[mdunker]

we are wanting to get some guidance on our construction loans as far as the funds that the customers would have to come up with for a construction loan. For example we have a loan in which the costs to build are$150,000.00 and we can lend 80% of this for a loan amount of $120,000.00. This leaves the customer to have to pay $30,000.00. Do we have to show this amount anywhere? In all the guidance on construction loans I only find what we would do with our funds not showing the customers funds. Is this a requirement is it acceptable to now show these funds from the customer or should we be showing them?

[rcooper]

Are you requiring the 20% as a down payment?

[mdunker]

I guess yes we would be. The customer is responsible for the rest of the costs of the construction.

[rcooper]

We believe it should be reflected in the “Down Payment/Other Funds from Borrower” in the Calculating Cash to Close section.

[mdunker]

What I am wandering now is this amount will be more than what may be needed at closing time so is it ok to hold the customers funds until the contractor needs it? So lets say our loan amount is $100,000.00. Construction costs are $125,000.00. We would be holding $25,000.00 of what the customers money for construction costs. We would not be paying any interest on these funds is this ok?

[Author]

Posts