Construction & Lot Loans
A lot or construction loan is for building your new home or completing extensive remodeling
What You Should Know
A lot loan allows you to start paying on land before you start construction. Once you’re ready to build, your lot loan can become a construction loan.
- If you own the land, you may be able to use your lot as equity for your construction loan.
- Construction loans are typically set up as a 6-12 month adjustable rate mortgage (ARM) during the construction period providing you with initially lower interest rates and lower monthly payments than a traditional fixed rate mortgage.
- Interest-only loan payments are made during the construction period.
- A third-party escrow account will be used to hold the construction funds to pay your builder. These funds are typically held with a title insurance company.
- Your builder will make four to five draws from the escrow account during the building process. A draw is a portion of the total cost owed to the builder at certain stages of the construction.
- A title company will act as the disbursing agent to pay your builder. They work directly with Johnson Bank and your builder to ensure proper inspections, timely payments and a clear title is maintained.
Construction-to-permanent mortgage financing
- After your home construction is complete, our program allows you to make a decision on permanent mortgage financing.
- You can choose whether to remain in your adjustable rate mortgage and begin making principal and interest payments, or if eligible, convert your construction loan to a longer term fixed rate loan.
Some lenders may require a second closing with additional closing costs. Our unique one-time close will help you save time and money. You can enjoy the convenience of one loan, one application and one closing date.
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