OVERVIEW

UWM offers One-Time Close New Construction for conventional and VA loans. This is an opportunity for our clients to generate new business as they continue to strengthen relationships with real estate agents, build new relationships with builders/contractors and further expand their portfolio of options for borrowers.

BENEFITS

  • UWM is arming our partners to help more borrowers and first-time homebuyers make their first home or next home their dream home
  • Builders don’t have to pay for the construction upfront, then sell the home to a borrower. They can create the borrower’s dream home and get a loan before construction even begins. Helping save time and money by only having to close once and covering one set of closing costs!
  • UWM’s process has a contractor approval component. Meaning we vet the contractor and obtain references to make sure they are credible. This helps give peace of mind to your borrower, that they have gone with a good option.
  • Other lenders require intense documentation, high interest rates, and large down payments. UWM helps reduce the headaches, keep the project moving, create transparency and peace of mind for all parties involved, and offer the same great service on these loans, as we always do.
  • After the first approval the borrower is good to go, no need to reapprove them!

BROKER TO BORROWER

  • This program includes a budget analysis which ensures the costs that the contractor is quoting are reasonable for the area. Gives peace of mind that your project is properly budgeted for the build.
  • “I can help get you into your dream home without settling for anything less!”
  • Once the build is complete, you can float down the loan to secure a lower interest rate if the market improves or stay locked in no matter the market shift.

BROKER TO REALTOR / BUILDER / CONTRACTOR

  • New construction loans take longer than traditional mortgages, sometimes cost more or have higher interest rates than traditional mortgages. When you partner with me and UWM, we can get you paid before the build even starts!

What is a One-Time Close New Construction loan?

A One-Time Close New Construction loan is a single closing construction loan. The construction portion is short-term financing that is modified into permanent financing upon completion of the project. A single closing construction mortgage can be closed as a purchase or a refinance.

What is a single closing?

A single closing construction loan is the combination of financing of the construction and the permanent mortgage. There is a single closing transaction that occurs prior to construction beginning.

Closing costs/fees that the borrower is responsible for are collected at closing. Funds are accessed through draws and there will be an initial draw at closing for proceeds to the contractor to begin the construction project.

What is a One-Time Close New Construction Purchase Loan?

The loan purpose is a purchase when the borrower is not the current owner of the lot on which the home will be built. The borrower is using the loan funds to purchase both the lot and to fund the construction of the property. The loan amount includes the sum of the sales price of the lot and the cost to construct the property minus the down payment.

What is a One-Time Close New Construction Refinance Loan?

The loan purpose is a refinance when the borrower already owns the lot in which the home will be built on. The borrower is using the loan funds to pay off any existing liens on the lot and to finance the construction of the home. The loan amount includes the sum of the any existing financing from purchase of the lot and the cost to construct the home.

GENERAL TERMS

Construction Period – time frame between the initial draw at closing to completion of the construction of the property

Initial Draw (Draw at Close) – amount of funds to be disbursed at closing

  • On a purchase transaction, funds from initial draw are used to purchase the lot and to pay the contractor to begin the project
  • On a refinance transaction, funds may be used to pay off existing financing on the lot and to pay the contractor to begin the project

Draw Schedule – outline of the increments in which funds will be disbursed to the contractor in accordance with the construction contract

  • Funds are generally released to complete a certain percentage of the project throughout the construction period
  • Before each draw is released, an inspection is done to ensure progress is being made on the construction, a title search is done to ensure there are no outstanding liens and that the correct permits are drawn
  • 4 business day turn time for release of a draw once it has been requested
    • Business days are based on regular business hours of 8am EST – 8pm EST Monday-Friday

Construction Draw Fee – cost collected at closing to draw funds during the construction period is based on the hard cost of construction

  • The fee is determined during the project approval period and will be finalized between Granite and the builder/contractor

Float Down – when the locked interest rate changed to a lower rate available at time of project completion

  • If the borrower is eligible for a float down, the process is automatically complete

PARAMETERS

  • Fannie Mae only – DU Findings must be approve/eligible
  • Maximum Lock Period = 90 days
  • Project and builder/contractor must be approved by UWM/Granite
  • 5% of construction cost will be held for the contingency fund that is part of the project budget (Form C)
    • 10% of construction cost held in Texas
    • Included in the initial loan amount and is used in case the construction costs are underestimated
  • 11 month maximum build period with 1 month modification period
  • Credit documents cannot exceed 12 months at the time of modification
  • .75% rate adjustment applied at time of lock to the rate selected in EASE
  • $1495 underwriting fee
  • Only weather related escrow holdbacks permitted
  • Eligible for Hybrid Close with paper note
  • Recast options are available once the build is complete and the loan is in the modification period

INELIGIBLE

  • Texas 50(a)(6)
  • Co-ops, attached condos, manufactured homes and accessory dwelling units
  • Temporary Buydowns
  • Principal Reductions
  • Appraisal waivers or appraisal alternatives
  • Title Review And Closing (TRAC) process
  • Virtual Close
  • Ultimate Loan Submission
  • Borrower cannot be the builder
  • UWM Loan Shield

