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Construction Loan Do’s and Don’ts

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Building a custom home is a fun and exciting process. However, there are a lot of things that you should know before you begin a construction loan to avoid unnecessary headaches along the road to building your dream home.

To help you navigate the construction loan process we’ve put together a short list of do’s and don’ts to help make your experience a positive memory.

Construction Loan Do’s

  • Hire a qualified, licensed general contractor. Communicate your expectations to your contractor. Discuss change order cost and overruns.
  • Plan carefully as you work on your plans, bids cost and what is included in the bid. Don’t assume anything – always ASK.
  • Keep the lender informed of material changes, like unexpected costs, issues or delays.
  • Monitor and manage your construction funds carefully as problems are easier to manage if discovered early. Have lien waivers completed and submitted to the lender as work is being completed.  Title insurance with mechanic lien coverage is required on your end loan.
  • Plan on completing the entire project per the plans and specifications that you provided to your lender. The appraisal was based on those plans and specifications.
  • Have 15% in cash reserves available if needed to complete the project.

Construction Loan Don’ts

  • Do not begin construction until after the loan closing.  This includes any ground clearing or excavating. Early-start coverage might need to be requested from the title company if construction has been started.
  • Do not take out any additional loans or credit lines during the construction period.
  • Do not take out any additional loans to assist in completing your home without lender’s approval during the construction phase.
  • Do not change employment (or become self-employed) during the construction period.
  • Do not have any late pays on your existing debts during the construction period.

Final Thoughts about Construction Loans

While building your custom home is exciting it can also be very stressful. It’s very important that you keep in communication with your lender during the project.  It is also key to have an open dialog with your contractor regarding timeline, cost vs budget, change order cost and any concerns that you have regarding the project. You want to be able to enjoy your new home for many years.

When you are ready to start building your custom home, please give Mid America Mortgage a call and let us put our years of experience to work for you.

"I’m a very loyal customer at Mid America Mortgage Services, Inc. I have an addiction to building houses and designing them, and they are always right there with me every step of the way helping me get the best loan product and the best rates whenever I am ready to build. They make sure you don’t get a loan that you can’t afford. The whole process was very smooth. I would recommend Mid America Mortgage Services, Inc to anyone because they are always there to teach you, help you, and make it easy for you every step of the way."

Kate

"I knew Jeanie Byland for a long time. She made the process so easy. One of the things I probably appreciated the most was that she didn't want to spoil the excitement of closing on a new house by showing up on closing day finding out that we owe a lot more than we thought. They were upfront with that information right from the get-go, and that’s because it’s just like they say, ‘They wouldn’t put you in a loan that they would be comfortable taking themselves.’”

Jamie

Michelle, I want to thank you for all of your efforts on the loan. I never knew how much information the needed! I appreciate your personal nature and ease of working together. Thank you for making this happen! :)

Amy

"My wife and I have moved around quite a bit with my job so we have been through the process before, but we have never had anybody help us as much as Michelle West Mid America Mortgage Services, Inc did. We needed a loan for a new construction home and they were able to help us out with all of our needs and make us feel comfortable with what we were doing moving forward. They did a good job of walking us through the paperwork to make sure that we were pre-approved for a certain amount."

Jason

"My family owns Tiger Ice Company. My experience with Ralph at Mid America started with Tiger Ice because we needed to expand our facility. When we went in to talk to Ralph at Mid America, he pretty much was straight up with us and told us we needed to go back to the drawing board. We came back with new numbers and a new plan, and we built the facility and everything was fine. Our dream of that would not have been possible at all without Mid America Mortgage Services, Inc and Ralph. They don’t tell you what you want to hear, they tell you the truth and that's what we weren't getting from other banks."

Andy

Selling our home of 17 years and building a new home was a very emotional time for our family. We were ready for the next adventure in our lives but knew there were numerous steps involved. The search for a mortgage officer was simple, Michelle was our choice. Her guidance and knowledge made the process as easy as possible. When we had questions, she was always there to give us an answer and discuss our options. The employees of Mid America Mortgage Services, Inc like Michelle will keep us returning for our mortgage needs.

Chad and Julee

"One of the main things that I loved about Michelle was she was so organized. She would meet us at any location she needed to, and to be honest she had the absolute lowest interest rate. They were always very transparent with fees so there were no surprises. Michelle was always super easy and we would always run in talk to her even it was for a few minutes. The best thing was the process was very, very smooth."

Chris and Jamie

"I have had mortgages since 2004 in Columbia and have gone through a couple of banks, but over the last several years, the last couple of houses have been with Mid America Mortgage Services, Inc. Michelle has told us many times, 'I am not going to put you in a situation I am not comfortable with you being in, regardless of what it means for our company'.

Heidi always has a smile on her face and when you walk through the door, they recognize you and say “Hi”. I definitely recommend anyone who is in the home buying, purchasing, refinancing, upgrading business to go to Mid America Mortgage Services, Inc, ask for Michelle because they are going to be the best person you can work with."

John

"They really explained the process to us very well and made us feel very comfortable, specifically Jeanie Byland. I have never asked a question that I felt dumb about. They really wanted to educate us and have been fantastic. The interest rates changed one day and they called me to say, ‘Hey we might ought to look into refinancing your loan’. I really felt like they had our best interest at heart."

Steve

"When we were 18 and 19 years old no one wanted to help us get started. But Michelle took us under her wing 6 years ago next month. There is a lot of people out there that could of taken advantage of us many of times because we had no idea what was going on. For Michelle to stand beside us and walk us through, and not let us get into something that could get us in a lot of trouble means the world. We thank Michelle and we are extremely blessed to be able to work with her and her team. I have never even thought about talking to another lender and will always be loyal to Mid America Mortgage Services, Inc."

Cody and Morgan


Phone: (573) 875-1100
200 E Walnut St, Columbia, MO 65203