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Construction Loan Overview

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Questions and Answers

What is the purpose of a Construction Loan?

To refinance an existing home
To pay off student loans
To purchase land for building a new home
To finance the construction of a new home (correct)

How long is the typical term for a Construction Loan?

30 years
6 months
12 months (correct)
5 years

What is the purpose of a 'Take-Out' Loan?

To pay off the Construction Loan once the home is complete (correct)
To purchase furniture for the new home
To pay off credit card debt
To finance the initial construction of a new home

What does it mean to Pre-Approve an exit strategy for the borrower?

Make sure they qualify for Fannie Mae and Freddie Mac guidelines post-construction (D) Signup and view all the answers

When does the disclosure of the 'Take-Out' Loan need to happen?

After the completion of the new home (B) Signup and view all the answers

What is the first step in the Construction Loan Workflow outlined in the text?

Speak with potential borrower about project plan (C) Signup and view all the answers

What is the role of AWM underwriting in relation to the 'Take-Out' Loan?

To approve the 'Take-Out' Loan before final approval for the Construction Loan (A) Signup and view all the answers

What document must be uploaded to the Construction Loan among others for verification?

Builders Risk Insurance (D) Signup and view all the answers

What is one important question to ask a potential borrower regarding their land?

Is the land free and clear? (D) Signup and view all the answers

What percentage of the total cost will All Western Mortgage lend up to on a primary residence based on the text?

100% LTC (C) Signup and view all the answers

What approval is necessary prior to submitting a project to underwriting according to the text?

CFSI system training approval (A) Signup and view all the answers

What determines the 'Total Cost to Construct' in the context of the Construction Loan Requirements?

Purchase Price (A) Signup and view all the answers

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