Single-Close Construction Loan

This loan is used when building a new home and acts as two loans in one: your construction loan plus your mortgage once the house is finished. It’s nice because during construction, your builder is paid as bills are submitted and you pay interest only on what funds have been used so far. After the one-year construction term, the loan is simply modified to full principal and interest payments based on your established interest rate at construction closing.

One big advantage of using this approach is that you pay closing costs just once. If you did a separate construction loan and then a mortgage, you would have closing costs both times. If you already have equity in your lot that can be credited toward the down payment.

You will have one-on-one personal guidance throughout the process, including being available to answer your builder/contractor’s questions along the way to keep the process moving smoothly.

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The single-close construction loan lets you finance your construction and then turns into your mortgage. Another option is to get a land loan to cover the purchase of a residential lot which you would combine with a conventional mortgage.

There are a number of costs that go into building a new home:

Land/Lot

You may purchase the land or lot you have under contract at closing with proceeds from the Single-Close Construction Loan, or you may have already purchased the land and have a loan to be paid off with proceeds from the Single-Close Construction Loan. Or, you may own the land free and clear.

Soft Costs

Permit fees, engineering fees, architectural fees, and other costs associated with building the home but not directly part of the actual construction costs. You may have already paid some of these costs upfront. If so, these paid items may be considered equity. Your Mortgage Loan Originator will be able to determine this with proper documentation.

Hard Costs

These are tangible costs associated with the actual construction of the home. This includes materials and labor costs.

Total Costs

The total cost consists of all of the above.

Maximum Loan Amount

You may borrow up to the maximum loan amount as figured from the lesser of the appraised value or the actual cost (lot plus construction costs).

Lot Equity

The land value is taken from the appraisal, if owned, before closing. The difference between the appraised land value and the construction costs plus land payoff, if applicable, will be the lot equity. The lot equity will be a credit toward the required down payment.

The specific amount of your closing costs will vary. A home loan often involves many fees, such as the appraisal fee, title charges, closing fees, and state or local taxes. These fees vary from state to state and also from lender to lender. Your Elements Mortgage Loan Originator will review all costs with you based on your specific loan amount, purchase price, and home value.

Third Party Fees

Third party fees are ones that we collect and pass on to the person who actually performed the service. These can include the appraisal fee, the credit report fee, the settlement or closing fee, the survey fee, tax service fees, title insurance fees, flood certification fees, and courier/mailing fees. For example, an appraiser is paid the appraisal fee, a credit bureau is paid the credit report fee, and a title company or an attorney is paid the title insurance fees. 

Taxes and Other Unavoidable Costs

These fees include state/local taxes and recording fees and will most likely have to be paid regardless of the lender you choose. If some lenders don't quote you fees that include taxes and other unavoidable fees, don't assume you won't have to pay it. It is possible that a lender who doesn't tell you about the fee hasn't done the research necessary to provide accurate closing costs. 

Lender Fees

Lender fees such as points, document-preparation fees, and loan-processing fees are retained by the lender and are used to provide you with the lowest rates possible. This is the category of fees that you should compare very closely from lender to lender before making a decision. Elements charges a standard $995 origination fee on all mortgages.

For more information, call us at 1-800-561-9433.

The Single-Close Construction Loan process is very similar to a standard purchase or refinance transaction. But unlike a purchase transaction for an existing home, the Single-Close Construction Loan involves determining the value of the new home upon completion, information on the planned home, and the total cost to complete the project.

Final Plans and Specifications

These consist of a legible set of architectural drawings (building plans). They must include a floor plan showing all dimensions and outside elevations (drawings of the exterior). In addition, the builder should provide a detailed description of the materials to be used in construction of the home; for example, wood shingle or lightweight tile roofing; brick or stucco exterior. This information will be provided to the appraiser who will determine the value, subject to completion per plans and specifications.

Construction Contract

This is the agreement between you and the builder that details the planned construction project, the agreed upon cost, and the construction term to complete the project. The final plans and specifications should be an attachment to the construction contract.

Detailed Line Item Cost & Draw Schedule

This schedule is prepared by the builder and should include hard costs (direct costs) and soft costs (indirect costs). The total should match the Construction Contract total. The Draw Schedule is used to advance funds to the builder as work is completed.

Builder Registration

We require our builders to be registered with Elements. Your Mortgage Loan Originator will work on this process directly with the builder.

Draw disbursements or progress payments are made on a work-completed basis and occur over a period of time as the work progresses. The builder will submit draw requests directly to our Construction Department, itemizing the work completed and the amount requested for payment. The percentage of work completed is determined by an independent third-party inspection service. Your builder will designate a construction bank account at a financial institution and disbursements will be wired directly to that account after receipt of the inspection report.

Initial Disbursement

The initial disbursement at closing includes the payoff of the lot (if applicable). Also, a start-up draw may be disbursed to the builder.

Final Draw

The final draw to the builder will be paid upon completion of construction and receipt of a final appraisal inspection, a “clear endorsement” from the title company, a final survey if required, homeowner’s insurance policy, and any other documentation as may be required for our particular loan.

