All-in-One Custom Construction

Transcription

1 Wholesale Lending All-in-One Custom Construction This is a true one-time-close loan program designed to finance the construction or major remodel of a primary residence or second home. This loan includes financing for both the construction and permanent loan in one closing. That means saving your client the expense of dual loan fees and the worry of having to re-qualify for a permanent loan after the home is complete. Interest-rate is fixed and secure from beginning to end. Your client can relax and enjoy the security and peace of mind that comes from knowing the permanent interest rate before construction even begins. Rely on Washington Federal s years of experience in construction lending. You and your client can always count on high-quality personal service throughout the entire process. Option available to lock interest rate up to 90 days, which includes a free automatic float-down of the interest rate. General Loan Type: Loan Programs Available: Not Available: Loan Term: Maximum Loan Amount: Custom Construction or Major Remodel of an Owner Occupied SFR or Second Home with automatic conversion to permanent loan. 30/15 Year Fixed 3/5/7 Year ARM (See Rate sheet for pricing) Non-Owner Occupied Total term of loan is the construction period of 9-12 months, plus term of permanent loan (30 or 15 years); except for 3/5/7 Year ARM, which has a total term of 30 years; construction period is included in the initial lower-rate period of 3/5/7 years. Maximum loan amounts are reflected on the Wholesale Lending Rate and Fee Schedule. Select Pricing tab on your State Home page to access. Page 1 of 13 Const WA ID UT AZ NV TX NM 7/31/17

2 Maximum LTV: Major Remodel: Tear Down and Rebuild: Property Type: Interest Rate: 80% LTV (80.01 to 85% may be considered by underwriter case by case on a very cautious basis.) LTV is based on the Appraised Value or the Total Acquisition Cost whichever is less. Total Acquisition Cost is defined as the total fixed price construction contract, plus the purchase price of the lot (or appraised value of the lot if owned for 12 months or more), plus borrowers closing costs. If a contingency fund is required by underwriting, it will be added to Total Acquisition Cost for purposes of calculating LTV and funds required to close. In general, if a contingency is required, it will not exceed 10% of the total contract price. Please complete WAFED Form LO260: All-in-One Custom Construction Loan Worksheet to determine the LTV correctly. If an existing house is being remodeled and/or added on to and it has been owned for 12 months or more, the LTV is based strictly off the future Appraised Value (value after the remodel and/or addition has been completed). If the property has been owned less than 12 months, the LTV is based on the future Appraised Value or the total of initial purchase price of property, plus the fixed price construction contract for the remodel, plus closing costs, whichever is less. Regardless of when the property was purchased, if the old house is being completely demolished in order to rebuild a new home, the LTV is required to be calculated using the future Appraised Value or the total of the fixed price construction contract, plus the current site value (do not include old house), plus closing costs, whichever is less. Cost to demolish and haul away old home will also need to be accounted for. Detached SFR only. (A duplex may be considered case-by-case.) 10 acres or less is required. (A property that exceeds 10 acres is an exception, but will be considered case-by-case providing it s typical for the area and documented with 3 comparable property sales in a current appraisal report.) Texas Only: Primary residences reflecting A6 Status on title are not eligible. The interest rate is fixed during construction. The same interest rate will apply after completion when loan is automatically converted to permanent financing. For current pricing, refer to Wholesale Lending Rate and Fee Schedule. To access, select Pricing on your state s Home Page. Special Pricing applies. 90-day lock-in option is available, which includes a free automatic float-down of the interest rate. (For further details regarding our lock-in policy and procedures, select Lock- in Procedures on your Page 2 of 13 Const WA ID UT AZ NV TX NM 7/31/17

