Financing Your Project

If needed, Winsome Construction has a number of financial institutions we can recommend with great construction lending programs. We can help you to find the lender that best fits your project, building needs and your budget. Here is an overview of the construction financing process to help you understand what is involved in financing the construction of your home.

There are two parts to residential construction financing. First, a home construction loan is used to fund the construction of your building,  then the construction loan is converted in to permanent financing.

  • In order to obtain construction financing, you submit for lender approval an application for a home construction loan. This construction loan will be used to pay subcontractors and suppliers during the construction phase of the project. These subcontractors and suppliers generally require payment within 30-60 days following work completion.
  • Once each month, Winsome will submit a request for funds to pay for subcontracting work and supplies that was used during the construction phase the previous month. The lender will release funds after they have verified that the amount requested will be used for the construction phase that has been completed. Typically, the lender will send out an inspector to verify that the work has been completed. Funds for completed work will then be released

You will need to apply for a residential mortgage to pay off the construction loan when you finish the project. In most cases, your approval for a residential mortgage will be required prior to obtaining the construction line. The residential mortgage is like any other single-family home mortgage loans. These include conventional and non-conventional loans, fixed, adjustable rates, etc.

Some lenders offer both construction lines and residential mortgages as one loan. The Construction/Perm loan is a combined loan made directly by the lender to the borrower. It functions as a construction line for financing home construction; then it serves as a permanent mortgage by converting construction loan after you complete the project.

The Construction/Perm loan has several advantages, namely:

  • The borrower can save money by paying for only one set of closing costs, attorney’s fees, appraisal and taxes.
  • Since the construction line is contingent upon approval of residential mortgage, obtaining a construction/perm loan allows the borrower to submit and provide documentation for one loan application and work through one lending institution.
  • Because the loan is made directly to the homeowner, the borrower can take full tax advantage of the interest rate charges.