CONVENTIONAL

  • 15- and 30-year Fixed & 7/6 and 10/6 ARMs
  • Conforming and High Balance loan limits
  • Primary, second home and investment properties
  • Min FICO = 700
  • Max LTV/CLTV/HCLTV = 95%

VA

  • 30-year Fixed & 30-year Jumbo
  • Primary Residence Only
  • Max Loan Amount = $4 million
  • Total loan amount cannot exceed the total acquisition cost, including financed funding fee
  • Min FICO = 620
  • Max LTV/CLTV/HCLTV = 100%
  • Funding fee based on total acquisition costs
  • Borrowers cannot combine VA entitlement
  • No rehab constructions – an existing property cannot be renovated using a One-Time Close New Construction loan

VA REFINANCE LTV DETERMINATION

On VA One-Time Close New Construction refinance loans, the LTV calculation includes the lower of the acquisition cost or appraised value of the lot. The figures used depends on 1) if the lot was acquired within 12 months of closing, and 2) if the lot was gifted to the borrower.

VA REFINANCE – CASH BACK

PURCHASE

If the borrower has made a down payment to the builder prior to the mortgage transaction occurring, borrower can receive cash back at closing for this amount

REFINANCE

In all states except Texas, if the borrower purchased the lot in cash or made a down payment to the builder prior to the mortgage transaction occurring, borrower can receive cash back at closing for this amount.

  • Lot must be free of any liens and cannot have been gifted to the borrower
  • If the purchase of the lot was financed, but the lot has since been completely paid off, evidence that it is owned free and clear must be provided
  • Any down payment that is being reimbursed must be fully documented and funds sourced

AGE OF CREDIT DOCUMENTS

  • Income, employment, and credit report documents must not be older than 12 months at the time of modification to permanent financing
    • Updated documents may be requested prior to CTC

APPRAISAL EXPIRATION

  • Full appraisal subject to plans and specs required to close One-Time Close New Construction loans
  • At the time of construction completion, an Appraisal Update and/or Completion Report (Form 1004D) must be completed
  • If the property is in a Declining/Risky Market, it may be subject to a 10% LTV reduction based on the max product LTV
    • Indicators that a property would be subject to LTV reduction:
      • Declining, Over Supply or Over 6 Months checked in the One-Unit Housing Trends section of the appraisal
      • SSR message 1020 is present on appraisal
      • The property is in a county found on the Declining/Risky Market List

LOAN STRUCTURE

CONVENTIONAL

  • Interest only payments made during construction period are based on the current draw amount during the construction period
    • 75bps adjustment applied at time of lock to the rate listed on the rate sheet
  • Once the construction period and the modification to permanent financing has been completed, the borrower will pay principal and interest payments
  • Loan term beings at modification date
    • Example: A 30 year term loan with an 11 month build. At time of modification, the loan converts to a 30 year permanent financing loan

VA

  • Escrow Waiver required during construction period – no payments are required during the construction period as the interest only payments will be included in the construction budget
  • Once the construction period and the modification to permanent financing has been completed, the borrower will pay principal and interest payments
  • Loan term begins at note date
  • Construction period is “backed out” of the loan term
    • Example: A 30 year term loan with an 11 month build. At time of modification, the loan converts to a 29 year and 1 month permanent financing loan

LOAN MODIFICATION

Loan is modified to permanent financing at time of project completion on every loan. The loan is converted to a fully amortizing loan and the loan term begins.

Borrowers will be required to sign the Modification Agreement.

  • The Final Inspection and Certificate of Occupancy is required before the Modification Agreement is signed by the borrower
    • If the Modification Agreement is not signed at 12 months, the Borrower is required to requalify
    • UWM will hold the final draw until the agreement is signed

NOTE: At time of modification, if the current available rates are lower borrowers will be offered a float down to a lower rate. If the current available rates have gone up, borrowers are protected against a rate increase.

REQUALIFICATION

If the modification agreement is not signed by month 12, the following must be submitted for requalification:

  • New income, assets and credit documents
  • Disclosures do not need to be redisclosed unless the borrower is denied during requalification
    • Loan will need to be resubmitted to refinance the One-Time Close New Construction loan

BORROWER QUALIFICATION REQUIREMENTS

DTI

Borrowers must qualify with their current mortgage payment included in the DTI calculation or sell their current residence prior to closing to have it excluded.

