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What happens with construction loans when building not complete?
2 Comments · Posted by admin in construction loans
I’m curious. Friend is building her own house, she and her husband literally. She has about 15 days to finish, no money left and bank says she has to have siding on house. (No doubt 
So, what happens when your time is up and construction isn’t complete.
I’m very curious. I know a lot depends on a lot . . . just wondering about personal experiences.
First answer–I have no idea what you mean – typo??
Second guy- I should have said, she already had an extension – 2 months. Yikes, huh. Trust me when I say she has no dollars for siding. Should be interesting.
For a lender to come in and refinance her out of the construction loan, the home must be completed – including the siding. It sounds to me like her bank is being stupid.
When you are that close (and for the sake of argument, I’ll assume the only thing left to do is the siding), the construction loan bank will usually give you an extension on the loan term. They don’t want the house – they just want to be paid off. I am in MN and we often run into trouble late in the year due to weather (tough to do things outside when it is snowing and 5 degrees….but I digress). Typically the bank will give the borrower an extention on the loan until the weather breaks (which may be April….damn, digressing again). I have never had a construction loan go to the next phase – foreclosure. The bank can accelerate the loan and make it due immediately. Your friend will be in default if they do this and the foreclosure process may begin.
If her current lender is not going to give her and extention she should contact another bank and see if they can do a "construction-to-permanent" loan, or give her another few months to finish the home.
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wallstdreams · March 18, 2010 at 2:33 am
the loan will be recalled same as any due date that arises
References :
thinking-guru · March 18, 2010 at 2:45 am
For a lender to come in and refinance her out of the construction loan, the home must be completed – including the siding. It sounds to me like her bank is being stupid.
When you are that close (and for the sake of argument, I’ll assume the only thing left to do is the siding), the construction loan bank will usually give you an extension on the loan term. They don’t want the house – they just want to be paid off. I am in MN and we often run into trouble late in the year due to weather (tough to do things outside when it is snowing and 5 degrees….but I digress). Typically the bank will give the borrower an extention on the loan until the weather breaks (which may be April….damn, digressing again). I have never had a construction loan go to the next phase – foreclosure. The bank can accelerate the loan and make it due immediately. Your friend will be in default if they do this and the foreclosure process may begin.
If her current lender is not going to give her and extention she should contact another bank and see if they can do a "construction-to-permanent" loan, or give her another few months to finish the home.
References :
I am a mortgage broker and a realtor