Frequently Asked Questions

<<Continued From FAQ page 1

   Construction loans do depend on the type of home that you are considering to build

   We are all very familiar with the standard construction commonly referred to as "stick built". However there are other methods that are becoming increasingly popular, these are:

  a-  Manufactured Homes
  b-  Modular Construction
  c-  Panelized Construction
  d-  Steel Frame Construction
  e-  Log Homes

   Very often a lender's decision to approve  construction loans depends on the type of construction which in turn is based on the simple factual reality of the existence of similar types of structures in the area. there are exceptions as well as restrictions which are covered below for each category.

14- What is the difference between Manufactured Homes and Modular Homes

   Construction loans are available for both manufactured homes and modular homes.

   Manufactured homes are typically built in a factory in container or trailer sized modules on steel frames. They are then delivered to the construction site where they are joined together on a permanent foundation.

   Construction loans are available for this type of homes but availability is somewhat limited. We currently do originate construction loans for this type of property in the state of California Only. Further more these construction loans are subject to availability of comparable sales of similar structures in the area.

   Alternatively, construction loans are more readily available for modular homes. These are also manufactured in a factory and delivered to the site for assembly on a permanent foundation but they differ from the manufactured variety in that they are assembled from sections of remanufactured walls. This method allows for grater flexibility of design and therefore a good deal appealing.

   Construction loans are a lot easier to obtain for modular homes.

15- Panelized Construction

    This is a variation on the same theme with modular construction. A panelized construction house is also built on the site on a permanent foundation out of standardized panels built in a factory in a factory.

    Construction loans are very simple to obtain for a panelized construction project as they are treated like a simple so called stick built home. An other term frequently used to describe this kind of construction is "kit home".

16- Steel Frame Construction

    Construction loans are readily available for this type of construction too. The main frame of the house is built in sections at the fabricators. The frame forms a sort of skeleton for the house and the walls are built in the conventional manner.

    This method is becoming somewhat more expensive than it use to be because of new x-ray weld inspection requirements imposed by an increasing number of cities and counties.

    As mentioned above there are no restrictions imposed by lenders on construction loans for this type of building.

17- Log Homes

    little explanation is needed here. Everyone is familiar with log homes, however as popular as they are construction loans are not easy to obtain in some circumstances.

    The rule discussed above that restricts the appraiser to using similar comparables very often becomes a problem in that the appraiser must find comparable log homes in the immediate area.

18- What is General Liability Insurance?

    All construction loans require an appropriate insurance coverage.

    General Liability Insurance is normally carried by the General Contractor. This policy comes into play where your course of construction insurance leaves off.

    It basically covers you against all claims arising from personal injuries or damage caused to other property.

   Also see below, for more details.

19- Builder's Risk Policy

    This is similar to General Liability and it is purchased by the homeowner who is acting as an owner builder.

    The explanations offered here on the extend of coverage offered by the various insurance plans is very basic. You should seek professional advice from your insurance agent regarding the details.

20- How do I know what type of policy I'll need?

    Your loan officer will normally be in a position to advise as to the type and amount of coverage you will need. Once construction loan documents are issued, a detailed coverage requirement instruction is sent to the closing agent who then contacts your insurance agent and organizes the necessary paperwork.

How is a construction Loan Calculated?

  Questions?  Call us Toll Free or Send an Email, with any questions or concerns that you may have. Visit Our State Specific Contact Page, where you can find our phone numbers to call us, contact us by email or complete our short, secure application form.