3 State Home page.) Loan Fee to WAFED: Add Construction Loan Origination Fee to Special Pricing reflected in current Wholesale Lending Rate and Fee Schedule. To access, select Pricing on your state Home Page. A construction period longer that 12 months requires an additional $1,800 fee. Draw Inspections: Limit one (1) per month for the original construction term of the loan.as an exception, if inspections are being performed outside of WAFED lending area, additional fees for draw inspections will apply. Contingency Requirement: Self-Insurance: Building Permit: Reserves/Impounds: Prepayment Charge: Loan Payments to WAFED: Not automatically required, however WAFED reserves the right to require one at time of underwriting depending on the strength of the borrower s personal liquidity, etc. If a contingency fund is required, it will typically be for an amount equal to 10% of the contract price. Refer to section below titled Contingency Funds for more details regarding when a contingency may be required. N/A The building permit is required to be provided prior to preparing loan documents. AZ Only: If the lot is being purchased simultaneously, the Building Permit cannot be obtained prior to closing, so it will be required prior to first draw. During the construction period, Borrower(s) must pay all property taxes and insurance premiums. For all loans over 70% LTV, impounds will be required as a condition of loan approval. For all loans with impounds WAFED will require the initial reserve deposit at time of completion and conversion of the loan to permanent financing (not at closing). At closing, the borrower(s) will be disclosed an estimate of the reserve deposit that will be required at time of conversion. Monthly impounds for taxes and insurance can be waived upon request if LTV is 70% or less, subject to underwriting approval. Escrow Waiver Fee applies. If flood insurance is required, monthly impound for flood insurance is always required; cannot be waived. No exceptions. Monthly impounds cannot be waived on Higher Priced Loans regardless of LTV. Does not apply. During Construction: Borrower(s) will be billed interest only each month based on the total portion of the loan amount that has been disbursed. After the project is 100% complete, the loan will automatically convert to permanent financing at the same interest rate, with monthly payments owing of principal and interest fully amortized Page 3 of 13 Const WA ID UT AZ NV TX NM 7/31/17

4 over the term of the loan. After Conversion to Permanent Loan: After conversion, the borrower has the option of making their monthly payments manually or via the E-Z Pay method (automatic withdrawal from a checking account of borrower(s) choice). If manual payment option is preferred, payment coupons will be ordered and a Payment Processing Charge will apply. (Please disclose the appropriate charge on the borrower s LE as stated on page 3 of the current Wholesale Lending Rate and Fee Schedule.) Property Tax Status Research Fee: Flood Certification: Required. WAFED will order from our service provider. Please disclose the appropriate charge on the borrower s LE as stated on page 3 of the current Wholesale Lending Rate and Fee Schedule. Required. WAFED will order Life of Loan Flood Determination from our service provider at time of preparing loan documents. Please disclose the appropriate charge on the borrower s LE as stated on page 3 of the current Wholesale Lending Rate and Fee Schedule. General Property Requirements: Site Inspection: Power: Water/Well: A satisfactory site inspection by WAFED is required prior to loan approval. The broker is responsible for requesting the inspection by providing a completed WAFED form LO346: Broker Request for Lot Inspection. To access the form, select Forms and Worksheets from your state s Home Page. So not to cause a delay, please be certain to include clear and detailed directions to the site with a contact name and phone number for the individual performing the inspection, should they have any questions. Oregon only: A Listing Kit is also required with the request for inspection. Please allow a minimum of 5 business days for WAFED to complete the site inspection. Power is required to be available at lot boundary. Public water is required to be available at lot boundary. If public water is not available, a developed well is required on the site prior to documents. Well requirements are as follows: Only drilled wells will be acceptable (no dug or spring fed wells). Newly drilled wells will require either a county well certification or a report from a private company dated within 6 months of closing documenting acceptable well flow and water purity. Page 4 of 13 Const WA ID UT AZ NV TX NM 7/31/17

5 Existing wells require either a county well certification or a report from a private company dated within 6 months of closing documenting acceptable water purity. Acceptable well flow is 5 gallons of water per minute for 1 hour or the well must have a 1200 gallon holding tank. Acceptable water purity test is defined as having no e-coli or coli forms present and nitrates that do not exceed maximum contamination levels. Oregon Only: State law requires a well purity test on all purchase transactions. A disinterested third party must collect test water. If the well is shared, a recorded Joint Maintenance Agreement is required and documentation from the county that the well is legally acceptable to service all associated properties. (Oregon is exempt from JMA due to state law automatically requiring owner s participation in joint maintenance.) As a result of the Hirst Decision WAFED will not lend on any property in the state of Washington that has had a well drilled after October 6 th of 2016 through Wholesale. Sewer/Septic: Access: Steep Slope: Appraisal: Public sewer must be available at lot boundary or, if the property requires a septic system and an approved septic system has not already been installed; an approved Septic Design is required prior to documents. There must be ingress and egress to the site via a legal road. A (joint) Road Maintenance Agreement may be required if access is via a privately owned road. (Oregon is exempt from JMA requirement due to state law.) A property located on a steep slope or a landslide prone area will pose additional building risks to be considered. For this reason, a current Geotechnical Evaluation Report is required for our review and acceptance and is typically required as part of the building permit process as well. A FNMA 1004 (SFR) or 1025 (2-4 Family) is required. Please instruct the appraiser to include a minimum of three (3) land sale comparables to support the site value. General Packaging and Documentation Requirements: In addition to the normal credit package documentation required on any 1-4 family loan, the following items specific to a custom construction or major remodel transaction are required: WAFED Custom Construction Worksheet (Form LO260): Broker is required to complete this form. This will help you to calculate, according to our policies, the funds required to close, the LTV and the total acquisition costs. Form can be accessed by selecting Forms and Worksheets on your state s Home Page. Broker Request for Lot Inspection (Form LO346): Broker is required to provide this completed form to request the property inspection, which is required to be completed prior Page 5 of 13 Const WA ID UT AZ NV TX NM 7/31/17

