When Does My Construction Loan Term Begin?
Your construction term begins on the date that you sign your loan documents. It is important to know that your Construction-to-Permanent Loan is a reimbursement program. Your funds are disbursed as your home is built.
How Do I Get My Money?
At closing, you will sign a Construction Disbursement Account Information form that describes the bank account you opened for the purpose of receiving wired funds.
How Much Can I Get for Start-Up Costs?
To help get your project started, First Capital will automatically fund all of the off-site ("soft") costs plus 5% of the on-site ("hard") costs, excluding your builder’s overhead, within 48 hours of your loan closing. In order to complete this initial funding, we must have your fully executed Construction Disbursement Account Information form.
Can I Get Reimbursed for Pre-Paid Items?
Pre-paid items that are reflected in your budget and used as your equity contribution are not reimbursable.
What Are On-Site Costs?
On-site costs are hard costs inspectable associated with the labor and materials used for the actual construction of the home. On-site costs are also known as "direct costs", "board and nails" and "hard costs improvements". On-site costs are disbursed based on all inspected percentage of the overall completion of the project rather than the line items allocated in the budget.
What are Off-Site Costs?
Off-site costs are indirect or soft costs not directly related to labor or materials for construction and are non-inspectable. Examples of off-site costs include building permits and
architectural fees. Off-site costs are automatically funded within 48 hours of your loan closing if wire instructions were provided at closing. However, off-site costs such as builder overhead/supervision are disbursed in proportion to the percentage of completion of the home.
After your loan is funded, you can conveniently access your construction loan online – request funds, check balances and the status of a funds request.
What are Deposits?
Vendors for items like cabinets, light fixtures, windows, appliances or any other specialty improvement that requires custom craftsmanship usually require deposits. IndyMac will release up to 50% of the total amount budgeted in the specific line item for the following deposits upon receipt of vendor invoices:
- Windows/doors
- Countertops
- Cabinets
- Special order appliances
- Flooring
- Custom lighting
- Rough framing materials
How Does The Disbursement Process Work?
Disbursements on a construction loan are designed to reimburse the borrower as the construction of the home progresses. IndyMac will disburse construction proceeds based on the amount of work that has been completed on the project. For example, if your construction budget is $100,000 and your project is 10% complete (based on our inspector’s view), we will disburse you up to $10,000 on the project. This disbursement would be in addition to any advances or deposits that you may be entitled to receive. Disbursements for on-site or direct cost expenses must be verified by an inspection.
How Do I Request A Draw?
Contact our draw department to request a draw as per your draw schedule. No verbal draw requests are allowed.
How Will I Know If My Draw Request Has Been Approved?
When we receive your Draw Request in our Disbursement Unit, we immediately order an inspection to verify the status of construction on your home. The inspection is performed within 3-5 business days from the time we receive your Draw Request. When the inspector verifies the percentage of completion and we receive verification from the title company that your property is free of mechanic’s liens, your Draw Request will be funded. We advise that you verify your bank’s receipt of funds prior to issuing checks. Please note that your funds may not be available until the next business day.
How Long Will It Take For Me To Get The Funds After I Make My Draw Request?
Deposits and off-site cost expenses can be funded within 48 hours of receiving a paid receipt or invoice. Draw Requests submitted via the Web will be funded within 3-4 business days. Draw Requests submitted by fax take 5-7 business days to fund. For on-site expenses, your disbursements will be released after IndyMac has received an inspection report performed by our local inspector and an update from the title company indicating the title to the property is free and clear of any liens. Your Customer Service Representative will review the inspection and title report and disburse your request up to the project completion percentage. This process may take up to 7 business days.
How Many Inspections Are Allowed And What Is The Cost?
First Capital allows you to request two draws per month. The Administration Fee was paid when your loan closed covers your inspections costs.
Who Does The Inspections?
Inspections are completed by a qualified professional third party, contracted on behalf of First Capital.
What Is The Lender’s Contingency Account?
A Contingency Account is money set aside for unforeseen circumstances or cost overruns that may occur during the construction or improvement of a home. Disbursement of these funds is on an “as needed” basis and will generally be in proportion to the completion of the home. Of course, as with other costs, a Draw Request is required for disbursement of these funds. In addition, evidence of the overrun in the form of receipts, paid invoices or canceled checks will also be required. Once construction is complete, any money remaining in the Contingency Account can be disbursed to the borrower upon request.
How Are Deposits For Kit and Modular Homes Handled?
We can disburse 75% of the funds allocated for the kit and modular home as a deposit which must be wired directly to the kit home vendor. Wire instructions for the vendor and a W-9 verifying the vendor tax identification number must be submitted with the request for the deposit and/or final payment.
What If I Need An Extension Of My Construction Loan Term?
Loans that go beyond the required completion date are technically in default pursuant of your Construction Loan Agreement. If the loan has gone beyond this required completion, all loan draws are on hold until an extension is granted. You need to contact your Customer Service Representative 30 days prior to your required completion date if the construction is not at least 95% complete.
Is There A Fee If I Need An Extension?
YES, there is a free associated with an extension of your required completion date.
The fee is:
- .50% of the loan commitment per month or
- .25% of the loan commitment amount per month if you agree to a one year prepayment penalty
- NO fee if you agree to a three year prepayment penalty
What Is Required To Roll The Construction Loan To A Permanent Loan?
Loans are rolled to the permanent phase effective the first of the month. The final Draw Request should be received no later than the 15th of the month prior to your roll over date. Our Roll-to-Permanent Department will contact you once the final disbursement has been made. When you make your Final Draw Request and submit all required final conditions, your Customer Service Representative will prepare your loan file for processing and re-pricing by the Roll-To-Perm Administrator. Loans are rolled to the permanent phase effective the first of each month. Your loan would then be eligible to “roll” from the construction phase to the permanent phase. Our Roll-To-Perm Department will contact you and inform you when your loan will convert into the permanent loan.
How Do I Make My Final Draw Request?
You can make a Final Draw Request when the home is approximately 95-100% complete. You can request the remaining 10% of your construction funds and roll your loan to a permanent status, provided that the Final Conditions are satisfied. In addition, your loan must be in good standing according to the terms of your Construction Loan Agreement. Once your final Draw Request has been funded, your construction loan will be rolled into a permanent loan.
Final Conditions: If You Are An Owner/Builder:
In addition to the Certificate of Occupancy or Final Building Sign-Off (Septic Certificate for Texas properties) you must provide the following:
- Final Draw Request
- Affidavit from you stating all material providers and subcontractors have been paid in
full
- Copy of the Recorded Notice of Completion (except Colorado)
- Copy of ILC (Improvement Location Certificate)
- Evidence of current homeowner’s insurance
- Final Progress Inspection at 95% or more complete
- Your mailing address and e-mail address for future correspondence
- Verification from title company evidencing no liens on property
If Your Home Was Built Using A General Contractor:
In addition to the Certificate of Occupancy or Final Building Sign-Off (Septic Certificate for Texas properties), you must provide the following:
Final Draw Request
- Affidavit from general contractor stating all material providers and subcontractors have been paid in full
- Copy of the Recorded Notice of Completion (except Colorado)
- Unconditional Lien Waiver Upon Final Payment signed by general contractor
- Copy of ILC (Improvement Location Certificate)
- Evidence of current homeowner’s insurance
- Final Progress Inspection at 95% or more complete
- Final Progress Inspection
- Your mailing address and e-mail address for future correspondence
- Verification from the title company evidencing no liens on property
