From floor plan to finishing touches, when you build new construction, your home is uniquely you.
For many of our members, this is a once-in-a-lifetime opportunity to build their dream home. We’re proud to be a part of something so special and your dedicated Mortgage Loan Officer will help guide you through the process of building your new home.
When I went in, my loan officer gave me confidence and she made everything so simple and non-stressful. She wasn’t pushy and I love that. She was very supportive, even if I ignored my phone, she would follow up with an email so she could stay in contact. There’s really nothing you guys could do better. She gave me choices to either have her complete things for me, or for me to complete, and I love choices. She really gave me the confidence that I was doing the right thing and making the right choice buying my home and going through Solarity. I really appreciate it, don’t change a thing.”
Solarity’s construction loans are “all in one”
This offers the most convenience, because it combines your construction loan and permanent mortgage, you only have to complete the application, get approval, and supply documentation once. During the construction draw period, you can disburse funds to your builder at each milestone. When construction is complete, your loan transitions to a permanent mortgage.
The Construction Loan Process
Here are the key steps you’ll take.
Getting a loan for new construction is a little different from the standard home loan process. Things will go much smoother if you know what to expect.
Step 1: Pre-qualification
Simply talk to one of our Mortgage Loan Officers or apply online to plan for what you can afford and explore your needs. We’ll provide a range of options based on your income, how much you owe, and any goals you’d like to meet. You will walk out of the door with a pre-qualification for your loan.* Consider pre-qualifying before talking to a builder, so you both have a good idea of the price range you can afford.
*Legally subject to underwriting the home you are refinancing and verification of the information you’ve provided us on your application.
What to bring:
- Your current address and any other addresses for the past two years.
- Driver’s license & Two months of bank statements
- Social Security numbers for all borrowers.
- Your employment history for the past two years.
- Most recent 30 days of paystubs and last two years’ tax returns, both personal and business.
- Information about your current debts.
- A copy of your current mortgage statement if held by another lender.
- Additional items you should bring if you have them: building plans, cost breakdown, description of materials, contract or anticipated terms with your builder, plot plan, septic design permit, well log, lot purchase information.
Step 2: Processing your loan
We’ll request documentation to verify your assets and income. In addition, we’ll order an appraisal from a third party, title report, and flood certification for your home. You will pay a processing deposit for these services, which will be applied toward your closing costs. We’ll also set up escrow for the loan closing and send you disclosures to read.
Step 3: Underwriting
We’ll prepare a closing disclosure which summarizes the final numbers for the agreement, as well as confirm your financial situation and property align with federal mortgage guidelines. Regulations that protect consumers require a three day wait before the documents can be signed to allow you time to consider and review the terms of your loan.
Step 4: Closing
We’ll prepare the loan documents and send them to an escrow company. You’ll make an appointment with the escrow company to sign the paperwork at their office. Once we’ve received the signed documents, we’ll transfer the money to the escrow company, which will disburse the funds and record all documents.
Step 5: Construction Draw Period
It’s time to break ground! You will enter an initial 9-month Construction Draw Period, during which you can request loan disbursements based on the percentage of completion. We may require inspections at certain stages. During this period, loan payments are interest-only and based on the disbursed balance of your loan.
Step 6: Completion
After months of planning and anticipation, you’re finally home. Once your new home has passed a final inspection and you have provided a certificate of occupancy, your loan transitions to a permanent mortgage loan. The permanent mortgage loan is based on your initial loan application and approval. You’ll start making regular monthly payments of principal and interest. Best of all, you can finally relax!
What happens next?
Have questions about payments, taxes, insurance, auto payments or anything else? Our Contact Center will be able to help. Get in touch with our Contact Center.
Terms to know
- Adjustable-rate mortgage (ARM): A kind of home loan where your interest rate is tied to a market index. As the index goes up or down, your interest rate and payments will also change at each scheduled adjustment period. These loans generally start out with an interest rate lower than a fixed-rate loan. This saves money initially and may help you qualify for a larger loan.
- Amortization: Gradually paying of a debt by making regular payments over a period of time.
- Annual percentage rate (APR): A measure of both the interest charged as well as any other costs associated with the loan. APR is designed to show you the total cost of the loan, which is important when comparing loans and evaluating if a loan is right for you.
- Buyer’s agent: A real estate professional who represents the buyer in a purchase of a home. Typically, there is no cost in working with a buyer’s agent because commission is paid by the seller when the house is sold. Be sure to discuss any compensation before you start looking at homes with your buyer’s agent.
- Closing costs: Fees paid to the financial institution or third parties for services to process the application and for the closing process.
- Collateral: Something of value used to secure a loan. For a mortgage loan, the home serves as the collateral. The property becomes the property of the financial institution if you are unable to pay your loan.
- Construction draw period: The period during construction in which funds can be drawn to pay the builder.
Construction permanent loan: A single loan that covers financing during the construction phase, as well as your permanent mortgage loan.
- Credit rating: A score given by a credit bureau that helps the financial institution determine your ability to repay a loan. Factors include your history of paying your bills, outstanding debt, credit history, variety of credit and history of application for credit.
- Default: When a borrower is unable to make payments on a loan or fails to meet requirements of the terms of the loan.
- Discount points: An upfront fee that lowers your interest rate.
- Down payment: The amount of the purchase price of your home that you pay in cash up front.
- Equity: The difference between the market value of a property and the owner’s outstanding mortgage balance.
- Escrow: A neutral third party that holds the money until all terms of the agreement has been met.
- Earnest money: A deposit you give to the seller when submitting an offer to show serious intent about buying a property.
- Fixed-rate mortgage: Type of home loan where interest rate remains the same for the length of the loan.
- Home inspection: Visual examination by a certified third party to provide an accurate estimate of the home’s value and condition.
- Homeowners’ insurance: Insurance that protects your property against loss from theft, liability or other disasters. Typically it is required for an amount equal to the mortgage loan.
- Interest rate: Percentage you pay for the loan to the lender.
- Jumbo loan: Loans that are more than the limits set by the Federal National Mortgage Association or Federal Home Loan Mortgage Corporation guidelines.
- Loan origination fee: A fee paid to a lender for processing a loan application. This is shown as a percentage of the mortgage amount and is due at closing.
- Monthly payment: The amount you pay for your loan (principal and interest) each month.
- Mortgage loan officer: Employee who serves as your guide through the process and who helps you select the loan that meets your needs.
- Private Mortgage Insurance (PMI): Insurance that protects the lender if a borrower defaults. Usually required if the down payment is less than 20 percent of the purchase price.
- Permanent mortgage loan: The loan that is finalized at the completion of construction. It includes regular monthly payments of both principal and interest.
- Rate lock: Guarantee of a interest rate for a defined period of time.
- Real estate agent: A person authorized to act on your behalf when purchasing a home.
- Rent-back: An agreement that allows you to rent your current home back from the new owner for a period of time.
- Seller’s agent (Listing Agent): Real estate professional that represents the seller. You generally won’t work with the seller’s agent, as the buyer’s agent will coordinate on your behalf.