How it Works

1 Land / Title Report

For home construction loans, the lot you are building on must be owned by you and in your name. We will conduct a thorough evaluation of the property being used as collateral for the loan. This may include an appraisal, inspection, and assessment of the property's value and condition.

If you purchased your lot through a title company, we double check the title is clear for you. If you did not purchase your lot through a title company, we will have your mortgage lender order the title report. Title reports are required at close of escrow, so this is a good time to order the report and check that everything is legally ready for you to build.

2 Preapproval from Mortgage Lender

The borrower is required to be approved for a traditional mortgage refinance before the start of the hard money loan. This is done through a pre-qualification letter from your lender. The proceeds from the loan with the mortgage company is used to pay off the hard money loan. With the hard money loan paid off, the borrower transitions to a traditional mortgage loan where you make regular payments until the loan is paid off or refinanced again in the future.

We do not require other financial statements and we do not charge points or any extra fees. We rely on your mortgage lender to make sure your credit and income match the building price. We have certain title and mortgage companies that we like to do business with, but we have worked with dozens more. However, we do insist on using a reputable company for the title and mortgage work throughout the duration of the loan.

We recommend being qualified for more than your anticipated budget. This gives you room for any changes or add-ons along the way. Sometimes prices in products change as well during the building process and this gives you a cushion.

3 Deed of Trust / Promisory Note

Once the loan application is approved, we will provide the borrower with legal documents. The first document is a Deed of Trust and the second document is a Promissory Note. A Deed of Trust, also known as a trust deed or mortgage deed, is a legal document that provides the lender with security interest in the property. It outlines the legal agreements of the loan and grants the lender the right to foreclose on the property if the borrower defaults on the loan.

The Deed of Trust will be recorded with the county the land is in. The Promissory Note spells out the terms of agreement and is the contract between the borrower and us.

4 Insurance

After the Deed of Trust is notarized and recorded with the county and the Promissory Note is signed and returned to us, we will ask for insurance on the property. We require the borrower to obtain property insurance during the construction process. This insurance protects the property against damage or loss.

The insurance policy should name the lender as the "loss payee" to ensure that the lender receives compensation in the event of a covered loss. You can acquire this insurance through your personal carrier or Country Financial in Safford, AZ.

5 Monthly Payments

The borrower is required to make regular monthly payments to the lender according to the terms of the loan agreement. The payment requirements, including the frequency, is outlined in the Promissory Note.