Construction Loans Step by Step

It is imperative that you understand the process of obtaining a loan for building a new home prior to jumping in. Let’s go through the process of obtaining a loan, finding a builder, and awaiting your new home.

1: Check your credit! It is best to get all 3 reports from Trans-union, Equifax, and Experian. In addition, go ahead and grab your FICO score from one of them too!

2: Collect all financial documents to include daily/monthly expenses, net income, taxes, total debt, investments and assets. Check with your bank to get an exact list of what they will need.

3: Head down to your local bank or Credit Union and get pre-approved for a construction loan. There are a lot of banks that do not offer construction loans so calling around to find one could be beneficial.

4: Find a builder (Check us out). When researching a builder ensure they are licensed, insured, bonded, and have good reviews. The information you’ll need to get a loan will vary by bank or credit union, but you’ll generally have to include your offer; the builder’s work history, insurance, and references; home blueprints, specifications, and materials; a line-item budget; a draw payment schedule; and a signed construction contract with beginning and end dates.

5: Apply for your construction loan. This loan will pay the builder in segments as the work is completed. The builder will request draws, the bank will send an inspector, and when applied work is accounted for the bank will send a check to the builder. This usually happens once a month and you will only pay interest on money drawn.

6: Enjoy the construction of your new home! While this process is painstaking, it is well worth it.

Bartlett Homes & Services would love to assist you through this entire process. Outlined in our Preliminary Building Agreement (PBA) we will consult you on everything on the building side to help you getting your loan and building your house. This will ensure your plans are drawn and engineered to Building Code, a detailed budget is put together to ensure we are within your pre-approval guidelines, and a detailed schedule is put together. All of this you will have access to through our online portal making the experience worry and stress free! The goal of the PBA is to have all ducks in a row prior moving to contract signing. This also allows you to see how well we can work together before any final decisions are made. If you have any questions about the process of obtaining a construction loan or any questions about building a custom home please do not hesitate in sending us an email. We are always glad to help!