Construction Loans

Building is stressful enough. Let us help ease the financial part.

What is a construction loan?

Construction loans are a 31 year term with the first year being interest only based on the funds disbursed. The loan is originated by BayCoast Mortgage Company and serviced by BayCoast Bank. The bank will hold back 100% of the construction costs, and advances are made once the work has been completed and verified by the appraiser. The bank does not pay for items ordered or stored. They must be attached to real estate. The cost of inspections are deducted from each advance. Borrowers are required to open a BayCoast Bank account, and each advance will be placed into the BayCoast Bank account.

What are acquisition costs?

Acquisition costs are land value plus the hard cost to build. This does not include soft cost items such as: architectural, engineering, survey, permits, school taxes, utility connection fees and any other fees incurred before the actual construction can begin.

What determines the Loan to Value?

It is determined by dividing the loan amount by the lesser of the purchase price (lot price plus construction costs) and the as-completed appraised value (projected value of the lot and finished house).

How do you determine land value?

Land value is the present value of the property if owned more than a year or acquisition cost, if owned less than a year based on purchase price.

Can I be my own General Contractor?

Unfortunately, no.

What if items come in higher than expected? Will the bank cover them?

No, the bank is not responsible for cost over runs.

What if we have additional money left over?

Any additional funds will be applied to your principal balance at the end of construction.

Is this a one-time or two-time closing?

This is a one-time closing.

What items are needed for a construction loan?

A fully executed construction contract, plans and specs, a valid contractors license, copy of GC’s liability insurance, homeowners to obtain a builder risk or construction rider to their Homeowner’s insurance policy, a copy of foundation permit (if applicable), a copy of building permit, verification lot is buildable and a fully executed construction loan advance schedule.