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Local lenders can help finance a new home building project, or can help people wishing to remodel tap into the equity already in their home.
“ Give your lender a call ahead of time, and get pre-qualified,” Glynis Laub, mortgage loan officer at High Country Bank, said. “Make sure you have everything in order before you start.”
Loan seekers must fill out a “dreaded packet” of application information to provide lenders with adequate information to consider a loan.
Laub said the turn-around time from application submittal to loan approval is usually, at most, 30 days.
Mark Ray, commercial lender for Pueblo Bank and Trust, said he can get approval for a construction loan in one to two weeks.
For a new home project, officials for both banks take specifications and cost estimates from the contractor and appraise the project as if the home was already completed.
“ We can loan up to 75 percent of that value, in a 12-month interest-only loan,” Laub said.
An interest-only loan means the borrower pays monthly interest only on what has been borrowed to date, not the entire loan amount.
“ After completion and receipt of a Certificate of Occupancy, we convert the loan to a more traditional type of financing, like a 15- or 30-year fixed mortgage,” she said.
Pueblo Bank and Trust will loan “up to 80 percent” of the appraised value.
For those wishing to remodel or expand an existing dwelling, homeowners can often tap into the equity already in the home or apply for a home-equity line of credit.
“ Depending on the equity already in the home, hopefully there is enough equity to cash out,” Laub said. “We can loan up to 80 percent of the appraised value.”
For example, a home appraised at $200,000 would be eligible for for a loan of $160,000. If the mortgage on the home is $100,000, the remaining amount — $60,000 — would be available for an equity loan.
A home equity line of credit works like a credit card, Ray said. A borrower pays only on the amount that has been borrowed, instead of paying on the entire loan amount as with a traditional equity loan.
No matter the project, Ray said the application process is essential in obtaining a loan.
“ You’ve got to have good credit, and the ability to make the payments, ” he said.