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The Construction Loan Process

December 14, 2021

Custom building your dream home can be considered the adventure of a lifetime. The ability to make decisions about the design of your home to make it the perfect fit for you is something that most families dream about. However, most people don’t bother to even look into the possibility of building their own home because of a fear of high costs and a stressful building and lending process. While it is true that there is a lot of work to be done to custom build your dream home, when you work with Schumacher Homes and Schumacher Mortgage, you can expect a seamless custom home building process.


Visit the Schumacher Model Homes Near You

When you’re ready to take the first step towards building your dream home, you’ll start the process by visiting a Schumacher Model Homes location near you. When you meet with the Schumacher Homes team, they’ll go over your custom home options and help you decide if moving forward with your dream to build your own home is right for you at this time. If you’re ready to begin the process, you’ll prepare to meet with Schumacher Mortgage to talk about financing.


Get Pre-Qualified

Before you can start designing your dream home, you’ll need to get pre-qualified with a reliable lender. As a Schumacher Homes affiliate, Schumacher Mortgage boasts a seamless construction lending process that works hand in hand with the Schumacher Homes.

To get pre-qualified with Schumacher Mortgage, you’ll begin with a phone consultation with a Loan Officer, who will walk you through the particulars involved with construction financing and will answer any questions you may have about the process. Once you’re up to speed, you’ll complete a mortgage application and upload the requested financial documents which your Loan Officer will have already gone over with you. Your Loan Officer will review your documents, pull your credit, and, if you qualify, issue your pre-qualification. If, for whatever reason, you do not qualify, there are steps you can take to qualify for construction financing in the future.

When you receive your pre-qualification letter, you will also receive an outline of your loan terms, closing costs, monthly payment, and cash to close, so you know exactly what to expect when it comes to financing your custom home build.


Start the Home Design Process

With your pre-qualification letter in hand, you’ll go back to Schumacher Homes to begin your home design process. At this stage, you will work with the Schumacher Homes team to choose the custom designs of your home to make it everything you’ve ever dreamed of! Once you’ve settled on your designs, you’ll sign your home purchase agreement.


The Pre-Construction Meeting

During the pre-construction meeting, you’ll meet with your entire building team, where they will go over the details of your building plans with you item-by-item, room-by-room. This meeting will also kick off the construction financing process.


The Construction Financing Process Begins

During the first week of the construction financing process, your Loan Officer will:

  • gather items that re needed to move your application forward
  • establish a budget and outline your construction draw schedule
  • send out your initial loan disclosures
  • order the title work for your property
  • order your appraisal


Within the first 17 days of the construction financing process, your loan file will go to the Underwriting team to be reviewed, and, if everything looks good, a conditional approval will be issued. During this time, your appraisal and title work will come back. You’ll receive a copy of your appraisal. It’s important that you review the appraisal to confirm that the reflected information is accurate.

After this, you’ll move into the closing stage. At this stage, you’ll work with your Client Manager to gather all the conditions outlined in your conditional approval. How quickly this happens depends on you, so be sure to be diligent about sending over the requested documents. Once those documents are received, your Client Manager will take your application back to Underwriting where they will confirm the conditions have been satisfied and issue your clear to close!

Once your file is cleared to close, a signing appointment will be set up with your attorney or notary to close the loan. You will be informed the day before the meeting how and how much to wire in for cash to close. At the signing appointment, you will sign all your final loan documents to finalize your construction financing.


The Construction Draw Schedule

During construction, Schumacher Mortgage won’t release all funds to the builder (Schumacher Homes) at the beginning of the project, but will follow the construction draw schedule, releasing the funds in phases. The construction draw schedule is outlined by Schumacher Mortgage and identifies certain points during the construction of the home for when additional funds will be released to the builder. With each phase there will be an inspection of the property to prove it has been sufficiently completed to that point, then Schumacher Mortgage will release the funds needed to complete the next phase.


Construction Begins and Your Home is Built

Now it’s time for the real work to begin! During construction, you will make interest-only payments (this is not applicable to VA loans). If you have put cash down, that money will be used first.

The home building process is generally outlined below:

  1. Homesite preparation and excavation
  2. Foundation is poured
  3. Framing is built
  4. Rough in mechanicals
  5. Install insulation and drywall
  6. Finish carpentry and painting
  7. Add flooring and finishing touches
  8. Your homeowner orientation and walkthrough


Your Custom Dream Home is Complete

Now that your dream home is completed, your construction loan will convert to permanent financing. At this stage, you will want to reach out to your insurance agent to confirm determine the appropriate insurance for your new home. Better yet, it’s time to move your items into your new home and settle in!

The custom building process can be stressful with a lot of moving parts, but once you move into your dream home made for you, it will all be worth it. If you’re ready to begin your construction financing journey, get started now!