CONSTRUCTION LOANS
Fairfield Financial Services offers construction loan programs that can be structured to meet the needs of individual contractors. For a detailed summary of our process, see the Rehab/Construction Loan FAQ. The following is an example of one of our programs.
Typical Program
Amount:
75% of LTV of the completed project value
Fees:
Origination fee of 5% of the gross loan amount. We charge a document preparation fee ranging from $650 to $2650 depending on the loan amount, and a collection account set up fee equal to $470 plus $1 for every $1000 of the loan amount. Depending on the location and characteristics of the property, there may also be an inspection fee.
Interest:
13-14% on the full amount disbursed
Interest Reserve
6 months' interest is held in reserve in Fairfield's client's trust account.
Term:
One year
Disbursement of Funds:
The first disbursement is made through escrow, and includes loan fees, escrow and title costs, and land acquisition advances (if any).
Construction disbursements are made on a monthly basis. Material suppliers and sub-contractors submit their bills to the contractor as of the 25th of each month. The contractor submits the bills to Fairfield Financial no later than the last day of the month. Along with the bills, the contractor will submit checks made out to the provider along with pre-addressed and stamped envelopes. After inspection and approval, Fairfield will deposit money into the contractor's account and mail the checks.
Interest reserve account disbursements are made monthly to the Lender.
Approval Process
Documents required for loan approval include but not necessarily limited to the following:
- Summary sheet describing the general parameters of the loan
- Loan application (Form 1003)
- Credit report
- Plans
- Detailed line-item construction budget
- Contractor resume or description of credentials
- Copy of earnest money agreement (if land is being purchased)
Fairfield Financial realizes that individual contractors have different methods of doing business and we are willing and able to structure loans to meet different needs. For example: the contractor can have sub-contractors and material men submit their invoices directly to Fairfield, and Fairfield can issue the checks and do the necessary accounting for the project, and Fairfield can do inspections more frequently than once a month.
If you are interested, a Fairfield representative will sit down with the contractor and work out an individual program.
