December 12, 2017

Construction Loans

Wake Forest Federal Online April 2012#2 006At Wake Forest Federal we offer an assortment of construction loans with competitive rates to fill your company’s needs. Please contact Billy Faulkner at (919) 556-5146 to obtain more information or to set up an appointment to apply for a loan.

Construction loans to individuals are typically made in connection with the granting of the permanent loan on the property. Such loans convert to a fully amortizing adjustable or fixed-rate loan at the end of the construction term. In most cases, we require that the closing with respect to the permanent financing occur simultaneously with the closing of any construction loan to the borrower.

We also offer construction loans to local real estate contractors in our market area, generally for construction of one-to-four family residences. These loans are generally indexed to prime with maturities of six to nine months, and allow for extensions with Board approval. The Association’s policies provide that construction loans may be made in amounts up to 80% of the appraised value of the property or the cost of construction, whichever is less. The Association makes construction loans to local builders on either a pre-sold or speculative (unsold) basis. However, the Association generally limits the number of unsold homes under construction by its builders, with the amount dependent on the reputation of the builder, the present exposure of the builder, the location of the property, the size of the loan and prior sales of homes in the development.

We also originate construction loans on commercial properties. The underwriting requirements are similar to those required for construction loans on residential properties. However, the loan to value may not exceed 75% of the property’s appraised value, certain debt service and income ratios are considered, and financial projections and business plans are reviewed.