• SITE SELECTION
  If you have not already selected and purchased your lot, location is one of the most important factors to consider. Some realtors specialize in finished lots as well as developers who sell finished lots. A current survey of the property indicating all easements and rights of way will be required for closing.
• MEET WITH THE BUILDER AND ARCHITECT
  You may start by meeting with a builder or architect. Many builders have architects on staff or certain architects they regularly work with. Keep in mind that each plays an integral role in the process and will work together to help make your vision a reality.
• MEET WITH THE LENDER
  It’s never too early to meet with your construction lender. An Elements Mortgage Loan Originator can help in planning for your future investment.
• LOAN CLOSING
  You must have an adequate down payment or equity at the time of closing. Equity is defined as cash paid toward the lot or construction costs, both hard and soft.
• UP TO 12 MONTH CONSTRUCTION PHASE
  Enjoy a construction phase of up to 12 months with interest-only payments while you complete your new home. You will be charged interest only on the funds disbursed. The interest-only construction phase of your financing may continue past your home’s completion and your move-in, up to 12 months from loan closing. You will be responsible for continuing to make property tax payments to the county during this time.
• SELL OR LEASE YOUR CURRENT HOME
  If you currently own a home, your Mortgage Loan Originator will help you determine your need to sell your home first. If you do not have to sell your home, close on the Single-Close Construction Loan and have up to 12 months to sell or lease your current home before loan modification. No need to move twice!
• LOAN MODIFICATION
  Once construction is complete and a Certificate of Occupancy from the county has been issued, you may move in. The final draw disbursement will take place at this time. The Single-Close Construction Loan will be modified upon completion of the construction of your home and 12 months after loan closing. The modification will involve setting up an escrow account for property taxes and homeowner's insurance. Certain conditions and restrictions may apply.

Call us at 1-800-561-9433 to see if you can be preapproved for a loan so that you know what price range you can afford, to evaluate the monthly costs of a mortgage, and to see how much of a loan you can afford. The preapproval will also give you some leverage when negotiating with the builders.

Get Preapproved

Yes! Our First-Time Homebuyer Program allows you to purchase a new home with as little as 5% down with no Private Mortgage Insurance (PMI). The loans can be up to $450,000, and it’s okay if your down payment was gifted to you. We will also be there to give you guidance at each step through the process.

We also have other programs that are available with even lower down payment terms such as FHA, VA, and USDA loans. For more information, call us at 1-800-561-9433.

Getting Started

You can apply online in 15-20 minutes! Submit your application anytime. Or call us at 1-800-561-9433 to apply by phone. When you apply, have ready your government-issued ID (driver’s license, state ID, or passport) and estimates of your household income, assets, home value and price you paid for your home. 

Gathering Documentation

We’ll contact you within one business day after you submit your application to review documentation that we'll need from you. We’ll also answer any questions you may have. 

Application Review & Approval 

Once you have supplied your documents, your loan will be reviewed by an underwriter. After the underwriter review, your Elements Mortgage Loan Originator and Loan Processor will work together to obtain any further documentation that is needed to close your loan, including the title work and an appraisal based on your plans, specifications, and value of your lot/land.

Closing

Once your loan has received final approval, your closing will be scheduled at a location convenient for you. That's it — your mortgage is complete! Application to closing takes an average of 45 days. 

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Like a Bank, Only Better!

Personal Mortgage Guidance

Buying a home can be a bit overwhelming. But don’t worry. We’ll be with you every step of the way to guide you through the mortgage process, from pre-approval all the way to closing. You’ll have your personal mortgage expert’s cell phone number, so you can get all your questions answered very quickly. 

Better Rates. Fewer Fees.

Because we’re a credit union, we return profits to members in the form of reduced fees, higher savings rates, and lower loan rates.

Trusted Advice. Fresh Approach.

We pride ourselves on being a trusted source for financial education. We come to your workplace to answer questions and can provide you with a dedicated Mortgage Loan Originator⁴ to guide you through the entire mortgage process.

Respected Locally. Accessed Globally.

Headquartered in Indianapolis since 1930, we rank among the top 3% of credit unions nationally⁵. We serve members in all 50 states and 50+ countries. You’ll have access to 5,000+ shared branches nationwide and 78,000+ surcharge-free ATMs globally.

High Tech. Human Touch.

Our technology makes banking with Elements easy. From quick digital applications to online and mobile banking, we’ll be by your side wherever you go. We’re here for you with member service available 24/7 and live chat during the workday.

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3 Easy Steps to Apply

1. Apply online - Do this whenever you have 15-20 minutes to spare. Or call 1-800-561-9433 to get started.
2. Take our call - We'll contact you within one business day after you submit your application to go over what documentation we'll need and to answer your questions.
3. Schedule your closing - We'll stay in touch with you throughout the mortgage process. Then, if you're approved, we'll schedule your closing at a location convenient for you.

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Your monthly mortgage payment is made up of four components: principal, interest, property taxes, and homeowner’s insurance (referred to as "PITI"). 

Principal and Interest

Principal and interest are based on the loan amount, interest rate, and term (amortization) of your loan. 

Property Taxes

Property taxes are assessed annually. The amount of your taxes is divided by 12 months in order to determine how much will be collected from you as part of your monthly payment.

Insurance

Homeowner’s Insurance is also paid annually. The amount of your annual premium is divided by 12 months as well. 

Private Mortgage Insurance (PMI) can also be a component of your monthly mortgage payment. This is insurance that the lender obtains to protect them against any loss if you stop making payments on your loan. PMI is typically required on Conventional loans if you do not put at least 20% down on a purchase or have 20% or more equity in your property on a refinance.