Log Home Financing, Log Construction at Summit Log Products

If you need construction financing or mortgage financing, Summit Log Products can obtain lender information for you or work with the lender of your choice. In either case, we have found the following information to be a generalization of lender requirements. Click Here to calculate your log home or log siding mortgage.

PRE-QUALIFICATION

Purpose: To provide borrower an estimated budget amount.

** Verbal Only--income and asset information is verbally provided by borrower. An application is not made at this point. Pre-qualification is only as accurate as the information provided (it is not verified).

** Single Bureau Credit—a single bureau credit report is pulled at this time to get a general idea of the borrower’s overall credit worthiness (at the borrower’s request). A more detailed credit report will be pulled at application.

** Maximum loan amount—borrower’s can be pre-qualified for a specific loan amount they have chosen or they are given a maximum loan amount. Loan amount less land payoff equals construction costs they can afford.

** Time Frame—completed via brief phone call with a lender representative

A pre-qualification does not always mean the borrower(s) will be approved for a mortgage. The loan is subject to a full application, receipt of all necessary documents, and underwriting review.

Purpose: A complete mortgage application that, when approved, is a commitment by a lender.

** Application—a telephone interview (approx. 1 hour) takes place between the borrower(s) and your representative. At this time, a detailed credit report is pulled to determine the borrower(s) credit. This information is put through a preliminary underwriting system and printed on an application document.

** Application Package—the representative will send an application package to the borrower(s) with all necessary compliance documents for signatures. Once the borrower(s) returns the application package and all necessary documents, the information taken over the phone is verified. Any new information is reviewed by the underwriting department.

** Underwriting—a process that provides a loan decision. The representative will review the loan decision and make any necessary phone calls and collect any additional information. Once the loan is approved a commitment letter is issued.

** Commitment Letter—if approved, a commitment letter will be issued stating the loan amount approved for and other conditions to be met prior to the loan closing.

** Condition requirements—additional documentation that is needed to schedule the loan to close. For example; title insurance, homeowners and flood insurance (if necessary), verification of any money being used in the transaction, contract from builder, appraisal, etc.

Purpose: To determine the fair market value of the home based on the sale of similar homes (comparables) in the area. The appraisal is the basis for the mortgage.

** Plans—a complete set of plans for the home is required. Plans should include all elevations. It is possible to use a preliminary set of plans as long as the basic footprint of the house does not change in the final plans. Changing the footprint of the house can significantly alter the appraised value of the property.

** Specs (specifications)—a complete set of specifications for the home describing all the components of the home will be required. This information will be provided to the appraiser. Wood floors compared to linoleum could change the value of the home.

** Manufacturer Contract—a complete and detailed contract from the manufacturer of the home will be required. The contract must include all addendums; price changes applicable taxes, and freight charges. A representative of the manufacturer and borrower(s) on the mortgage also must sign this contract.

** General Contractor/Builder Contract--builder or general contractor is doing all phases of work on the house; a contract must be signed by the GC and borrower(s). The contract must be for labor and materials.

** Self Builds/Owner Builders Contract—signed estimates for labor and materials on letterhead from all sub-contractors must be provided. If the borrower is doing some of the work themselves, then signed materials estimated from the suppliers must be provided. Specific guidelines are required to be eligible to act as your own general contractor.

** Appraisal—the Lender must approve all appraisers. If they are not on the approved appraiser list they may be added after supplying the necessary documentation. Once all construction documents have been provided to your representative and approved by the appropriate parties, the appraisal of the home will be ordered. Appraisers are also required to do progress inspections during construction.

Purpose: To establish a schedule of when money will be paid during construction as work is progressing on the home. A draw schedule is prepared by builder and approved by the lender’s Construction Department.

** Final contract from manufacturer—will be required to insure that all changes to the house have been accounted for and the lender has received any changes in price.

** Payment terms—a set contract between the manufacturer and the lender determines when the payment of the home is to be released.

