New Construction Loan - Financing Process

[Alex Brandt]

Hello All,

I am needing some feedback from people who have gone through the process of building their own home to get some perspective if this timeline for financing is normal. I am a first time home buyer and I decided that building would be the best way to go....joke's on me.

Background: In August of 2016 I paid cash for two improved lots (ie: has sidewalks, paved street, utilities stubbed out), each one a 1/4 of an acre for a total of $9,995. In December 2017 I transferred one of the lots to a business I started up for $30,000 (the lot I am building on).

On March 8, 2017 I applied for a construction loan with US Bank and received my pre-approval on March 12,2017. I signed the contract with the builder on March 25,2017. I had the engineered (stamped) floorplans by April 12. The bank received the builder's packet on April 17th. I submitted the engineered floor plans to the City for approval on April 21st. The bank sent me the loan estimate and disclosures on May 2nd. My build permit was approved by the City on May 12. The appraisal was ordered sometime in early May and I didn't receive it until June 14th (about 45ish days - so that was normal). The appraisal came in at $30k for the lot and $140k for the structure.

It's now July 6th and the lender is saying that closing and signing will be the week of July 17th. I've already provided the lender with proof of funds to cover the cost of closing. The title/escrow company hasn't even received my loan information from the lender at this time (it took two days to negotiate with the title/escrow company to lower their fees as they wanted $1k just do the construction hold back/fund dispersing). My 90 day rate lock with the lender expired in June and they've re-locked my loan at a 3.8% rate (said they don't need to re-pull my credit as my credit score was high when I initially applied - I thought they had to re-pull after 90 days regardless). Also, my 90 day price lock with the builder expired on June 25th but they've told the lender it is a fixed price contract and I have no intentions of requesting anything from the builder to change the price.

I've asked the loan processor if its normal for construction loans to take 120+ days, but no response yet. I'm doing 20% downpayment based on acquisition costs ($152,500) and my appraisal came in higher ($170,000) so my loan to value ratio is 72% (loan amount is $122,500).

I feel that this process should not take this long since everything was on a 90 day rate/price lock and this is a conventional/traditional loan. My biggest concern is that the builder comes back and increases the price of the contract since the price lock was only 90 days (despite the builder telling the lender it's a fixed price contract and not a cost plus contract).

If the builder does increase the price of the contract would I have any recourse with the lender since they are taking forever and I have no room in the loan for price increases/contingencies?

Thank you for your time and any help would be great appreciated.