How to Refinance Construction Loans
Construction loans home projects generally should be completed within 12 months. If the project is not completed within that time based upon the bank requirements you may be able to refinance a construction loan. If the project is almost complete you can still take out a loan and pay off the construction bank. No matter your situation you can still look into financing a construction loan.
Things You'll Need:
- Proof of income documents
- Bank statements
- Initial appraisal on the project
- Declarations page from insurance policy
- Certificate of Occupancy (when applicable)
- Builder's License (if applicable)
- Builder's cost to complete (if applicable)
- Builder's contract (if applicable)
- Exhaust all avenues with your present construction bank of continuing construction. Construction takeovers can be very hard to find. Search for a mortgage brokerage the deal with banks, as this could give you more possibilities of finding lenders who will be willing to buy you out of your old construction loan.
- Apply to refinance your loan at about 45 days from the project's estimated end date. If you don't have a permanent loan when the project is almost done set up then to take on a construction loan. Once the home is completed the initial appraiser will have the final say if it is completed per plan and if it’s still at its original value by doing a final inspection. Once the final inspection takes place your builder should provide you a Certificate of Occupancy (CO) from your county building department. Make sure this is sent to your lender.
- Give your lender the information of the construction loan company you used to close your loan. Using the same company works to your advantage since they already have your closing information and title insurance.
- Request a deadline from your builder of when all construction phases will be completed. This information is needed to help with the final inspections and to schedule a closing date. If it is a case when the new construction loan is paying off the old loan, find out with the new lender when all construction works need to be stopped on your project. Give this information to the builder.
- Do a follow up with your lender and builder if they are any last minute things that may cause any delays. It can be both frustrating and time consuming to to take over an existing project, but with patience and the right construction contractor it will all be worth it.