Frequently Asked Questions

• What does Interest-Only Mean?

  With an interest-only loan, you are only responsible for paying the interest on the amount you draw from the construction loan each month. 

  Here’s an example. 

  If you draw $15,000 in January, you pay 4.99% on $15,000

  If you draw an additional $25,000 in February, you pay 4.99% on $40,000 ($15K from January + $25K from February)

• What is a Construction Loan?

  A home construction loan provides you with financing to build your dream home. 

  With terms up to 12 months, this short-term loan covers your costs, including land, contractor labor, building materials, and more, until your home receives an occupancy certificate.  

  Once your home is ready to move in, you will then secure a traditional home mortgage.

• You might prefer an adjustable-rate mortgage over a fixed-rate mortgage if...

  • You plan to move before the introductory rate expires.
  • You want a lower payment during your initial payment period.
  • You think rates will drop in the future.
  • You are planning on relocating before the rate adjusts
  • You know you will be paying off the loan in a few years
  • You need to move fast and have limited time to secure a down payment
  • You do not qualify for a 30-year fixed-rate mortgage, but want a 30-year payment schedule
  • Your payment could decrease if the index against which your ARM is benchmarked drops
• A 5/5 adjustable rate-mortgage is right for you if...

  A 30-year ARM with a fixed interest rate for the first five years, then fluctuating every five years. 

  A 5/5 ARM is best if you want to lock in a low rate over a longer period and maintain the same rate over an extended time. 

  With a 5/5 adjustable-rate mortgage, you can go 10 years with only one rate adjustment, whereas with other lenders, you could experience up to six rate changes in the same time period.

• A 3/3 adjustable-rate mortgage is right for you if...

  A 30-year ARM with a fixed interest rate for the first three years, then fluctuating every three years

  A 3/3 ARM is best if you want to lock in the lowest rate, but over a shorter period and are okay with the rate fluctuating more often.