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(The process of converting the construction loan into the permanent mortgage)
- Modification Process - Converting the construction loan into the permanent mortgage. American Home Bank sends the borrower(s) a modification package to sign and send back to convert the loan. This process starts once American Home Bank receives the final inspection.
- Modification Package - The documents sent from the lender that allows the borrower(s) to "modify" their mortgage. At this time, the borrower(s) can apply any monies left over from the construction loan or from their own pocket to reduce the final loan amount. If applicable, tax and insurance escrows are set up at this time.
- Escrows - An account set up with a lender that holds property taxes and insurance out of the monthly PITI payment made by the borrower until they are due.
- PITI - The mortgage terminology that stands for Principal, Interest, Taxes, and Insurance. PITI makes up a borrower's payment when taxes and insurance are included. Otherwise, a lender collects principal and interest (P&I).
- Final Inspection - The last inspection performed to insure that the house has been completed to the same degree at which it was initially appraised. The final inspection is required in order to convert into the permanent mortgage.
- Final Lien Search - If applicable in the borrower(s) state, a final lien search is needed to insure to the lender that no liens have been placed on the property since initial settlement. Upon receipt of the final lien search, modification can occur.
- Modification Fees - Outstanding fees due to American Home Bank at the time of modification or loan conversion. These fees usually include, but are not limited to the following items: outstanding construction interest, interim interest on the permanent loan, an escrow deposit for taxes and insurance (if applicable), courier fees for overnight draw checks, and inspection fees.
- Construction Loan Deposit - The 1% fee collected at initial settlement that is credited towards the borrower's modification fees. These modifications fees are calculated at the time of conversion from the interest only construction loan to the permanent mortgage.
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