6 to underwriting review. Refer to General Property Requirements listed above for details regarding property inspection requirements. Documentation on lot purchase: Provide fully executed Purchase and Sale Agreement if borrowers are purchasing the lot simultaneously with obtaining the construction loan. If lot was purchased less than 12 months ago, provide copy of final HUD-1 Settlement Statement to document the purchase price. Legal Description of subject property. Fixed-Price Construction Contract: We do not accept Cost-Plus, Time and Materials or Fixed-Fee building contracts because these provide estimated costs only. We require the TOTAL contract price to be FIRM, (not just the contractor s fee.) The contract must be signed and dated by builder and borrower and include state sales tax, if applicable. Please refer to Construction Contract Requirements below for more complete details on contract requirements. Cost Breakdown: This document breaks down the contract price line-item by line-item. We do not require the builder to use a WAFED form; we will accept the builder s form. It must include the builder s profit and overhead figure as a separate line-item amount. The total amount must match the Fixed-Price Construction Contract amount. It must be signed and dated by the builder. (The builder is not required to provide a breakdown to the borrowers, so only the builder s signature is required.) Description of Materials and Specifications: Must be signed and dated by builder and borrower. Building Plans: Provide one complete set showing foundation plan, floor plan and elevations; signed and dated by Builder and Borrower. Site plan: As submitted to the county. Must show lot dimensions, setbacks, easements, adjoining roads, location of house, location of garage and, if applicable, location of septic system and well. Documentation on any pre-paid items: Pre-paids are items included in the contract price that have been paid by the borrower in advance. Please refer to section titled How to Document Prepaid Items for details. Custom Construction Loan Guidelines and Practices (Form LO271): This form provides answers to common questions the builder and borrower may have upfront regarding our construction loan practices, such as draw procedures, insurance requirements, extension procedures, etc. This is required to be signed and dated by the builder and borrower(s) prior to loan documents being prepared. A Complete Builder Package. A Builder Package consists of the items from the builder that we require to review in order to evaluate whether or not the builder is acceptable to Washington Federal. Please refer to section titled: Builder Package Requirements for complete details. Building Permit: This is required to be provided prior to documents. (AZ only: When lot is being purchased simultaneously, building permit is not required prior to closing, but is required prior to first draw.) Page 6 of 13 Const WA ID UT AZ NV TX NM 7/31/17

7 Texas Only: WAFED form LO339 Disclosure Statement is required to be signed by the borrower(s) no later than one (1) business day prior to closing. Builder Package Requirements: The following information is required from the Builder in order to evaluate the builder s experience level and credit worthiness: General Contractor s License and Insurance Bond: Must be current and comply with state s requirements. Custom Construction Loan Builder s Resume (Form LO272): The builder is required to fully execute this form. Select Forms and Worksheets on state s Home Page to access and print. A list of the builder s major suppliers, sub-contractors and references including all contact information. No need to duplicate any information already provided in the Custom Construction Loan Builders Resume. Often the builder will have their own list already prepared for this purpose. (It is acceptable for the builder to refer to this list in the resume if that s helpful.) IRS W-9: Builder is required to sign this form prior to documents. Proof of a current General Liability Insurance policy: Must reflect a minimum of $1 million per occurrence. Refer to section below titled Insurance Requirements for further details. Custom Construction Loan Guidelines and Practices (Form LO271): This form provides answers to common questions the builder and borrower may have upfront regarding our construction loan practices, such as draw procedures, insurance requirements, extension procedures, etc. This is required to be signed and dated by the builder and borrower(s) prior to loan documents being prepared. Construction Contract Requirements: Construction contracts are not all the same and can vary quite a bit from builder to builder. We have very specific requirements regarding the building contract that are important to understand and make clear to the borrower and builder. If you have any questions regarding what it is that we require, please let us know right away. Fixed-Price Construction Contract: This is not the same as a fixed-fee contract; the TOTAL PRICE must be fixed. The price must include state sales tax, if applicable, and builder s profit and overhead. Required to be signed and dated by the builder and the borrower. The total price should always match the Cost Breakdown total. Cost-Plus, Time and Materials, Supervisory, Consultant, Fixed Fee or any other estimated price contracts WILL NOT BE ACCEPTED. Read the contract, specifically regarding how payment to the builder will be calculated, to determine what kind of contract you have. Page 7 of 13 Const WA ID UT AZ NV TX NM 7/31/17

