Construction Loans to Build Your Future

A Construction-to-Permanent loan is a single-close loan that includes a specific number of months of construction financing plus up to 30 years of end financing in one loan. For example, a 30 year Construction-to-Permanent loan with Independent Bank may include a 12-month construction period, as well as a 30-year principal and interest period. The Construction-to­ -Permanent loan has only one closing, one set of closing costs, and the loan terms remain the same throughout the life of the loan.

No. If you do not own the lot free and clear when applying for the Construction-to-Permanent loan, the lot will be paid off at the construction loan closing.

Absolutely not! That’s the beauty of our Construction-to-Permanent loan. Your documents were created specifically to cover both the constructing and permanent phases of your loan. There may be some forms to sign in order to update your file, but you can be assured that you have permanent financing when your home is complete.

Generally, you will be able to borrow a percentage of the future value of the house, regardless of how long you’ve owned the lot or the total cost of the build. Lot equity can be used as a source of down payment as long as the appraised value is adequate.

The appraiser uses the plans and specifications provided by the builder, along with the vacant property on which the house is to be built, to determine what the value of the property will be once construction is complete.

Yes. In this case, the amount that can be borrowed is based on the future value of the property, after the construction or remodel is complete. If you are contemplating a teardown or extensive remodel, you should discuss these plans with your Loan Officer.

Before Independent Bank will provide construction financing for a project, the builder/general contractor must be on the Independent Bank Active Builder list. To be added, each builder is required to complete the Independent Bank Builder Profile and supply copies of their license and proof of insurance. Please refer to ‘Builder Activation Process’ on page 8 for more details.

Independent Bank does not offer the ability to “self-build” a personal residence.

Independent Bank Construction-to-Permanent loans have a construction term of 12 months. The construction loan term begins at closing.

Independent Bank encourages you to make sure you are comfortable with your builder prior to executing a Building Contract. When issues do arise, every effort should be made to try to find a resolution that works for all parties involved. It is very costly to everyone to cancel a contract. In addition, it may be a challenge to find a new builder to take over a started project.

You’ll pay interest only on the principal balance disbursed when the billing is generated.

Appraisers do a very good job of determining fair value. In the event that the appraised value is lower than expected, you may be required to bring additional funds to close. This will depend upon the loan-to-value ratio that results once the appraised value has been determined. Loan-to-value is determined by dividing the principal balance of the loan by the lesser of the property’s purchase price or appraised value. Should a low appraised value occur, your Loan Officer will discuss the available options with you.

Not necessarily. Consult with your Loan Officer. Independent Bank has financing options to assist, such as bridge loans.

Cost overruns are a legitimate concern. Overruns can occur due to unforeseen circumstances or change orders for extras added by you as the project is built. All cost overruns and change orders that increase the overall cost of construction must be paid out of pocket by you before any additional draws will be released to your builder.

• Once appraisal is complete and all pertinent financial information is received, your application will be reviewed.

• Upon approval of your loan request, you will be contacted by your Loan Officer.

• Shortly after, Independent Bank will contact you to schedule a closing to sign the loan documents.

• Your builder should not start construction of your home until after your loan has closed.

• The mortgage must be recorded and a notice of commencement filed before any work can be started.

• The start of construction prior to our notification may result in the cancellation of the loan commitment.

include a monthly non-complete fee for each month, full or partial, past the original completion date.

There are fees assessed with the approval to extend the required completion date.

There may be fees assessed*

• A monthly extension fee of 0.3%* will be assessed for each month (or partial month) that the Required Completion Date is extended. For example, if an extension of 2.5 months is requested, the total extension fee would be 0.9% of the loan commitment.

*Subject to change

If construction is completed earlier than anticipated, you have the option to move into your principal and interest payments early. In the case of early conversion, you will be asked to sign a loan modification document which must be signed in front of a notary.

You will need to work with your builder to determine when you will able to take occupancy of your new home. Most builders require the final draw to be funded prior to releasing the keys to homeowners.