Get Your Mortgage Phil

Last week I had the pleasure of working with Sione's Concrete Construction when we had the driveway replaced at our home on the San Francisco Peninsula. Several clients and friends had recommended Sione and I had seen his work first-hand, both a driveway similar to ours, and a masonry retaining wall, and liked what I saw.


What really convinced me that we had found the right firm was talking with Sione. We immediately knew that he knows concrete inside and out, and takes pride in his work and cares for his customers. He suggested routing one downspout underneath the drive and out into the street to avoid excess water pouring across the drive; he offered to power wash steps and a walkway in front and seal them when he seals the drive--at no additional cost. His price was reasonable, his crew polite and efficient, and he cut no corners. 

Sione's Concrete Construction is a family-owned and operated business on the San Francisco Peninsula built on referrals, and based on integrity, honesty and quality.  Their work takes them from Daly City down through the Silicon Valley towns and everywhere in between.

When you have a paving job--driveway, walkways, swimming pool decks, stairways, etc--give Sione a call at 650-759-2477 or ask me for more details about my experience working with Sione's Concrete Construction.

Do you need a loan to complete construction in California? I may be able to help you. I have access to private money that will loan to complete construction on a wholesale basis, as well as working directly with borrowers.

There are several reasons why you may need a loan to complete construction. First, perhaps you were funding construction out of your own savings, and have run out of funds that you want to commit to the project.

Second, the project may have become more expensive due to upgrades or unforeseen circumstances.

Third, you may have a loan, but your construction lender may have gone out of business! Ouch!

No matter what the circumstances, if this happens, you need a loan to complete construction. Here are some of the parameters that my private money source in California requires:

First, the loan amount must be between $1 million and $5 million dollars. This source for a loan to complete construction likes the high-rent districts!

Second, the maximum loan-to-value percentage is 65% of the future completed value.

Third, the maximum term is three years. However, most of the time, a loan to complete construction will be one year.

Fourth, the minimum credit score must be at least 640. The credit score used is the middle score of three credit scores supplied by the three credit bureaus.

To apply for a loan to complete construction, there are three parts of the approval process.

The first part of the approval process is qualifying the borrower. This part of the qualification process is similar to applying for a loan to finance a completed home. A loan application, income documentation, and asset documentation must be provided.

The second part of the approval process is qualifying the contractor. The contractor must provide adequate insurance and a resume of completed projects to demonstrate his ability to complete the job in a workmanlike manner.

The third part of qualifying for a loan to complete construction is providing project documentation. This documentation consists of plans, permits, a construction contract, cancelled checks and receipts for work completed, and a list of building materials.

Trying to get a loan to complete construction can be stressful! My best advice is to be organized as best you can with your documentation, starting with the first receipt you have from the beginning of the project. Organization will help minimize your stress level.

Recently a friend of mine called me and said that he needed a construction loan to remodel his house in Burlingame, CA. I asked him if he had a construction contract and plans. He said not only did he have those items, he had already started construction!

I asked him why he was calling me now, didn't he already have a construction loan in place? He said no - he was approved for an equity line of credit, but when the lender found out that construction had already started, they could not fund the loan.

I told him I would do my best to find him a construction loan, but I could not guarantee anything. Lenders usually do not like to approve a construction loan application after the project has started. 

After making several phone calls, I found a bank that was interested in funding this construction loan. Luckily, my client was financially qualified, and very organized with his paperwork. We got the loan approved, and it recently closed escrow!

There are several lessons homeowners should know that my client learned from going through this process to obtain a construction loan.

Before starting construction, a homeowner should make sure he has the financing of the project approved. It could be a construction loan, a line of credit, a margin loan, etc. No matter what type of financing it is - have it nailed down. Having financing in place not only makes sure the homeowner can finance the project, but also will save the homeowner from a lot of paperwork headaches and stress!

Another tip when obtaining a construction loan is to alert your contractor that he will need to supply documentation to the lender. This documentation usually is made up of a resume, list of completed projects, insurance, and financial statements.

Regarding financial statements of the contractor, it is a good idea to find out the amount of working capital your contractor has. In many cases suppliers will ask to be paid prior to the bank supplying funds from the construction loan. If the contractor does not have enough working capital to fund the suppliers, they may place a mechanics lien on the project. A homeowner may want to consider writing into their construction contract the ability to pay a supplier or sub-contractor directly if the contractor is unable to. This ability can help avoid an issue with a mechanics lien.

If for some reason construction has commenced prior to obtaining a construction loan, make sure that you keep copies of all receipts and cancelled checks. The construction loan lender will want to see these.

Finally, make sure you understand all the terms of the construction loan. The key points to know are:

• the interest rate and how it can change
• the term of the loan
• how often funds are disbursed
• who the check for funds is made payable to (homeowner, contractor, or both)
• whether or not the bank will provide a permanent loan to take out the construction loan upon completion

I recently referred a client to a company in Redwood City who has been doing kitchen, bath, new additions & custom homes in San Mateo County for a long time. They were very happy and mentioned how efficient, cost effective and quality work they did for him that I wanted to let everyone know about. The name of this company is Building unlimited. They are located in Redwood Cityand service all of the bay area. You may visit them at www.buildingunlimited.net.