8 Owner-Builder transactions WILL NOT BE ACCEPTED: Defined as: A Borrower who is not a builder by occupation who wants to perform as a general contractor to build own home. WAFED will accept Owner-Builder transactions on a retail basis only. Builder-Owner transactions are accepted case-by-case. Defined as: An actual Builder by occupation who s properly licensed and wants to build his/her own house. Any amount for Profit and overhead is required to be excluded from cost breakdown and will not be included in calculation of total acquisition costs. Allowance items: Allowance items are amounts for items on the cost-breakdown that can either increase or decrease because a final cost has not been provided. Typically these are for items that the borrower has not yet made a final decision on regarding the materials, etc. We will allow for a minimum number of allowances depending on the strength of the borrower. Our general policy is to not allow total allowances to exceed 20% of the total contract price. WAFED will review the described allowance items to be certain the amounts provided are not unreasonably low. Case-by-case, we may require that some allowance items be fixed prior to closing. Draw Procedures: WAFED draw procedures will always take precedence over any draw procedures outlined in the construction contract if they so conflict. In this situation we will require the builder and borrower to acknowledge this fact in writing prior to documents. Refer to section below titled Draw Requirements in order to determine if the draw procedures outlined in the construction contract conflict. Contingency Funds: A contingency fund is an amount kept in reserve to guard against cost overruns. Many lenders automatically require a contingency fund be included in a Custom Construction loans, but WAFED does not. However, we do reserve the right to require a contingency fund at time of underwriting if one is believed to be required. (This could be required by the Underwriter at the credit review stage or the final underwriting stage.) Some of the situations that could result in the Underwriter calling for the inclusion of a contingency fund are described below: 1. Borrower does not have sufficient liquid reserves available after closing for potential cost overruns. (Note that retirement funds are generally not viewed as liquid.) 2. The construction contract includes a high percentage of allowance items and/or allowance items appear too low. 3. Builder is not known to WAFED and the cost breakdown is not very detailed. 4. Non-arms length relationship between builder and borrower. 5. Construction project includes work that is difficult to determine the accurate costs upfront, such as building on a steep slope, extensive remodel work, etc. If a contingency is required by Underwriting, it will typically be for an amount equal to 10% of the contract price. The amount required can vary, however, depending on the reason one is needed. Contingency Funds cannot be used for upgrades to materials or change-orders after closing. Upgrades and change orders (once approved by WAFED) are required to be paid by the borrower out-of-pocket. Page 8 of 13 Const WA ID UT AZ NV TX NM 7/31/17

9 If any part of the contingency fund is remaining after the home is 100% complete, it will be applied to the borrowers loan balance unless otherwise agreed to by Underwriting. How to document Pre-Paid items: Often there are items included in the contract price that the borrowers have paid in advance of closing that they would like credit for in order to reduce their loan amount or funds required to close. So not to cause a delay in closing, ask the borrower at time of application if they have paid for anything in advance (or if they plan to pay for anything in advance) that they would like to receive credit for. Listed below are the documentation requirements for these items: All requests for pre-paid credit items must be submitted no later than at time of underwriting for final loan approval. No credit will be given for any items that are not installed and considered real property. For example: No credit will be given for any Appliances, Windows or Kitchen Cabinets paid for in advance, since they would not have been installed yet. Complete WAFED form LO401: Items Prepaid on Construction Loan Cost Breakdown: This completed form is required to be signed by the builder and the borrower to document agreement of the credits provided. For each item that has been paid, please be certain the form clearly indicates which line-item from the Cost Breakdown has been paid for in advance (either partially or in-full) and provide a copy of the bill and canceled check (or equivalent). The Builder must acknowledge all credits to the Borrower. Each credit will be compared to the Cost Breakdown line item. Credit will be allowed for the lesser of the Cost Breakdown line-item amount or the amount of the receipted item. Any credits after underwriting will be allowed after the loan closes in the form of a draw. Credits taken to closing by the borrower will NOT be credited at closing. Any preliminary deposit to the Builder towards the contract price is to be documented by obtaining written verification from the Builder and a copy of the canceled check. Prior to docs, the Builder and Borrower must indicate which item(s) from the Cost Breakdown that it applies to. Please refer to section below titled Builder Deposit Special Requirements for further instruction regarding this specific prepaid item. If the pre-paid credit amount is being used to reduce funds required to close, document that the item was paid prior to the date of the borrower s most recently provided bank statements (or other form of verification of funds). Otherwise, the amount(s) will be subtracted accordingly from verified funds. A bill/receipt and canceled check are the simplest forms of documentation. Page 9 of 13 Const WA ID UT AZ NV TX NM 7/31/17

