Construction Loans
If you’re looking for a construction loan or even a one-time close construction loan, we’re here to help!
Gulf Coast Bank Home Loans offers construction mortgage loans in areas we serve including metro New Orleans & Baton Rouge as well as Florida & Texas.
Click here to find a loan officer near you
Construction Loan Options
Do you plan on building a new home or completing a major home renovation on your current home? With our unique experience in new construction lending, Gulf Coast Bank and Trust Home Loans is dedicated to making your dream home a reality.
Loan Types
- Fixed rate options are available
- Our one-time close option features only one loan and the ability to lock in your permanent rate from the beginning. The construction stage is an interest-only loan payment on the funds as they are disbursed. Once construction is completed, the loan will modify to a permanent loan with principal and interest payments and the official loan term will begin.
- Our two-close transaction includes two separate loans: one interest-only loan for the construction period and then a permanent mortgage once the home is completed.
There are pros and cons to each loan option so talk to one of our mortgage loan originators to decide which program is best for you.
The Construction Loan Process
Here’s an overview of how the process works:
Step 1: Apply Online
Once we determine which loan program best suits your needs and you have a contract with the builder of your choice, it’s time to apply for your mortgage.
In addition to the usual financial documentation required for a loan transaction, we will also request copies of your construction contract, plans and specifications, as well as the required insurance policies needed to start the process.
Step 2: Planning a Disbursement Schedule
Your contractor or builder will need to agree to our draw schedule. This is simply a plan for when payments will be made to you based on completed project milestones.
There are typically 5-7 disbursements depending on the size of your project.
Here’s an example of a disbursement (or draw) schedule:
Draw 1 - Foundation
Draw 2 - Framing, roof, exterior doors and windows
Draw 3 - Plumbing, HVAC, electrical, insulation, and drywall
Draw 4 - Interior doors, cabinets, and countertops
Draw 5 - Flooring, finishes, and Certificate of Occupancy (COO)
Step 3: Appraisal
An appraisal will be ordered based on the plans and specifications of your project. The appraisal is utilized to help ensure that the home’s ultimate value will be adequate for the loan amount.
Step 4: Mortgage Approval & Closing
Once all documentation has been approved by the underwriter, you will proceed to your loan closing or settlement. Once settlement has occurred and building permits are secured the construction of the home can begin.
Step 5: Construction
During the construction phase, your builder will request disbursement from the loan when each milestone is complete. Prior to disbursement, an inspector will visit the site to ensure the work has been completed.
During the construction phase, you will be responsible for interest-only payments on the funds that have been disbursed, real estate taxes and homeowner’s insurance.
Upon completion of your home, the parish or county will issue a certificate of occupancy and the lender will order a final appraisal which will be used to confirm all work is finished and the estimated value is still supported.
Step 6: Your Permanent Mortgage
If you selected a one-time close, your loan will be modified into a permanent mortgage with full principal and interest payments at that time.
With a two-time close, your loan will go through the approval stage one final time and you will have another closing to pay off the construction loan and begin the permanent loan.
FAQs
How long do I have to build my home?
We offer variable construction periods.
What happens if construction takes longer than planned?
You will need to apply for an extension and pay any applicable fees.
Do I need to own my lot before I get a construction loan?
No, you may purchase the lot with the construction loan.
What if I already own the land where my home is being built?
You may be able to use the equity of the land you own towards the down payment of the construction loan.
Do I have to make mortgage payments during the construction period?
You must make interest-only payments only on the funds which have been dispersed. You are also responsible for paying real estate taxes and homeowner’s insurance during this period.
Do you have any questions?
Gulf Coast Bank Home Loans has branches in metro New Orleans and Baton Rouge as well as Loan Production Offices in Tennessee, Florida & Texas.
If you are ready to get started with a construction loan, you can pre-qualify today.