Construction Loan 101

Nick and I met with Olympia Federal Savings Bank this morning to talk about construction loans. We've never had a brick and mortar bank before as we've always been happy USAA customers but apparently Olyfed is one of the few banks in the area making construction loans right now. While we're not ready to submit an application yet (we're going to build the barn with cash) it's good to know the basics:

• Need 20% down payment for the construction loan.
• Have 6 months to get certificate of occupancy. As owner-builders this was a little worrysome to me but the woman said we could get a special exception made.
• Need to produce a line-item budget of how much it will cost to build the house. Now me, being the excellent list maker and spreadsheet inventor that I have always been, has already created a line by line estimation of what it will cost to build the house. I asked the woman if what I had created would work and she kind of laughed like I would need to do more work...well low and behold, I included more line items than the bank. There are some rough estimates that we had done which I'll need to finalize but I'm more done than not.
• Once we start building we'll only pay interest on the money we take out only and not the whole balance, AND the best part...
• They reimburse us for our purchases instead of paying directly with their money. Which for us is just about the best scenario ever as we have a very good mileage card. (The Platinum Delta Sky Miles card in case you're looking for one yourself. I went to Greece on my miles and Nick and I both went to Nicaragua, not to mention countless other domestic flights. In a lot of cases (like home improvement stores and gas, woot woot!) you get double miles.)

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