10 Builder Deposit Special Requirements A Builder Deposit is a deposit amount required by the builder upfront, prior to any work being completed. The builder deposit is credited towards the contract price. Not all builders require a deposit upfront. If a builder has required a deposit upfront, it s typically used to pay for preliminary costs associated with the project that are included in the contract price such as for plans, the building permit, and various other permits, surveys, inspections, etc. that are required to be completed prior to closing. A builder-deposit is required to be verified prior to documents by obtaining documentation as you would for any other pre-paid item. Refer to section above titled How to Document Pre-Paid Items for more information on how to document the builder deposit. If the builder deposit exceeds the total amount of the upfront preliminary costs: If the deposit exceeds the total amount for plans, permits and any other miscellaneous preliminary costs reflected on the cost breakdown (anything not related to actual construction work on the subject property), WAFED may not allow a credit for these excess funds. In this situation, please address the following questions: Has any work been started on the project? (It is against WAFED policy to begin any work prior to closing.) If no work has been started, what is the purpose of collecting the portion of the deposit that exceeds the preliminary upfront costs? (It is against WAFED policy to provide a credit towards any work that has not been completed.) If the builder deposit exceeds the upfront preliminary costs reflected on the cost breakdown and no other work has been completed, WAFED underwriting will have to review the specific situation and consider whether or not to allow the full credit amount or to require the builder return the excess funds, since no work was completed by the builder in exchange for the funds the builder received. Our decision will be reviewed strictly case-by-case and will consider the amount in question, the work completed, the builder s qualifications, the borrower s qualifications and loan-to-value. How will the Builder Deposit be handled? After proper documentation of the builder-deposit is received and reviewed, the borrower will be given credit towards their funds-required-to-close for the amount approved by WAFED. Also, this amount will be subtracted from the first monthly draw after closing. The builder and borrower are required to acknowledge this fact in writing prior to closing in order to avoid any potential confusion at draw time. Disbursement of Real Estate Commission: Sometimes a builder s cost breakdown will include sales commission intended for a realtor who found the client for the builder. This happens most often if the lot is being sold by the builder simultaneously. It s also common for the amount of the sales commission to be based on the value of the finished home rather than on the sales price of the lot, which can often be a sizeable amount. It is WAFED policy not to disburse sales commission at the closing of a custom construction loan unless it s being deducted from the actual sales price of the lot. WAFED requires all sales commission to be disbursed through the normal monthly draw process based on the percentage of completion; the same way the builder s profit and overhead is disbursed. Page 10 of 13 Const WA ID UT AZ NV TX NM 7/31/17