Are you looking for a construction loan in the Los Angeles, California area? Well, it has not been easy to find funding for a construction loan lately, but there are some sources starting to make funds available. 

If this is the first time you have looked for a construction loan, there are some details that you need to know.

First, there are generally three parts of getting a construction loan approved. The first part is the general contractor approval. The lender will usually like to see the contractor's resume, list of projects completed, credit history, licensing, and insurance coverage.

The second part of getting a construction loan approved is the project approval. The lender will want a copy of the plans, construction contract, permits, receipts for payments, and a list of building materials.

The final part of getting a construction loan approved is credit approval. Credit approval for a construction loan is similar to getting credit approval for a mortgage. The lender will look at your capacity to re-pay (employment, income, debts, repayment history, etc.).

Here are some tips that will help you with your construction loan:
1. Do not start construction until your construction loan has been recorded with the county. It makes the process much easier for you and the lender.
2. Hire a general contractor with a strong resume and a good reputation for his work in the Los Angeles, CA area.
3. Be very organized with your documentation for the lender. The easier you make it for the lender, the easier it will be for them to approve your construction loan.

Once these three parts of the construction loan are approved, the lender will start to disburse your funds. The first disbursement will pay off your existing mortgage, if you have one. The exception to this disbursement would be if they approved it as a second mortgage (rare).

A construction loan usually has some built-in protection for the borrower: funds are usually not disbursed until an inspector inspects the property to make sure the work the contractor is asking payment for has been completed in a workmanlike manner.

The payment you make for a construction loan is similar to that of a payment on a home equity line of credit - you only pay interest on the amount disbursed.

For example, If you are approved for a $1,000,000 construction loan, but only $500,000 has been disbursed, then you would only pay your monthly payment on the $500,000 disbursed.

Sometimes a construction loan will be set up with a reserve fund. The reserve fund is used to make your payments. A reserve fund is nice because it allows you to keep your money in the bank. On the other hand, if you do employ a reserve fund to make your payments, you will be paying interest on interest.

After the project has been completed, you have three options as a borrower: pay the loan off, accept permanent financing from the construction lender (usually worked out prior to the beginning of a construction loan - called a construction to perm loan), or obtain a take-out loan (a loan from another lender to "take out" the construction lender). These choices are necessary because construction loans are usually written with a payoff date from six to twelve months from the initial disbursement.

Here in the summer of 2009, the cost of construction has declined in Los Angeles, CA because of our economic downturn. Now may be a good time to consider building that new home or re-modeling the home you have. Remember, get that construction loan lined up first!

Are you looking for a construction loan in California? Well, it has not been easy to find funding for a construction loan lately, but there are some sources starting to make funds available.

If this is the first time you have looked for a construction loan, there are some details that you need to know.

First, there are generally three parts of getting a construction loan approved. The first part is the credit approval. Credit approval for a construction loan is similar to getting credit approval for a mortgage. The lender will look at your capacity to re-pay (employment, income, debts, repayment history, etc.).

The second part of a construction loan approval is the general contractor approval. The lender will usually like to see the contractor's resume, list of projects completed, credit history, licensing, and insurance coverage.

The third part of a construction loan approval is the project approval. The lender will want a copy of the plans, construction contract, permits, receipts for payments, and a list of building materials.

Once these three parts of the construction loan are approved, the lender will begin disbursing the funds. The first disbursement will pay off your existing mortgage, if you have one. The exception to this disbursement would be if they approved it as a second mortgage (rare).

The payment you make for a construction loan is similar to that of a payment on a home equity line of credit - you only pay interest on the amount disbursed.

For example, If you are approved for a $750,000 construction loan, but only $300,000 has been disbursed, then you would only pay your monthly payment on the $300,000 disbursed.

Sometimes a construction loan will be set up with a reserve fund. The reserve fund is used to make the payments for you. A reserve fund is nice because it allows you to conserve your cash. On the other hand, if you do employ a reserve fund to make your payments, you will be paying interest on interest.

A construction loan usually has some built-in protection for the borrower: funds are usually not disbursed until an inspector inspects the property to make sure the work the contractor is asking payment for has been completed in a workmanlike manner.

After the project has been completed, you have three options as a borrower: pay the loan off, accept permanent financing from the construction lender (usually worked out prior to the beginning of a construction loan - called a construction to perm loan), or obtain a take-out loan (a loan from another lender to "take out" the construction lender). These choices are necessary because construction loans are usually written with a payoff date from six to eighteen months from the initial disbursement.

Here are some tips that will help you with your construction loan:
1. Do not start construction until your construction loan has been recorded. It makes the process much easier for you and the lender.
2. Find a general contractor with a strong resume and a good reputation for his work in your geographic area.
3. Be very organized with your documentation for the lender. The easier you make it for the lender, the easier it will be for them to approve your construction loan.

Here in August, 2009, the cost of construction has declined in California because of our economic downturn. Now may be a good time to consider building that new home or re-modeling the home you have!

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