MrsGordo is right on. I just got through going through that process. From my experience, hardly anyone does any 1-time construction permanent loans anymore. I called around to about 8-9 local banks and a few internet based mortgage companies and all of the internet based places said, "We don't do one-time close, your best bet is a local bank." Well, all of the local banks said they don't do that anymore. So, I had to go with a separate interim construction loan, at that point...its just shopping the different rates/closing costs. It varied so much. Some banks charge a point, but if you use them for permanent they credit that back to you. Some of them told me flat out, if they can't get the permanent they don't want to mess with the interim (Since they don't make very much off the interim). The bank I wound up using was referred to me by my builder. He uses them, and has referred other clients to them and never has heard anything negative. I wound up going with that bank, and it really worked out well for me. They had the best rate, no points (which allows me the option of shopping the permanent), and also they have a relationship with my builder already. So he knows what they need, and they know he does quality work and finishes on time and in budget. My interim construction loan also encompassed the purchase of the lot. So based upon my total loan amount, the amount I put down paid off the lot and put some in the balance of our building account. Now, if we can just get some DRY WEATHER Q#$(#$@#$!!, we can actually start and i'll start making draws and paying the interest. So, i'm not sure how it'll work with you buying the lot so far in advance of building. I would call around to some local banks and get some ideas from them. Make lots of notes on who you talked to, the rate, any points charged, application fees, etc so you can look back on the big picture and see who has the best overall terms for your situation.

We did a construction loan on ours and we are almost finished. Some things I learned. 1) Don't forget that MOST construction loans have a deadline date and penalties for going over that date. Ours went over, as do most and now we got a 2 point penalty and hoping the builder is going to pay the penalty like he claims. 2) There usually is an additional inspection fee which YOU will have to pay for any inspections beyond what is contracted. We got hit with one. The builder called for the 4th draw and the bank came out to inspect. The builder had most of the 4th draw items finished, but not all, although he had items done from the 5th draw which he thought would balance out. The bank was unhappy about that and required an additional inspection that I must pay for and hope the builder will compensate me for it. 3) Yes, as noted above, the banks inspections are worthless. I happened to be at the home one day talking with the builder when the bank inspector came. It was siding and insulation. There was no siding on the front of the house since it gets stone and stucco, but the back and sides had siding. The inspector never looked at the sides and back and said "I am assuming there is siding on the back and the front gets stone" the builder replied "yup" The inspector then stuck his head in the door, not his feet, just his head, saw there was insulation and said, "I am assuming there is insulation upstairs too" builder says "Yup" and the inspector says "OK...gotta run" and drove off. Less than 30 seconds on the property. We know our builder, but I don't know if I could even trust him if I were not close by to watch over them. One good thing the bank will do for us at conversion time is if all contracted items are not finished, but CO is acquired, they will withhold an amount which will certainly encourage the builder to come back quicker and finish.

Yes to your own RE attorney. Yes to a methodology of lien release tracking. Yes to setting up a construction draw schedule even if you don't have a loan. Your builder should know when he needs draws and design a schedule for you. Planning is everything. Know what you want and stick to it. Strangely enough, once the foundation is dug, a lot of risk diminishes. If there are no rocks or water, your foundation costs drop off. Shop around for other lenders. You only need a construction loan. Not a construction to perm. They are different. It's good to have a line of credit in your back pocket when building. I suggest you explore a home equity line of credit on your current home. If you need it, you have it. If you don't use it, you were prepared. Lenders will love you. They love to lend to people who don't need the money. And, they love lending to people who already own the land. Expect and prepare for cost overruns. Construction lending is high risk and you are lowest level of risk of a high risk endeavor. Make the lenders compete for your business.

Try to find a one time close construction loan. BMO Harris does this for example. You normally will need to pay cash for the land. Most banks will only loan 75% of the appraised value. So more cash. Landscaping will usually be out of contract so more cash. If you can visit all the vendors your builder uses and get all your choices in the contract. Builder allowances will always be low. This can help keep you within 5 to 10 percent of your budget.