** Freight—is to be included in the contract to insure that the cost of transportation of the home to the job site has been accounted for.

** Taxes—normally included in the contract and sent to the manufacturer. If not, it will be borrower(s) responsibility outside of the loan.

** Maximum loan amount—the highest amount a borrower(s) may receive from the lender to prepare for cost overruns.

** Cost Overrun Fund—with sufficient equity, between 5%-20% of the construction cost (in addition to submitted cost) can be added to loan amount and set aside for cost overruns or upgrades to the home during construction. Invoices for overrun or upgrade must be provided to disburse funds.

** Draw Review—once the draw schedule is completed, it should be reviewed by the builder and borrower(s).

** Revisions—revisions to the draw schedule are acceptable prior to the initial settlement. Any revisions after settlement will result in a revision fee to the borrower.

Purpose: Execution of mortgage documents to allow the Construction phase of the mortgage to start.

** Borrower’s Attorney or Title Company—borrower will supply the name of the attorney or settlement company they wish to have facilitate their settlement (or closing). The lender will prepare the mortgage documents and send them to the attorney. The attorney will order title insurance and collect tax information, which will be relayed, to the lender. The borrowers will go to the attorney’s office to sign all the documents. Once the mortgage has been recorded by the attorney at the courthouse, the documents will be sent back to the lender.

** Signed mortgage documents—all mortgage documents must be signed and returned to the lender by the Title Company or Closing Agent/Attorney before the lender is able to disburse money according to the terms of the draw schedule.

** Draw schedule is signed and becomes binding—the draw schedule is signed by the builder and the borrowers at settlement and becomes a binding contract at that pint. As indicated Draw Schedule section, revisions to the draw schedule after settlement will result in a revision fee to the borrower.

** Closing costs—the borrower may be required to pay a portion of their closing costs at settlement. The lender’s fee, the attorney’s fees, the title insurance premium, and homeowners insurance are some of the fees the borrower may be Required to pay at settlement. Your lender representative will be able to provide the borrower a good Faith Estimate during the Application process to give you an idea of what the total closing costs will be.

Purpose: systematic disbursement of construction funds as work is completed on the house according to the terms and conditions set forth in the draw schedule.

** Building permit—a building permit must be received by the Construction Department prior to any monies being disbursed.

** Package returned to the lender—fully executed closing package and recorded mortgage must be returned to the lender prior to monies being disbursed.

** Deposits to builders—any deposit monies payable to builder per contract and draw schedule will be sent out.

** Deposits to borrowers—any deposit monies payable to borrower per draw schedule will be sent out.

** Inspections—with exception of deposits and home deliver, an inspection report must be ordered by and received by the construction department prior to any monies being disbursed. Inspections verify completed work per signed draw schedule.

** Title bring downs—in applicable state, a title bring down must be done prior to each draw being disbursed. Bring downs verify that no liens have been filed against the property since the last bring down. If a lien has been filed, no money will be disbursed.

** Interest only payments—during construction, the borrower will make interest only payments to the lender based on the amount of money the lender has disbursed to that point. They will be billed each month for the interest.

Purpose: conversion of the construction loan into a permanent mortgage so that repayment of principal can begin.

** Final inspection—a final inspection will be ordered for the home to insure that all work has been completed and the original appraised value still stands.

** Final bring down—final title bring down will be performed to insure that no liens have been filed against the property.

** Escrow—if applicable, escrow accounts will be set up for real estate taxes and homeowners insurance.

** Final loan amount –the construction loan principal amount can be reduced at this time to the final loan amount.

** Additional Modification fees—any fees due per your good faith estimate provide after application.

** FedEx—the Construction Department will prepare the modification package and overnight it to the borrower. They will generally have 48 hours to sign the documents and overnight them back to the lender.

** PITI-at this point the borrower will begin to make their monthly mortgage principal and interest payment (with real estate taxes and homeowners insurance if applicable).