Encompass Quick Reference Guide Construction Loans

Encompass? Quick Reference Guide

Construction Loans

A construction-only loan finances the improvement or construction of a residential property. These loans are typically short-term in nature, requiring interest-only payments during construction and final payment when construction is complete. Construction loans follow the same workflow used for most Encompass loan files, but you need to enter or edit the construction-related data listed below. This guide applies to construction-only loans in Encompass 16.1. For information about the workflow for One-Time-Close Construction-Perm loans in Encompass 16.1, refer to the One-Time-Close Construction-Perm Loans Quick Reference Guide.

Borrower Summary

In the Transaction Details section, the following fields relate specifically to construction loans:

Purpose of Loan: Select Construction

Loan Type: Select Conv. Purchase Price: Can represent the land, improvements, or both.

Construction-Only Loan Data Borrower Summary

1003 Loan Application

In the Construction Loan section on the 1003 Page 1, complete the following fields:

Period: The construction time, in months.

Year Aqd: The year the property, typically the lot, was acquired.

Original Cost: The original cost of the property, typically the cost of the lot.

Existing Lien: The amount of any existing liens on the property.

Present Value of Lot (a): The current value of the lot.

Cost of Improvements (b): The estimated cost of improvements to be made to the lot.

Total (a+b): The current value of the lot plus the improvement (construction) costs. This field is automatically calculated.

1003 Loan Application REGZ-LE

Loan Templates

Loan templates save time and improve the accuracy of loan information by enabling you to quickly apply the information in the template to a new or existing loan.

If you use the same types of data and information for most of your constructions loans, create a loan template that populates a construction loan with predefined data and establishes predetermined sets of documents and forms for the loan.

Each loan template consist of five component templates that are separately maintained. These component templates can also be easily applied to new or existing construction loan files as needed.

For more information about creating and using loan templates, refer to the Loan Template help topic in the Encompass online help.

REGZ - LE

In the Construction Mortgage section, complete the following fields. 1st Int Change Adj - Select the date when the first adjustment to the interest rate occurs: the construction first payment date or the promissory note payment date. Est. Interest On: Select a method for calculation of interest. - Method A (Half Loan): Interest is payable only on the amount advanced for the time it is

outstanding. Assumes half the commitment amount is outstanding at the contract interest rate for the entire construction period. - Method B (Full Loan): Interest is payable on the entire amount regardless of actual dates or amounts of disbursement. Assumes the entire commitment amount is outstanding at the contract interest rate for the entire construction period. Number of Days: Select a method for calculation of the repayment schedule. In each option, the first value represents the number of days per year used to calculate the loan's total interest and the second number represents the number of days per year used to calculate the daily interest. 360/360: Total interest is calculated based on the months in the loan period multiplied by 30 (partial months are not allowed) / Daily interest is calculated based on 360 days in a year. 365/ 360: Total Interest is calculated based on the total days in the loan period (partial months are allowed) / Daily interest is calculated based on 360 days per year. 365/365: Total Interest is calculated based on the total days in the loan period (partial months are allowed) / Daily interest is calculated based on 365 days per year.

*Example Calculations Based on Number of Days Options The following examples assume a loan amount of $200,000, interest rate of 5%, a loan period of 8 months, and a first payment date of June 1. The total interest calculation is (number of days in the loan period) x (daily interest).

- 360/360 - Total interest = (8x30) x ($200,000 x .05/360) = 6,667

- 365/360 - Total interest = (245) x ($200,000 x .05/360) = 6,805

- 365/365 - Total interest = (245) x ($200,000 x .05/365) = 6,712

Period: Enter the length of the construction loan in months. Int Rate: Enter the rate for the construction loan. Rate Type: Select a Rate Type from the drop-down list. Inspection Fee: Enter the dollar amount for construction inspections performed after the loan closes. This value is automatically printed to the Construction Loan Agreement disclosure provided in the closing doc packages generated by the Encompass Docs Solution. Initial Acquisition of Land: Select if loan amount includes the purchase price of the land. Est. Closing Date: Enter or select the loan's estimated closing date. First Payment Date: Enter or select the date of the first loan payment. Final Payment Date: Enter or select the date that the loan is due. Occupancy Cert Date ? Enter or select the date when the property is certified suitable for occupancy. Required Reserves: Enter the dollar amount of any required reserves. Select the Required Interest Reserve, Creditor Prohibits Borrower from Making Interest Payments, and Refinance check boxes as needed. The selections for the interest check boxes affect the calculation for the Estimated Construction Interest amount, which in turn affects the APR, Finance Charge, and Total of Payments. Description: The description of the construction loan.

? 2022 ICE Mortgage Technology. All rights reserved. Encompass? and the ICE Mortgage Technology logos are trademarks or registered trademarks of ICE Mortgage Technology or its subsidiaries. Other company and product names may be trademarks of their respective owners. Rev. 4/4/2016

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download