CONSTRUCTION LENDING Through Mid Penn Bank

BUYING A HOME IS ONE OF THE LARGEST INVESTMENTS ANYONE CAN MAKE.

As a result of the pandemic and rising interest rates, the American dream of owning a home has become more difficult as housing inventory is at an all-time low.

Many people hoping to purchase a home are turning to new construction to make their dreams of owning a home a reality. But building a new-construction home comes with a different set of concerns than buying a previously built home.

One of the main differences between the two is how to finance the building of a new home. Many people dream of building their own home, but few have the up-front cash needed to build it. This means that most will require a loan to cover the cost of construction.

While applying for a traditional loan is fairly standard, it can be more challenging to secure a loan for new construction. This makes sense as you are asking a lender to give you money for something that doesn’t yet exist. For that reason, there are more complex underwriting guidelines for securing a construction loan.

When you finance the construction of a new home, you need a lender that knows the ins and outs of construction loan financing as well as the intricacies of the home building process. Mid Penn Bank and our local team of professionals in the MPB Mortgage division are the premier lender in Central Pennsylvania in construction financing. Step by step, our lenders will walk you through every stage of building and financing your new home.

Building a home can be stressful, and it is important that you feel confident that you are financing with someone who understands the nuances of a construction loan. MPB Mortgage’s Mark Bitting has been specializing in construction lending for almost 30 years and is a leading expert in the area. Builders and realtors regularly refer clients to Mark not only because of his expertise but also because of the unwavering service he delivers. The relationships and trust that he has built in the industry are unmatched.

Mark works diligently for his clients and has unparalleled expertise in this financing niche. Throughout his career, borrowers have asked Mark to take over in the middle of the building process after they have struggled with a different lender. Because of his perseverance and connections, he has gotten the projects back on track and created clients for life.

Brent Roland, president of Roland Builder in Mechanicsburg, Pa., said of Mark, “Mark Bitting has been a valued partner for over 20 years. He brings a wealth of knowledge to the mortgage process and serves his clients with great care and compassion.”

While Mark is Mid Penn Bank’s leading construction lender, he is backed by a team of professionals with 110 years of collective construction lending experience in Central Pa. The entire team shares Mark’s passion for exceeding expectations and providing top-notch service to every client.

Mid Penn Bank works strictly with local professionals to assist our customers from start to finish. We have strong relationships with local builders, realtors, underwriters, and appraisers that make the process as smooth as possible. Building a home comes with many variables but the MPB Mortgage team is equipped with the resources to react to problems quickly and efficiently.

You may be wondering what the differences are between traditional mortgages and construction loans and which one is right for you. Unlike conventional loans, construction loans pay solely for the process of homebuilding. The approval, appraisal, and disbursement procedures are very different from a traditional mortgage. Also, the loan itself covers more than just building costs. In most loans, the land, labor, plans and permits, contingency reserves, and interest reserves are all included in the loan bundle. Construction loans are very short term, generally with a lifespan of one year or less, and mortgage balances can fluctuate throughout the time period. Since there is more risk with a construction loan than a standard mortgage, interest rates may be higher.

The approval process also differs from a regular mortgage. Mid Penn Bank’s mortgage team works closely with many local builders to assist homebuyers. The originator of the construction loan will require detailed plans, a construction timetable, and a budget that makes business sense.

Construction loans call for more equity than a traditional mortgage. Fortunately, the land on which the home is being built can often be used as all or part of this down payment if the homebuyer owns it fully.

Another difference between a construction loan and a standard mortgage is that the loan pays out as progress is made on the project.

Generally broken down into phases, the money is disbursed as each phase is completed or as the funds are needed. Our construction lenders keep a close eye on the progress of each project we finance and personally visit the homesite to verify that construction is moving at the projected pace.

Construction loans draw funds in conjunction with each phase of building and the borrower normally only repays the interest on the loan for the duration of the building process. Construction loans are generally converted to a regular mortgage once construction is complete. The borrower typically converts the loan to a conventional mortgage and begins repaying both principal and interest. Because of this, our involvement often doesn’t end when your home is built. Our experts are here to help you even after the building phase has ended.

Choosing the right lender is of critical importance to financing a new home. When you partner with Mid Penn Bank and MPB Mortgage, you will receive 100% local service during every step of your project. You will never call an 800 number if a question arises; you will call our team directly and speak to a person familiar with your account. Our lenders sit within earshot of one another and work together to find solutions to problems in a fast and effective manner. We strive to make the homebuilding process as seamless as possible so that you can focus on watching your dream home become a reality.

Mid Penn Bank has the experience, expertise, and connections to see your project through from beginning to end. Contact us today to experience the Mid Penn Bank difference.