Roadmap to Financing Construction USAM

Roadmap to Financing Construction USAM

YOUR ROAD MAP TO FINANCING AND BUILDING A CUSTOM HOME

The thought of building your own custom home with all your own finishes, floorplans, design colors and location can be one of the most exciting and memorable times of your life! However, as you start to look at each choice, material, builder, financing option, floorplans, etc. you may start feeling very overwhelmed!

READY TO GET STARTED? LET’S GO! Never fear, USA Mortgage is here to help! We have created this custom construction road map to help you plan out the custom construction process and feel confident to make your dream home a reality!

STEP ONE: GATHER SOME INSPIRATION! You have decided that you want to build your dream home! Here we have included a list of things to consider along the way. It is not an exhaustive list but a head-start to some of the decisions you will need to make as you customize your home! 1. Must Have 2. Would be Nice 3. Great if Budget Allows

We have separated these into three categories for you:

Some “Must Have” categories to consider:

OVERALL STYLE What do you want the overall feel of your home to be? Craftsman, modern, traditional or even coastal? Two story or single story? Have you started to consider the floorplan and layout and flow the internal and external rooms? Is a kitchen connected to the family room so you can cook and spend time with your family? Start to map out your interior and exterior appearance! LOCATION Do you enjoy a more remote of urban setting? Acreage or small fenced back yard? View or no view? Proximity to desired schools or family? Access to paved trails or easy accessibility to freeways and interstates? All are important factors when deciding the where to build! SIZE AND AMENITIES Do you need 3 or 4 bedrooms? How about bathrooms? Is space to entertain a priority? Two or three car garage? Do you need a larger kitchen that would allow you more counter space, bar stools, double ovens or a extra space for kitchen cabinets? This might also be a good time to consider closet space, casework or an extra storage space that is needed.

Some “Would be Nice” categories to consider (again, this is just some of the ideas so you can start prioritizing the most important aspects of your new home!):

MATERIAL TYPES AND OPTIONS Granite, quartz, tile, hardwood, laminate, concrete, the options are endless. Time to make some cost and benefit decisions on the most important type of finishes for your home!

SPECIAL FEATURES Do you have a hobby that needs an extra room? Are green features important? Do you need the ability to work from home and a home office is vital? Do outdoor space and the ability to have a BBQ area or outdoor cooking ability need to be factored into your build?

Some “Great if Budget Allows” inspiration is below!

• In wall ironing board • Instant hot water • Motion sensor faucets • USB Outlets • Solar Panels • And so much more!

• Tesla or electric car chargers • Radiant floor heating • Smart home technology • Built in writing for flat screen TV

• Dog Washing Station • Bamboo wood floors • Theater or game room

Now all of this is great to be inspired by and helps to design your perfect home but real life requires a balance of needs and wants to fit into your budget and lifestyle! This exercise helps to shape your thoughts of your home and helps you realize the “Must Have’s” and “Wish Lists”.

STEP TWO: CONTACT YOUR USA MORTGAGE BANKER AND GET PRE-APPROVED!

Getting pre-approved for building your dream home is the next step in the building process. It is a good idea to know how much how you can afford to build and starting to put your inspiration into a budget that matches your pre-approval!

Once you contact your USA Mortgage Banker, you can expect the following:

1. An initial discussion so we can walk you through the pre-approval and building process.

2. You will apply online or via the USA Mortgage App. You can download the the USA Mortgage app on iTunes of the Play Store!

3. You will then provide documentation. Typically, the following list is used for guidance as to which documents we will be asking for:

ALL BORROWERS

•W-2s for the previous two years •Paycheck stubs for the last 30 days (most current) •Employment history for the last two years •Checking and savings account statements for the last two months •Statements for 401(k)s, stocks, and other investments •Signed federal tax returns from the last 2 years •Residency history over the last two years •Copies of HUD-1 or Release/Satisfaction if paid off mortgage in last two years •Photo identification for applicant and/or co-applicant •Check or credit card information for credit report and appraisal fee

VA LOANS

•Veteran DD214 or Veteran Reservists DD256

ADDITIONAL DOCUMENTS THAT MAY BE REQUIRED •If refinancing: Copy of Note, Deed of Trust or Mortgage, HUD-1 Settlement Statement, Survey and homeowners insurance information. insurance information. •Previous bankruptcy (if applicable) •Divorce Decree (if applicable) •Relocation Agreement if relocation move is financed by employer, i.e. buyout agreement, plus documentation outlining company-paid closing costs/benefits. •Documentation supporting monies received from Social Security/retirement/disability (if applicable) •Rental property - copies of leases, plus mortgage statement, homeowner’s insurance and property tax statements SELF-EMPLOYED BORROWERS ADDITIONAL DOCUMENTS •Copies of most recent two years corporate tax returms •Year-to-Date profit and loss statement and balance sheet •Copy of business license or CPA contact information •1099s or K1 forms

*Additional items may be requested during the loan underwriting phase if more information is required to guarantee your loan.

4. We will review and analyze your information at this point. We will thoroughly review your credit, income and asset documentation. If we need any clarification or extra documents, we will contact you so that we can make sure your pre-approval is as accurate as possible. This high-level review ensures that your mortgage experience is a 10!

5. We submit your loan file and documentation to underwriting for a full credit approval!

STEP THREE: PICK THE PERFECT CONSTRUCTION LOAN FOR YOU!

