FAQs

I just have some lending questions, who do I talk to?

If you just want to talk to a loan officer to discuss your loan options, rates, purchasing power and monthly payments, or any other questions you have about financing – talk to loan expert!

What is a pre-qualification and why is it important?

A pre-qualification is one of the most important steps that a future homeowner can take in the home building process.  It involves two parts, completing an application and submitting financial documentation to your loan officer to review. This documentation can vary slightly, but typically consists of tax returns, W-2’s, paystubs, bank statements, property information, and identification.  Your loan officer will review and determine if a pre-qualification letter can be issued.   If so, this letter will specify the amount you should qualify to borrow for your home.  You’ll also get a breakdown of the likely down payment required, the closing costs, and your projected monthly payment. You can do this seamlessly online.  Get started now with a fast-track pre-qualification process in less than 20 min, apply now!

How long does it take to get pre-qualified?

Usually, 1-2 business days after the application is complete and your documentation is uploaded.

What down payment is required?

Schumacher Mortgage offers low and no down payment loan options. VA programs can allow for as little as a $0 down payment to active-duty military and veterans, FHA which allows as little as 3.5%, and conventional options with 5% down.

VA programs, FHA programs, and conventional loan programs can assist you in determining a program best suited to your needs and down payment abilities.

How do construction loans work?

This can vary by loan product. One-time close loan products mean that you close one time, before construction starts, and then the loan automatically converts to permanent financing at the completion of the home. There are requirements to maintain minimum qualifications throughout the construction process to convert the loan. Most construction loans have an interest-only payment paid during construction, and then offer a permanent financing solution after the home is complete.

How much home can I afford?

Each customer’s financial situation is unique and so is this answer for them. Your financial situation, down payment, repayment period, loan product, and credit history will all factor in determining what you can afford. Schumacher Mortgage offers a no-cost, no-obligation consultation with a Loan Officer who will provide you with an estimate of what you might qualify for.

Can I use my lot as my down payment? How does this work?

If you own the lot already, your lot and home may be combined into one property. Each construction loan product has different guidelines pertaining to using lots as equity. With many loan programs, an appraisal is conducted for what the home will be worth when the home you’ve designed is built on the lot. The value of your lot can be factored in!

Every construction loan requires an appraisal, in which the appraiser provides an estimated value for what the property will be worth when your new home is built on your land. Often, the appraised value is the value that dictates the loan amount and down payment required.

When do I lock my interest rate in on a one-time close construction loan?

Your interest rate is locked in before the construction starts. Locking in the rate means that you would have the same interest rate during construction as you do after. During construction you pay interest-only (except for VA loan borrowers who will pay no interest during construction). Once construction is complete, assuming you maintained the minimum qualifications along the way, the loan converts to a fully amortized loan.

What does it mean by “no extension fees”?

Schumacher Mortgage gives you peace of mind and financial protection from loan extension fees that other lenders don’t. If construction time extends beyond the length of your construction loan due to building circumstances beyond everyone’s control (such as supply chain issues, permitting delays or weather), Schumacher Mortgage guarantees that you will never pay a loan extension fee, and your interest rate will not change. Additional conditions apply. See bottom of Loan Options page for details.

What are draws?

A draw is a disbursement of money made to the builder on your behalf based on your purchase agreement at designated stages of construction (i.e. when the foundation is complete, under roof, after drywall, trim, and after completion of the home.) You only pay interest on the amount drawn. So, your payment at the beginning of the loan (not applicable on VA loans) is significantly less than at the end. It’s important to emphasize that these payments are interest-only so they'll be less expensive than the standard housing payment.

Can I live in my current home during construction?

Schumacher Mortgage offers unique financing options so you may be able to stay in your current home while your custom home is being built. These unique programs allows for equity in the existing home to be used towards a down payment as well as flexibility on some of the qualifying terms like debt-to-income ratios.

Should I have the lender check my credit if I’m not sure I’ll qualify?

If you are interested in going forward and getting pre-qualified for construction financing, the only way to know whether you can qualify is by pulling credit. If Schumacher Mortgage pulls your credit and you cannot qualify, they may offer you some tips to raise your score and then get you qualified through a rapid rescore, or they can provide a referral to a credit repair company.

Does pulling my credit drop my score?

Excessive credit pulls can impact your credit score. However, when pulling credit for purposes of a mortgage, the bureaus are understanding that this is not the same as a credit card inquiry or other inquiries and do allow for a few pulls in a limited timeframe without impact to your scores.

How much are closing costs?

Closing costs vary by loan amount, loan product, and by your financial scenario. However, in your consultation with your Loan Officer, you will get a good idea as to what to expect.

When does my loan convert from the construction portion to the fully amortized payment if I’m using a one-time close loan?

Assuming you maintain your loan eligibility throughout the construction process, your loan will convert to permanent financing approximately 60 days after the home is complete.

What is an appraisal?

An appraisal is a report completed by an independent licensed appraiser to establish the value of the property. For new construction, an appraiser is given the plans and specs of the home you design as well as a cost breakdown. Then, the appraiser visits the land on which you are building the home and assigns a value as to how much the property will be worth when the home is built on the land.

What is an appraisal report?

An appraisal is a report completed by an independent licensed appraiser to establish the value of the property. For new construction, an appraiser is given the plans and specs of the home you design as well as a cost breakdown. Then, the appraiser visits the land on which you are building the home and assigns a value as to how much the property will be worth when the home is built on the land.

What is cash-to-close?

The term “cash-to-close” is the total amount of funds required from you, the buyer, at loan closing. It consists of the down payment plus closing costs.

What is a conditional approval?

A conditional approval means that an underwriter has reviewed your file and has made the decision that your file will meet the loan program’s guidelines and will be approved. Conditions could include selling your current home or paying off debt.

Do I need to pay off my land before building?

No, you can combine your lot and home together with one set of closing costs.