OWNERSHIP INTEREST

  • If the broker has ownership interest with the builder/contractor, it must meet the Interested Party Contribution Guidelines
  • If the borrower has an affiliation with the builder/contractor, occupancy is limited to primary residences
  • The borrower cannot be the builder/contractor

DISCLOSURE DOCUMENTS

  • Loan Term - includes both construction period and permanent loan term
  • Purpose
    • Refinance if borrower owns land and a lien is being paid off
      • Construction if borrower owns lot and no existing liens being paid off
    • Purchase if borrower is purchasing land at time of loan
  • Product
    • Construction Period Interest Only then Permanent Loan Product
    • i.e. 7 mo. Interest Only, Fixed Rate
  • Monthly P&I – based on percentage of completion
    • [(loan amount ÷ 2) x interest rate] ÷ 12
    • Example: $240,000 ÷ 2 = $120,000 x interest rate of 6.75% = $8,100 ÷ 12 = $675

FEES

There are additional fees associated with a One-Time Close New Construction loan file:

  • Construction Draw Fee - $290 per draw
    • The number of draws is determined by Granite (see Draw Schedule above)
    • All draw fees will be paid as a one-time fee at closing
  • Contract Review Fee - $150 paid to Granite
  • Project Review Fee - $300 paid to Granite
  • Title Date Down Fee - $170

The One-Time Close New Construction specific fees will be disclosed in Section B of the fees screen. The Contract Review Fee and Project Review Fee may be marked as paid outside of closing.

NOTE: The Construction Draw Fee and the Title Date Down Fee will be zeroed out on a VA One-Time Close New Construction loan.

GRANITE APPROVAL PROCESS

BUILDER/CONTRACTOR APPROVAL

Please refer to the Contractor Review and Submission Requirements by Granite.

The builder/contractor must be approved by Granite to be eligible to complete the project. The approval process can be started before a property is found and must be complete on every loan regardless of if the builder/contractor is already approved. The builder/contractor approval process must be complete prior to underwriting. The $150 approval fee should be paid by the borrower but can be paid by the broker. UWM will not reimburse the fee. This fee is to be paid to Granite each time the process is complete.

  • The client will fill out the top and bottom section of the Contractor Acceptance Checklist – Form B to then be sent to the builder/contractor
  • The builder/contractor or the client is responsible for completing the checklist items and sending necessary documents to Granite
  • Granite will review the information and issue the contractor approval back to the client
    • 3 business day turn time for initial review
    • If additional information is needed in order to issue the approval,
    • Granite will reach out directly to the builder/contractor – additional 2 business day turn time

NOTE: The Builder/Contractor Approval fee is named Contract Review Fee in section B of the fee screen.

On a VA One-Time Close New Construction Loan, the builder/contractor must also be listed on the VA Registered Builders list.

  • The builder/contractor must download the forms listed on the VA website and send the completed forms to their Construction & Valuation Point of Contact
    • Builder Information and Certification
    • VA Form 26-421 Equal Employment Opportunity Certification
    • VA Form 8791 VA Affirmative Marketing Certification
  • The VA will issue the builder/contractor a VA Builder ID Number
    • 5 business day turn time for ID issue

PROJECT APPROVAL

Please refer to the Project Review Requirements and Submission Requirements by Granite.
The project must be approved by Granite. The project approval process can be started once a property is found and should be complete prior to the loan entering CTC. The $280 approval fee should be paid by the borrower but can be paid by the broker. The broker cannot be reimbursed by UWM.

  • The Project Review Checklist – Form D must be filled out by the client and sent back to Granite with the following documents/information included:\
    • Signed Construction Contract – Borrower and Contractor must both sign; contract amount must match total in cost breakdown.
    • Cost Breakdown – Must match dollar amount in Construction Contract.
    • Set of Plans – One full set of plans for construction and job specifications.
    • Appraisal – Lender will order an appraisal based on the plans and specifications. If the plans have not been submitted, please indicate in the
    • Expected Completion Date column your expected delivery date to the Lender.
    • Building Permits – Submission of Building Permits to Lender — if pre-start activity has occurred, Permits must be included.
    • Pre-paid Information (Prepaid Accounting Information – Form D1) – improperly documented pre-paids will not receive credit.
    • Draw at Close — submit a fully completed and signed (Construction Loan Disbursement Request/Authorization – Form E) documenting the hard cost draw at close.
  • Granite will issue the project approval back to the client
    • 3 business day turn time for approval
    • If additional information is needed in order to issue the approval, Granite will reach out directly to the builder/contractor – additional 2 business day turn time
  • The final project approval will include:
    • Conventional: finalized number of draws, initial draw at closing amount and balance the project budget
    • VA: interest only mortgage payments, property taxes, insurance (during construction), finalized number of draws, initial draw at closing amount and balance the project budget
  • If the budget is underestimated and more funds are required to complete the project than the amount secured by the contingency plan, the borrower may be required to provide the additional funds out of pocket

NOTE: The Project Approval Fee is named Project Review Fee in section B of the fee screen.

VA PROJECT APPROVAL

UWM underwriter will provide a cover letter for the required funds that need to be included in the project budget. This cover letter will need to be supplied to the builder/contractor for the final project approval to be processed. Calculator available to calculate the appropriate amount of funds required.

NOTE: Loan must be locked in order to determine the correct amount of required funds.