We offer multiple construction loan products to provide the right construction loan product to meet your specific needs! AVAILABLE OPTIONS CONSTRUCTION LOAN FEATURES

• FHA • 0% down USDA

• All options allow land to be purchased with the construction loan • 680 credit score

• 0% down VA • Conventional • Ask your lender for more options!

• 365-day building window • 43% debt to income ratio

Once we have determined the ideal construction loan for your project, we will work with you to determine the following items to complete your construction loan package (all of these items will be expanded on in further details in the coming pages):

1. Land Details 2. Selection of respected experts to design and build your home 3. Construction Cost Breakdown 4. Determining your “as-completed value”

STEP FOUR: LAND DETAILS

Are you a current landowner or do you need to pick your homesite? As we mentioned earlier, this step is one of the “must haves” when building a custom home.

If you currently own the land you are looking to build your dream home, your USA Mortgage partner will work with you to understand the value of your land, any outstanding balance owed and how that fits into your overall value and budget for your build.

If you still need to pick your homesite, you can work closely with your USA Mortgage partner to set a budget for your lot that fits into your total construction budget. If needed, USA Mortgage, has top-rate recommendations for realtor partners that can assist you in purchasing your lot.

STEP FIVE: FIND YOUR PERFECT PARTNERSHIPS WITH CUSTOM CONSTRUCTION EXPERTS

This starts the exciting part of building your home! You will start meeting, interviewing and selecting your building partners! This is where your dreams will start turning into realty. Be sure to ask your USA Mortgage partner for a list of builders, architects, engineers, surveyors and interior designers in your area!

ARCHITECT In most cases you will start by working with an Architect. Your Architect will use their special construction knowledge and design your home to meet your desired specifications. They will develop all of the electrical, structural and mechanical plans for the home. BUILDER You can start selecting your builder at any stage in the custom construction process and is probably most-helpful to bring them in very early on. They will be involved in the day to day building of your home. Many times, builders are set up as one-stop shops and have many of the design and architect services in house. Your builder will utilize your architect and design plans to formulate a construction cost breakdown and construction contract for your build.

Other important experts to keep in mind during your journey!

• Interior Designers • Surveyors • Engineers • Landscapers

• Home Owners Associations • Utility Companies • TV/Phone/Internet • Property Manager

STEP SIX: CLOSING ON YOUR CUSTOM CONSTRUCTION LOAN

Now that you have selected your builder, created home plans and are ready to start building, we move on to closing on your construction loan! Construction loans have a lot more pieces involved than your standard mortgage, so we have included the items needed to finalize a construction loan.

DETERMINING YOUR FINAL LOAN TO VALUE

1. An appraisal will be ordered to determine the “as-completed value” of the property. a. To complete this appraisal, we will need a complete set of architectural plans, plot and site plan and cost breakdown of your building plan. 2. The appraisal will determine the value of land and construction of the property 3. Current lien payo, if any, on your lot 4. Acknowledgement and documentation of pre-paid land or construction costs. i.e. Survey or engineer costs 5. Final closing cost and soft cost calculations

BUILDER APPROVAL Your builder will also need lender approval for loan closing, this process can start at the time you select your builder. Your USA Mortgage partner will work directly with your builder and get the builder approved with the following items that will be needed from your builder.

1. Builder Profile- provided from USA Mortgage 2. Builder Resume- provided from USA Mortgage 3. Certificate of Insurance/General Liability Insurance 4. Most recent two years of tax returns (first 2 pages only) 5. YTD Profit and Loss and Current Balance Sheet 6. Builder State License

CONSTRUCTION PACKAGE APPROVAL Your construction package will also need lender approval. The following items will be needed for construction approval.

1. Completed contract between you and your builder 2. Plans for proposed project 3. Specifications and Materials

4. Construction Cost Break Down 5. Draw Schedule 6. Completed “As-Is” Appraisal

OTHER ITEMS FOR LOAN CLOSING: 1. Course of Construction Insurance - this is insurance carried by you to protect your new home while it is under construction. Please contact your USA Mortgage partner for a list of preferred insurance agents who can assist you with this step.

2. Septic Permit (if applicable) 3. Well Permit (if applicable) 4. Building Permit

STEP SEVEN: DURING THE BUILDING PHASE • During construction, you will be making monthly payments that are interest only payments based on the draws to the builder. • A draw schedule will be determined in advance between you and your builder and lined out in your contract. Draw site inspections will be handled via photographs to draw administrator.

STEP EIGHT: CUSTOM CONSTRUCTION COMPLETE!

• Once you receive your certificate of occupancy, you will move into your fully amortizing loan if your chose one of our four all in one construction options.

PLEASE CALL TODAY IF YOU ARE READY TO GET STARTED ON YOUR CUSTOM CONSTRUCTION JOURNEY! Building your custom construction can have many moving parts and can feel overwhelming at times. Our goal at USA Mortgage is to take the guesswork out of this process and provide you with a partner you can rely on to help make your dreams come true!

Company NMLS: 227262. Not a commitment to lend. Additional terms and conditions apply. DAS Acquisition Company, LLC is not a…liated with or endorsed by any government entity or agency, including USDA, HUD or VA. Headquarters: 12140 Woodcrest Executive Drive, Suite 150, St. Louis, Missouri 63141, Toll Free: (888) 250-6522. For complete licensing information visit http://www.nmlsconsumeraccess.org.