11 Draw Requirements: General: Final Draw: Draws will be based on the percentage of completion per the approved contract, plans and description of materials; unless a line item disbursement procedure has been specifically agreed upon in writing. Draws will be given no more frequently than once per month and are typically completed between the 1 st and the 10 th. WAFED will not advance any money for items not yet installed. Prior to the disbursement of any draw, a Certificate of Job Progress, signed by both the Builder and the Borrower(s) will be required. Draw checks will be issued payable to the Builder and the Borrower(s) unless WAFED is previously instructed otherwise in writing. The final draw, however, must be made payable to both the Builder and the Borrower(s). Ten percent (10%) of the cost to build will be held back from the final draw until WAFED receives the following: The final Certificate of Occupancy (or final, signed-off permit), a satisfactory final inspection from the appraiser as documented by receipt of Form 442 with color pictures and a final Certificate of Job Progress signed by both the Builder and ALL Borrower(s) stating that construction is 100% complete. For Oregon properties only: Draw checks may be issued solely to the Builder, provided a Request for Payment of Bills has been completed and signed by both the Builder and the Borrower(s) and approved by WAFED. The final draw check may also be solely payable to the Builder however, a Request for Payment of Bills must be completed and signed by the Builder and ALL Borrower(s) and approved by WAFED. For OR, NV and Tucson Division properties only: In addition to the above final draw requirements, a recorded Notice of Completion (Form LO289) is required at time the final draw request is made. Draw Fees: $600 for loan amounts up to $700,000 $1,200 for loan amounts over $700,000 Limit one (1) per month for the original construction term of the loan. In the event an exception is made to allow a project outside of Washington Federal s lending area, additional fees for draw inspections will apply; to be determined case-by-case. Change Orders: All changes to the contract, plans, specifications, and cost breakdown must be authorized by WAFED prior to any alterations. A reduction in the quality of the project will not be allowed. Any request for changes that will increase the cost of the project will NOT be paid for from the WAFED loan processing account. Borrower may be requested by WAFED to deposit the additional funds required to the loan account for proper monitoring. Page 11 of 13 Const WA ID UT AZ NV TX NM 7/31/17

12 Monthly Payments to WAFED: During construction, the Borrower(s) will be billed interest only each month based on the portion of the loan amount that has been disbursed. Payments are due on the 1 st of every month. A late charge will be assessed if payments are received after the 16 th of the month. Draw requests will not be honored if payments to WAFED are not current. After the project is 100% complete, the loan will automatically convert to permanent financing at the same interest rate, with monthly principal and interest payments fully amortized over the term of the loan. Insurance Requirements for Borrower and Builder: Liability Insurance and Course of Construction Insurance each serve different purposes. Liability Insurance, which the builder is required to provide, insures against claims arising from injuries or damage to other people or property (i.e., someone falling off the roof of the house, etc.). Course of Construction insurance, which the borrower is required to provide, protects the dwelling. WAFED s insurance requirements for the builder and the borrower are the following: Borrower: Provide evidence of Hazard Insurance to include the following: Coverage amount equal to 100% of full replacement value of completed improvements. Course of Construction Insurance endorsement (or equivalent). List Mortgagee as: Washington Federal, its successors and/or assigns. Name of the insured must match grantor clause on Deed of Trust. This typically is the Borrower(s) name. The maximum deductible we allow is 1% of the policy face amount or $1,000, whichever is greater. Binder to reflect borrower s WAFED loan number. Builder: Provide evidence of Broad Comprehensive General Liability Insurance to include the following: Minimum coverage of $1 million per occurrence. The Declarations (which are commonly referred to as a Dec Sheet ) or Certificate of Insurance must name the Certificate Holder, either Washington Federal or the state agency where the builder is licensed. Verify that policy is current. Page 12 of 13 Const WA ID UT AZ NV TX NM 7/31/17

13 Owner-Builder Exception: If the transaction is an Owner-Builder exception loan, which would not have a builder assuming any liability, the borrower is required to provide evidence of Liability Insurance for the construction project for a minimum of $500K per occurrence. The Declarations ( Dec Sheet ) or Certificate of Insurance must name Washington Federal as the mortgagee, reflect the subject property address and the borrower s WAFED loan number. Builder and Borrower Meeting with WAFED is Required Prior to Closing WAFED will require as a condition of loan approval to have the borrower and the builder meet with the WAFED Branch Manager (who is responsible for monitoring the construction project) prior to closing. This meeting gives everyone involved the opportunity to address any lingering questions before embarking on this new 6-12 month relationship and hopefully clears up any potential misunderstandings upfront before the loan is closed. The broker is more than welcome to participate in this meeting as well. Extending Construction Term: If the house is not 100% complete at least one month prior to the first scheduled payment of principal and interest, a modification must be approved by the bank that extends the first principal and interest payment date. WAFED may charge an additional fee of.50% of the loan amount and/or increase the interest rate if the modification results in: 1) An extension of more than two months; or 2) Extends the construction phase to greater than 12 months. The extension of the first payment date will result in a slightly higher monthly principal and interest payment for the borrower than originally disclosed, since the final maturity date of the loan will not change in this situation. Programs, interest rates, fees, terms and conditions are subject to change without notice. This information is intended for mortgage and real estate professional use only and should not be distributed or shown to consumers or other third parties. If you have received this information from Washington Federal directly by fax or and no longer wish to receive information, please contact us immediately. Washington Federal NMLSR Company # Page 13 of 13 Const WA ID UT AZ NV TX NM 7/31/17