Construction Loan Transcript

For most people building their dream home can be one of the most rewarding yet stressful tasks they'll ever complete. That's why at Bristol County Savings Bank it's our goal to provide you with the resources you need to ensure that your construction goes smoothly. Our construction loan program combines cutting edge innovations with decades of experience to help guide our borrowers through the process.

I'm JR Pimental and I'm here to help you understand the construction financing process. There are some special features that make construction loans unique. You can choose to purchase the land and build your home all-in-one transaction. Or if you already own the land, we can include the land in any equity you've accrued as part of the deal.

Our construction loans are all fixed rates with only one closing. You can lock in your interest rate at any time in the application process with a rate lock deposit, which is refundable at time of closing. The rate is valid for 60 days so you want to make sure that you have a target closing date in mind before you lock in your rate.

We allow 12 months for you to complete your project, during which time your payments will be interest only on the funds that have been dispersed. Principle and interest payments begin on the 13th month or upon completion of the project, whichever comes first.

Here's what you'll need to apply. For a land purchase, we'll need a fully executed purchase and sales agreement. If you already own the land, we'll need a copy of the deed, a copy of your signed construction contract along with a breakdown of your construction costs and the plans and specifications are also required for all applications. We'll need proof that the lot is buildable such as a building permit, approved septic design, or percolation test. Prior to closing, we will need proof of insurance. During the first 12 months, the construction phase, the bank will hold back funds to cover your cost of construction in an escrow account and as work is completed, we will reimburse you.

Two key points to keep in mind, the bank will only reimburse for work that has been completed and we do not reimburse on invoices alone. In order to ensure a smooth construction phase, it's imperative that you understand our disbursement procedures and make sure that both you and your builder are comfortable with our disbursement schedule. Our goal is for you to always have enough funds in escrow in order for you to complete your project. This means you may need to infuse cash into the project in order to get started which will be reimbursed after each segment of the work is done.

Here's how your funds will be dispersed. Once the site work is completed and the foundation is poured, you can request your first disbursement. We'll send out an inspector to verify that the work has been completed and will also order a plot plan. If you haven't sent us your building permit, we'll also need a copy before we can release any funds. Generally, the quickest way to receive your construction funds is to open a Bristol County Savings Bank checking account and we will deposit the funds directly into your account. Keep in mind that we disperse funds according to our disbursement schedule, which is based on the plans that you provide to us. You'll want to make sure that the project is sticking to that schedule so you'll get reimbursed appropriately. There is a fee for each inspection which we deduct from your disbursement, so a good tip is to try and minimize the number of disbursement requests.

When your project is completed, you can request your final disbursement. We'll order your last inspection and request your certificate of occupancy and any other applicable documents. You'll also need to update your insurance policy to remove the builder's risk and have the insurance company fax us a copy of the new policy.

Here's one more tip before you begin: Research your contractor. Make sure that they can finish the project within 12 months and within your construction budget. You don't want to be paying full principal and interest payments when your house isn't finished. Stick to your original plans. If you deviate from that, we may not be able to reimburse you and you may not have enough construction funds to finish your project. During your construction, one of the best resources available to you is the bank's construction team. Our goal and yours is to complete your home within the construction budget and time frame allotted. We look forward to making your dream a reality.

Question? Call (508) 828-5329 or email mortgageinfo@bcsb.com