Finding an Experienced Residential Construction Loan Expert

A good homebuilding experience depends on more than one residential construction loan experts. Make sure each of these people is competent and experienced at his job.

Your Loan Officer

Find an experienced residential construction loan officer who can walk you through every step in the process of applying for and closing your loan. Your residential construction loan expert should specialize in this type of loan. Your expert should be able to walk you through:

  • Qualification (documentation needs, steps to closing) for a residential construction loan
  • Finding (through referrals or guidelines) a reputable, reliable general contractor
  • Consultation on a realistic construction timeline and budget
  • Smooth connection with your servicing associate after closing

Staying local is your best bet to find a knowledgeable residential construction loan expert. Avoid calling toll free numbers on web sites. Instead, start at your local bank branch. If local banks do not fund residential construction loans, a regional mortgage lender may be a better choice. If you are purchasing a lot in a subdivision, ask if the developer has a preferred residential construction loan expert that you can consult.

Make sure the lender has been funding residential construction loans for at least 5 years. Otherwise you may find yourself helping their servicing department to iron out the disbursal process.

Your Residential Construction Loan Servicing Representative

After closing your residential construction loan, the lender’s servicing department will take over. The servicing department’s job is to process residential construction loan disbursals, schedule  inspections, and process the construction to permanent conversion when your home is completed.

If you are not assigned a specific servicing representative in the servicing department, ask for one as quickly as possible. Request a representative who has been at the lender for at least 2 years. If your assigned representative is inexperienced, ask for the name of a more experienced colleague or supervisor for back up.  

You will probably never meet your residential construction loan servicing representative. Expect most communication to be through phone and email. Your representative handles dozens of active residential construction loans at a time, so establish a good working relationship with your representative by touching base at least once or twice per week during construction. Have necessary paperwork handy when calling. Keep extra copies of everything you send to the servicing department in case mail gets misdirected. Keeping on top of your loan will help your representative get funds disbursed more quickly.

Your General Contractor

It’s important to think of your general contractor as part of your residential construction loan team. Your contractor will have a lot of contact with your lender. Contractors who frequently work with the same lenders on many projects understand the minimum insurance and licensing requirements, and know the nuances of submitting paperwork for faster funds disbursals.  

In addition to customer references and referrals, take your loan officer‘s advice into account when choosing a contractor. The bank may balk at approving your residential construction loan if you insist on using an unknown contractor who is underbidding the competition.