But, you know what this means?
The land is ours!!!
Like official official. The deed will get recorded tomorrow morning and we can pick up our copy on lunch tomorrow.
So how does all the payment stuff work you ask? That was definitely our main question when starting this construction loan process. Here is how it works.
We have a loan in the amount we need (for land and the home build) minus the down payment we agreed upon with the bank. As an example, let's say we needed $100,000 for everything (I wish!), and agreed to $10,000 down payment. That means we have a loan for $90,000. After we signed the papers today, the first "draw" on the loan is made to pay our closing costs and to our builder for the land purchase. Let's say that was $10,000. We have $80,000 left on the loan to build the home and the $10,000 down payment is in our private bank account. We can use the $10,000 down payment whenever we see fit - either use it early to keep our payments lower and keep a higher equity amount, or use it towards the end if we come in under budget, that keeps cash in hand for us. .
Monthly payments are made based on the amount that has been drawn each month and are the interest only. A construction loan does have higher interest rates than a conventional loan, so we will be on a tight schedule so that we can close the construction loan and convert it into a mortgage loan as soon as we can.
When we need to make a payment to our builder, or reimburse ourselves for items we may purchase, we call our loan officer and ask for a transfer to be made on the loan to our checking account. That may be different depending on the bank. Seems pretty antiquated, but that is how they do it, so we roll with it. Our county also doesn't have any electronic payment options for your utility bills and you must pay them in person every month.... I digress. So we call our bank and ask for transfers as needed to our builder, or submit receipts for purchases we make.
Since we did a cost-plus build agreement, it will be on us to make sure we are keeping items and decisions within budget.
All in all we are super excited to get started and footers might be going on this week. This part all depends on the weather. It has been fairly wet here but we are hoping for some clear days soon (and all in a row).
No photos here to update you. Neither of us thought about it during all the signing that we should photograph this moment. Ahh well. We have another opportunity for photos when everything is done and we are signing for our mortgage loan.
See Y'all Next Time!
Liz and Mike
So how does all the payment stuff work you ask? That was definitely our main question when starting this construction loan process. Here is how it works.
We have a loan in the amount we need (for land and the home build) minus the down payment we agreed upon with the bank. As an example, let's say we needed $100,000 for everything (I wish!), and agreed to $10,000 down payment. That means we have a loan for $90,000. After we signed the papers today, the first "draw" on the loan is made to pay our closing costs and to our builder for the land purchase. Let's say that was $10,000. We have $80,000 left on the loan to build the home and the $10,000 down payment is in our private bank account. We can use the $10,000 down payment whenever we see fit - either use it early to keep our payments lower and keep a higher equity amount, or use it towards the end if we come in under budget, that keeps cash in hand for us. .
Monthly payments are made based on the amount that has been drawn each month and are the interest only. A construction loan does have higher interest rates than a conventional loan, so we will be on a tight schedule so that we can close the construction loan and convert it into a mortgage loan as soon as we can.
When we need to make a payment to our builder, or reimburse ourselves for items we may purchase, we call our loan officer and ask for a transfer to be made on the loan to our checking account. That may be different depending on the bank. Seems pretty antiquated, but that is how they do it, so we roll with it. Our county also doesn't have any electronic payment options for your utility bills and you must pay them in person every month.... I digress. So we call our bank and ask for transfers as needed to our builder, or submit receipts for purchases we make.
Since we did a cost-plus build agreement, it will be on us to make sure we are keeping items and decisions within budget.
All in all we are super excited to get started and footers might be going on this week. This part all depends on the weather. It has been fairly wet here but we are hoping for some clear days soon (and all in a row).
No photos here to update you. Neither of us thought about it during all the signing that we should photograph this moment. Ahh well. We have another opportunity for photos when everything is done and we are signing for our mortgage loan.
See Y'all Next Time!
Liz and Mike
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