More Construction Loan Issues

Even though we put our build on hold for the winter, we decided to go ahead and close our construction loan. The actual build was put on hold in the end of November 2019, but we were likely to start things back up in late April or early May 2020. The plan was to start with framing, done on the front range, with plans to ship house panels up to Summit County. Then the hope was to start with excavation of the site in May or June, depending on how fast the snow melted and how fast the water dried up. We had landed a pretty solid construction loan rate, and the process of getting the loan to close was a grind, so we decided to push forward to close the loan.

This would put the end of our construction over a year out from the loan close. Generally, the banks wanted one-year construction loans. So we could either pay to extend the interest-only period of the construction loan via a higher interest rate, or we could start paying the principal and interest after a year. We decided to do the latter, since we would need to start paying the principal at some point anyway. And we could afford to pay both principal and interest for a while.

Getting documents for the bank for the construction loan felt a little like doing quests in a video game. “Get me the toenail of a griffon! Fetch the eyelash of a unicorn!” Sometimes the assigned tasks were impossible: “Get homeowner’s insurance for a house that isn’t built.” When we tried to get something like homeowner’s insurance and failed, we would then get the response “Oh yeah, it’s just builder’s risk insurance until the house is finished, then homeowner’s. That’s pretty typical.” It was pretty frustrating to be sent on errands that were literally impossible. 

In the meantime, we finalized the “build” contract with Shaun.