Construction Loan FAQs
How do I access funds from my construction loan?
Your builder will be working directly with you to build the home and to prepare the construction draw requests. These requests authorize us to release funds. Upon your authorization, the builder will submit the draw to the title company for their review and submission to us.
When is my payment due?
You will make interest-only payments during the construction phase, with the payments due by the 15th of the month.
What should I do if I want to make changes to the project?
The cost to build was established at closing based on your contract. If you make any changes to the contract with the builder to change the cost to build or that may impact the project value, we as the “Mortgagee” must approve the changes.
If the changes increase the cost of the project, you will be immediately responsible for paying the amount of the increase to us to hold with your construction project. We will disburse the funds to the builder when the work is completed.
What happens if the cost of a material/labor is greater than the builder’s allowance for that material/labor?
Allowance overages must be paid at the time the invoice is to be paid. For example:
- If the excavating allowance was estimated at $4,000.00 and the cost is $4,100.00, we will request the $100.00 from you at the time the invoice is to be paid.
- If you have a flooring allowance of $3,000.00 and you upgrade flooring for a cost of $3,500.00, at the time the invoice for flooring is submitted, we will collect $500.00 from you to cover the difference.
How does the builder get paid?
- Both the builder and member are required to sign the draw request form requesting payment for work completed.
- The builder is to submit signed draw requests to the title company.
- A total of five (5) draw requests are allowed during the build process; additional draws may incur fees.
- When applicable, draws will be paid first by funds that you have set aside for this purpose. If funds are not available, the builder will be paid by loan funds. Funds are paid upon completion of the work.
- We are unable use loan funds to pay down payments.
- WESTconsin Credit Union will approve and disburse draw requests within three to five (3-5) business days of receipt.
- All draw requests, upon approval by WESTconsin Credit Union, are paid directly to the title company.
- The title company issues payments to the appropriate parties, as indicated on the draw request form and collects the lien waivers.
Why does the title company need to inspect my home?
The title company performs required inspections by WESTconsin Credit Union at the time of a draw request to assure that the requested funds pay for the work completed. These individuals should not be confused with a “Building Inspector.” The municipality will be responsible for performing any of the county and state inspection requirements. If you have questions about the actual building of the home, we suggest you work with your builder or local building inspector.
What needs to happen before I can draw the full amount of my construction loan?
As part of our loan approval process, we are required to obtain a final appraisal inspection to confirm the project was satisfactorily built according to the contract and plans and supports the original appraised value. The final inspection will be required prior to the final disbursement of loan funds. Examples of items that must be completed include, but are not limited to, all flooring, lights, plumbing, and trim installation. All interior rooms, basement finish and exterior items are to be completed per plans. All exterior finishes are to be installed along with driveway finish per contract and final grade.
How are my property taxes and homeowners insurance paid during and after construction?
During the construction phase (the first year) you will be responsible for paying any real estate taxes and homeowners premiums that are due.
An escrow account may be set up when the loan converts to permanent financing. The funds needed will be estimated and provided to you closer to the completion of your home. Please plan on depositing funds into an escrow account at completion of construction.