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New Construction Loan - Financing Process

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Alex Brandt

Jul 6, 2017
Hello All,

I am needing some feedback from people who have gone through the process of building their own home to get some perspective if this timeline for financing is normal. I am a first time home buyer and I decided that building would be the best way to go.

Background: In August of 2016 I paid cash for two improved lots (ie: has sidewalks, paved street, utilities stubbed out), each one a 1/4 of an acre for a total of $9,995. In December 2017 I transferred one of the lots to a business I started up for $30,000 (the lot I am building on).

On March 8, 2017 I applied for a construction loan with US Bank and received my pre-approval on March 12,2017. I signed the contract with the builder on March 25,2017. I had the engineered (stamped) floorplans by April 12. The bank received the builder's packet on April 17th. I submitted the engineered floor plans to the City for approval on April 21st. The bank sent me the loan estimate and disclosures on May 2nd. My build permit was approved by the City on May 12. The appraisal was ordered sometime in early May and I didn't receive it until June 14th (about 45ish days - so that was normal). The appraisal came in at $30k for the lot and $140k for the structure.

It's now July 6th and the lender is saying that closing and signing will be the week of July 17th. I've already provided the lender with proof of funds to cover the cost of closing. The title/escrow company hasn't even received my loan information from the lender at this time (it took two days to negotiate with the title/escrow company to lower their fees as they wanted $1k just do the construction hold back/fund dispersing). My 90 day rate lock with the lender expired in June and they've re-locked my loan at a 3.8% rate (said they don't need to re-pull my credit as my credit score was high when I initially applied). Also, my 90 day price lock with the builder expired on June 25th but they've told the lender it is a fixed price contract and I have no intentions of requesting anything from the builder to change the price.

I've asked the loan processor if its normal for construction loans to take 120+ days, but no response yet. I'm doing 20% downpayment based on acquisition costs ($152,500) and my appraisal came in higher ($170,000) so my loan to value ratio is 72% (loan amount is $122,500).

I feel that this process should not take this long since everything was on a 90 day rate/price lock and this is a conforming/traditonal loan. My biggest concern is that the builder comes back and increases the price of the contract since the price lock was only 90 days (despite the builder telling the lender it's a fixed price contract and not a cost plus contract).

If the builder does increase the price of the contract would I have any recourse with the lender since they are taking forever and I have no room in the loan for price increases/contingencies?

Thank you for your time and any help would be great appreciated.

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Last edited:


Platinum Contributor
Read Millionaire Fastlane
Summit Attendee
Speedway Pass
May 2, 2017
I would take this to or an attorney.
My anecdote is that I'm building a house right now, and everything is taking longer than I think it should, but my financing did not take as long as yours.

Who knows if our builders, lenders, and general financial situations are even close to each other?
Check biggerpockets - real estate is what they do, and there is a wealth of info. I wouldn't worry about the lawyer until something costs you money.


Bronze Contributor
Read Millionaire Fastlane
Speedway Pass
Jan 22, 2017
I would never rely on a behemoth bank like US Bank do anything in a fast and efficient manner. Take your business to a small local bank. In my area it varies but there are always one or two who had a recent committee meeting and decided they want to aggressively expand their business and will give great terms. You just have to call around.


Legendary Contributor
Speedway Pass
Aug 24, 2007
First, I'd be willing to bet a lot of money that you have absolutely no legal recourse against the bank.

Second, the builder has no legally obligation to extend the rate lock on the bid. Keep in mind that the reason builders lock rates for a fixed period of time is that labor and material costs change. The cost of sheetrock can fluctuate, the cost of roofing material can fluctuate, the cost of siding can change. Plus, there are certain times of the year when labor is more expensive, especially in areas with extreme climates. So, while the builder may honor the price, he also may have good reason not to.

This is going to sound a little bit harsh, but you need to hear it: If you can't manage the loan process effectively, you're probably not ready to handle the build process. Lenders are much easier than contractors/builders. The loan process is much easier than the build process. You need to step up and take control of the process. Don't just wait for the lender to tell you what's happening and when; instead, get commitments that make sense and hold the lender to them.

For example, you said the appraisal took 45 days. That's ridiculous. That just means that the lender waited 30 days to order the appraisal. I would have been on the phone with the loan officer every day from the beginning to ensure that the appraisal was ordered within the first week. If it wasn't, I would have moved on to another lender (there are plenty of construction lenders these days).

Construction loans shouldn't take more than 30 days once you have a detailed bid and permits -- more than 90 days is ridiculous.


Float like a butterfly
Read Millionaire Fastlane
Speedway Pass
Dec 6, 2016
I really can't help. I just came here to plead with the American members of the forum.

Never, ever, ever, take for granted how cheap land is in your great nation.


New Contributor
Jan 1, 2017
Don't buy the bs that materials and labor goes up. Don't bend over for the GC.
I would've waited to have the final approved plans as the contracted price.
I try to use smaller local banks that I have a relationship with. Would've expedited the appraisal process.

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