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: From time to time, as a borrower completes the construction of a project, the borrower will submit a draw request to Fairfield Financial. Fairfield will review this request and, upon approval, release funds either directly to the subs/suppliers (if requested to do so) or to the borrower (if the borrower has already paid the subs/suppliers). Fairfield is responsible for ensuring that (a) the work is completed to an appropriate quality standard (this may require an on-site inspection which will incur a fee specified in the Loan Agreement), (b) the project is on-budget (or if not on-budget, appropriate adjustments are made), and (c) that all subs and suppliers get paid for their work on the project.
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.
