Mortgage Center

Construction Loans

Financing your new home from the ground up to move in day.

What do I need from my builder?

Contract for the purchase of the land, if you do not already own it.
Contract with a properly licensed general contractor. The general contractor will need to provide a sworn contractor’s statement to the bank.
The sworn contractor’s statement must include a listing of all subcontractors, their addresses, their portion of the contract, and the nature of the work they are responsible for completing.
Certificate of liability insurance for the builder and a Builders Risk Insurance policy during the construction phase of your new home.
Building permit
Plans(blueprints) and specifications for your new home.
Once the bank has received all these items, we will order an appraisal.

The borrower will need to deposit the money necessary to complete the construction with HTNB that is not being provided by the construction loan
The borrower and the bank will close the loan. The loan documents are standard mortgage documents. All loan fees will be collected at the time of the closing.
The contractor will submit requests for payment to the bank or its designee. An inspection will be done to make sure the work is completed and then the funds will be disbursed.
Sometimes projects change. You, the builder, and the bank should discuss changes and the costs of those changes prior to making the change to make sure that the cost is covered in your contract, your loan, or with other funds.

You will need to pay the interest outstanding on the loan each month. This is calculated based on the amount of the funds that have actually been disbursed for the construction. You do not have to pay principal payments during the construction.
You may need to pay additional inspection fees if changes were made to the original plans that require additional payouts or inspections.
You will need to pay for hazard insurance during the construction period. The bank will not escrow insurance or real estate taxes during this time.
If your property is located in a Special Flood Hazard Area as defined by the Federal Emergency Management Agency (FEMA), we will set up an escrow account to collect flood insurance premiums. This is mandatory for all homes build in a Special Flood Hazard Area.

Lot Loan

What is a lot loan? A lot loan is for the borrower that knows where they want to build their home, but isn’t quite ready to build yet. Hometown offers a loan product that helps you to buy your lot today so that you can build your home when you are ready.

Construction Only Loan

What is a construction loan? This type of loan is for the borrower that hasn’t decided which permanent end loan finanacing option is the best choice. Perhaps, you are selling your home, expecting money from another source, or haven’t decided what the best loan option is for you. A construction loan may be what you need.

Construction to Permanent Loan – Start To Finish

What is Construction-to-permanent financing? If you are building a new home, you can save time and money with Hometown National Bank’s construction-to-permanent financing This is one loan that allows you to finance the construction costs of the home and provides end loan financing in just one closing.

What Are Benefits To Me?

Peace of Mind – You will know prior to the start of your construction process that your finances are in place.
Certainty – You can protect yourself against rising rates by locking your end loan ate in advance during the term of your construction project. We offer up to 12 month construction financing and a variety of end financing options for up to 30 years for qualified applicants.
Save Time – Close on one loan, one time and avoid having to go through the loan process more than once!
Save Money – One closing allows you to only pay closing costs one time.
Options – Hometown National Bank has a wide variety of end loan financing options to meet your needs.
End Loan/Permanent Financing Loan Options – Hometown offers to ability fix an attractive initial fixed rate with 5, 7, or 10 year adjustable rate options.

Final inspection indicating 100% completion of construction
Final title policy updates will be ordered. • The builder will provide a Certificate of Occupancy.
You and the builder will provide an executed Completion and Acceptance Letter verifying construction is complete
Final lien waiver/affidavit provided by the builder
Homeowner’s hazard insurance policy with documentation showing you’ve paid your first year’s premium.
Once the construction is completed your payments will become responsible for principal and interest payments going forward. Your payment may include an escrow for real estates taxes and hazard insurance if you elect to do so.

If you elected not to use your entire loan amount or the loan amount changed, your Note will be modified and we can recalculate your principal and interest payment based on the lower amount for a nominal fee.
If construction is completed in less than or greater than your construction loan term, a Modification Agreement is required to change the due date of your first permanent mortgage payment.

Last but not least…