchases and construction that have had the broker there, they have NEVER wanted to present the package. If they want to let them!

Reply by CHRISTINA KHANDAN on 9/22/05 11:46am
Msg #66701

Thanks guys for all your input. I just hope I do this well and it doesn't seem like this is the first time I am doing this. Will let you know how it went.