Choose an AMC Preferred Builder and take advantage of valuable incentives when financing your home.
If your building a house, consider having one of AMC Mortgage's preferred builders build your home.
AMC Mortgage offers a closing costs credit up to $2500 when using an AMC preferred builder. This comes with no increase to the rate or normal closing cost fees.
If you a builder and would like to know more, contact your favorite AMC loan originator about participating in the preferred builder program.
THE AMC CONSTRUCTION LOAN
The loan program to meet your needs.Are you building a custom home?
How you finance the construction of your new home is one of the most important things to consider. Let AMC be your lender. We are known for exceptional customer service and understand the needs of both the home buyer and the builder.
AMC Construction Loan Process takes you from ground-breaking to move-in, in one easy process. At AMC you will be working with construction loan specialists who are able to answer questions for you and your builder. This will insure the home construction progresses smoothly with no surprises along the way.
The Loan Program to Meet your Needs –
The AMC Construction Loan
The AMC Construction Loan is designed to build a primary residence or second home. Working with AMC Mortgage for both the construction phase and permanent financing, allows AMC to reduce the duplication of closing costs. When the construction is completed, the loan converts to a permanent mortgage saving considerable time and money. Construction time periods vary from 8-12 months, depending on loan program to allow time to build the new home and sell the existing home.
Construction process FAQs
Traditionally, construction loans are done two different ways. The first option is a construction-permanent mortgage and the second option is a construction-only mortgage.
A construction-permanent mortgage is both your construction loan and long term mortgage combined into one loan, which means you only have one closing for both your construction loan and your long term mortgage. This saves you time and money. Best of all, with this type of construction loan, your interest rate is guaranteed up-front, which means that you don’t have to lose sleep over what happens to interest rates while your home is being built. You have peace of mind knowing exactly what your interest rate and monthly payment will be.
A construction-only mortgage is just that. It is a short term mortgage that provides financing for just the construction period. Your end loan (permanent long term mortgage) is taken out upon completion of your home. Your construction loan and end loan are two separate loans, which means you have two separate costs and generally the interest rate for your end mortgage is NOT guaranteed until completion of your home.
We will typically finance up to 90% of the cost to build your home (land and construction cost). In some cases you can borrower your down payment and have it be an acceptable source of funds provided that the loan is secured by an asset in which you have sufficient equity and your income can support the required monthly payment.
Your monthly payments are interest only and are billed on a monthly basis. The amount of interest you and your builder are billed is based on the actual amount you and your builder has drawn against your construction loan. Your payments will gradually increase as your builder draws funds toward the completion of your home. You will only pay interest on the actual amount borrowed and for the actual period of time it was borrowed for. This ensures you do not pay interest for funds that you did not use. Interest only payments help to keep your total costs during construction as low as possible.
Your full monthly payments (both principal and interest) will begin once your home is completed and your mortgage converts to your permanent mortgage. An escrow account for taxes and insurance will be added to your monthly payment at this time.
With a construction permanent mortgage, the rate for both your construction loan and permanent mortgage are locked in at the time you close your construction loan. Because you close on both your construction loan and end mortgage at the same time, you have the peace of mind in knowing what your rate is, and, best of all, you only pay one set of closing costs. If interest rates at the time your home is completed are lower than the interest rate on your construction loan, you can pay nominal cost to have your interest rate reduced (some restrictions apply). This option is only available once your home is completed. With this flexibility you can have your cake and eat it too!
With a construction only mortgage, you have two separate closings. AMC Mortgage has negotiated with title companies to eliminate the duplication of title fees to reduce closing costs to our customers.
Yes, these projects are more complex to finance and generally will take more time tailoring the construction loan to you and your builders specifications. In addition, these projects can often times have difficulty with an appraisal. This is especially true if your home with the addition will be one of the larger homes in your neighborhood.
There is probably no reason to pay off your lot loan prior to the construction loan. If you have a lot loan, the new construction loan will pay off that lot loan just like any refinance would. The lot and the new improvements constitute only one piece of real estate, and the lot loan has to be paid off so the bank ends up in a first lien position. If you pay the lot loan off prior to applying for a construction loan, you may be handcuffing yourself by putting too much cash into the deal. Construction loans are almost always “no cash out” loans, so it may not be possible to get this cash back on acceptable financing terms. You are often better off having cash on hand during construction to handle upgrades and changes.
Depending on your overall financial position, you may be required to sell your current home prior to qualifying for a construction loan. Well qualified borrowers may be eligible to finance the construction of their new home without selling their existing home prior to the start of construction. We will discuss specific options that may be available to you upon receipt of your loan application.
At the time we close on your construction loan, you will have to furnish your down payment. For example, if the home you are building costs $200,000 and you will only be financing $100,000, you will need to furnish your $100,000 down payment at the time we close your construction loan. The $100,000 down payment is held by the bank and is used to fund your builder’s draws. Once we have exhausted your funds, we will begin to fund the builder’s draw requests from your construction loan. There is no interest paid on your down payment.
No. No lender will enter into a deal where the end result is an unfinished house. You could leave items such as landscaping, a swimming pool, finishing a bonus room, a security system, ceiling fans, and a garage door opener out of the build. However, you cannot leave out items such as cabinets, floor coverings, or a driveway. In addition, all items that were included as part of your plans and specifications will need to be completed. In other words, you must build a minimum of what you disclosed to us you were going to build. If you build less that what was disclosed, your loan amount will be adjusted down in most cases and there may be serious problems with the bank and building inspector.
No. All lenders require a clear title, and this situation can be thought of as a title problem. There are some exceptions to this rule and you should contact me for details if this is applicable to you. Many title insurers will no longer insure these projects which may eliminate this from being an option. If you have sufficient funds and can build the house for cash, you can take a mortgage out on the home upon completion. However, the title company will require evidence and waivers of lien to insure all subcontractors have been paid. If you do not have sufficient funds to build the home for cash, you must close your construction loan before you break ground on your home.
Yes, however, we do require that your builder complete a builder review application. We will check for “happy homeowners” for whom the builder has completed similar projects and vendor references to insure they have a good history with the builder. While we do conduct a review of the builders qualifications, we do not warranty the builders work or their ability to complete the project according to contract terms. In the end, you as the homeowner are ultimately responsible for your builder selection and should research your builder in depth prior to executing a contract.
Again, the answer depends on the builder and the builder’s proposed draw schedule. A rule of thumb is that we typically do not like to do draws at less than 2 week intervals, but nothing is cast in stone. If frequency of draws is a hot issue for your builder, we can usually handle the arrangements. We do require your signed authorization before releasing any funds to your builder. In addition, we will not allow the builder to draw funds for work and/or items that have not been completed. We will have the appraiser inspect your home each and every time the builder request funds. What the builder is requesting funds for must match up with what the appraiser says is completed.
Yes, you can. A common occurrence is that the borrowers have now sold their previous residence, and they wish to use some of these funds to buy down the construction loan prior to the loan flipping over to their long term mortgage. You can make a principal payment of any amount, we will apply your payment and “re-calculate” your payment on your permanent mortgage for you.
Yes! Provided a current appraisal of the land supports equity in your land, you may be able to count some if not all of any equity position toward your down payment.