Financial Matters: Construction loans

PORTSMOUTH, Va. (WVBT) - All week long we're showing you how to makeover your home on The Hampton Roads Shows.

Some of the ideas are do-it-yourself, but others might require a contractor.

So, what do you need to know before you pick one out?

Tim Branson, Mortgage Closer at BayPort Credit Union, has some solutions.

Homeowners really need to do their homework -- where should they start?

• Many lending institutions require you to use a Class A Contractor
• Ask how long the contractor has been in business
• Make sure that the building permit is in the name of the builder (this is important in case any problems occur)
• Get references, ask for at least one that is more than one year old
• Perhaps even ask to visit a completed current home
• Require proof of their Workers' Compensation and General Liability insurance

There's one term that homeowners need to know when it comes to signing a contract: "Cost plus."

• Make sure you get a complete list of specifications before you sign the contract
• Make sure that the contract includes a draw schedule

At Bayport Credit Union, homeowners can apply for a construction loan -- what are the requirements?

• Must use a Class A Contractor
• Our construction loans are a one-time closing product (that will save you money by only closing once)
• CU can lend up to 85 percent of the Total Contract price
• 85 percent of a current appraisal if you already own your land, which means we might be able to lend you 100 percent of your construction price as well as the closing cost

Watch the Financial Matters segment on The Hampton Roads Show and for more information on BayPort Credit Union, visit them online at www.BayPortCU.org .