How to Convert Construction Loans
A construction loan is a loan where a price is spread at a prime rate. Construction loans arrangements should be made between you and the lender to establish a payment schedule based upon the stages of the construction. A construction loan can easily be converted into a permanent loan before a building project is complete.
- Go to your attorney or closer and ask them to prepare and administer the modification package to convert your construction loan into a permanent loan. This can only be done this way if you obtained a construction-to-permanent loan package before your building project was started.
- Refinance your loan if you didn't get a construction-to- permanent loan package. This time make sure that you just get a construction loan and fill out the same application file that you used previously. Update the information on your insurance policy declaration’s page and construction appraisal. Provide any other requested documentation to complete your application.
- Set up a meeting with your lender to go over all the paperwork and documentation for your conversion or refinance. Start your conversion process at least a month before your building project is completed because the conversion process can take up to a month.
- Work with your original closer from the construction loan process to complete the conversion process. They can help speed up the process along since they are familiar with you and your project. If they are not able to assist you, ask them for a referral that can help you move forward with this process.
- Use a lender appointment appraiser to complete a final inspection. Make sure to walk with the through the property and mention anything you feel that is relevant to the appraisal. They will make sure that the property is valued properly for the new loan modifications.