Cypress Investment Corporation

Cypress Investment Corporation Phone
(888) 591-8043 ext. 0
(831) 624-0600
Email

Frequently Asked Questions

These frequently asked questions have been compiled to help you understand more about Cypress Investments' wide range of services. If you have additional questions that you'd like us to answer, call (800) 495-4261 Ext. 0.
Q	Is there only one set of closing costs?
A	Yes, there are no additional fees or costs when the house is completed and the loan is converted to a 5/1, 7/1, or 10/1 ARM or a 15 yr. or 30 yr. fixed rate loan.
Q	Do you do loans that do not require income documentation and tax returns?
A	Yes, the loan to value is 80% and the borrower must have excellent credit.
Q	On completion of construction of the house, do I have to go through another loan process, pay more fees?
A	No. The loan automatically converts to a 5/1 7/1, or 10/1 ARM or a 15yr. or 30yr. fixed rate mortgage.
Q	Are there any interest payments during the construction phase?
A	No, we establish an interest reserve account for the borrower.
Q	If the interest rate goes up during the construction phase, will my rate go up?
A	No. You are protected against any rate increase during the construction period. In fact, if the interest rate goes lower at the time of completion of the house, your loan will automatically roll down to the lower interest rate.
Q	What is the Maximum loan that you will loan on my new house?
A	Total construction costs plus land is 90% of costs up to $400,000. Over $400,000 we can loan up to 80% to a maximum of $3,000,000 Loan Account.
Q	Do you do lot loans?
A	Yes, up to 100% LTV.
Q	Do you have home improvement loans?
A	Yes, at 9.00% and up to 90% loan to value.
Q	Do you do no points-no costs loans?
A	Yes.
Q	Do you do swing loans?
A	Yes, on homes in California and Nevada.
Q	Do you do loans for pre-fab homes?
A	Yes, loan to value as high as 95% with a start rate as low as 8.00%.
Q	Do you do all types of loans relating to Real Estate?
A	Yes, refinance, purchase, commercial, and other loan programs. At Cypress Investment Corporation, we are not your average lender. Currently, no other bank or lender can offer better rates on loan programs than Cypress Investment Corporation.
Q	How is my down payment calculated, and when do I pay it?
A	Your down payment is the difference between your total construction costs (including land, closing costs and reserves) and the amount of your loan. You will receive credit for any prepaid expenses or equity in the land that is documented. However, the balance of the funds to complete construction are due at the loan closing, just as it would be if you were purchasing an existing home.
Q	My contractor already has a contingency line. Why do I need a contingency reserve?
A	The contingency reserve assists the borrower in handling unknown and unplanned conditions which may not be included in the builder's contract, such as a soils problem which could warrant additional excavation or foundation work. If the funds are unused at completion, the loan will either reflect a lower principal balance or the funds will be released to the borrower where legally permissible. Builder's contingency funds are established for the builder's protection and are generally unconditionally his or hers by contractual agreement.
Q	What if a borrower owns a lot free and clear and wants to get cash back on the equity through a construction-to-permanent loan?
A	Any requests for cash-back are subject to CIC (Cypress Investment Corporation) underwriter approval and would be available only through the final disbursement of funds upon satisfactory completion of the home per the Construction Loan Agreement and only if the loan is not in default.
Q	How is the interest calculated and paid on my loan during the construction process?
A	Interest is charged only on the amount of funds actually disbursed from your loan. At your loan closing, an interest reserve account is generally established. This account will be used to pay the interest on your loan during construction. Each month, the actual interest that is due will be disbursed from this account to the Lender. Once the funds in this account have been used, the borrower will receive a monthly bill for the actual amount of interest that is due.
Q	If the borrower is paying the interest monthly, when does he or she receive a bill, and is there a late charge that could be due?
A	Unlike regularly amortizing loans, during construction, payments are interest-only, and computed on the amount actually disbursed over the actual number of days outstanding. A bill is produced at the end of each month and mailed to the borrower. The borrower must remit the interest payment due, and it must be received by the 16th of the month or be subject to a 5% late charge.
Q	Since the borrower has to pay a down payment at closing, can they just begin construction prior to the loan closing, and pay the contractor directly?
A	Borrowers who start construction prior to the loan closing can subject themselves to delays. This creates a "broken priority," and the title insurer will require additional documentation to ensure the Lender that there are no intervening liens that could come or have already come of record. Additionally, the borrower will need to provide to the Lender evidence of payment of all funds prior to the closing of the loan to receive credit towards their down payment.
Q	How does the borrower receive a construction draw and how long does it take?
A	The borrower must complete and sign a draw request each time he or she is requesting funds. This is called "Exhibit D" and is part of the loan closing documents. This request should be faxed to CIC to begin the draw request process. Upon receipt, an inspection is ordered to ensure the work has been complete, and an update from the title company is requested to ensure there have been no liens recorded since the last draw or initial loan closing. Upon receipt of the inspection and title update, funds are wired directly to the account that was previously established. The process will take three to five days depending upon the inspection and the title company providing the update.
Q	Who will the borrower contact to obtain disbursements of his or her construction funds?
A	Since all of CIC's loan products are servicing released, CIC will administer the draws and will deal directly with the borrower and builder. At closing or purchase of the loan, a Welcome Package will be mailed to the borrower and will include the name of the loan administrator who will be handling the account. This letter will also provide the borrower with a phone number and fax number to contact the loan administrator.
Q	When is the borrower advised how his or her funds will be disbursed?
A	Since there are no start-up funds in the loan and no construction funds at closing, the management of funds is critical not only to the borrower, but also to the builder. This should be addressed by the loan officer or loan agent early in the processing of the loan package. Information provided by CIC in its Welcome Package or closing documentation should be a reinforcement of information that was already provided to the borrower and the builder by the Seller or Loan Broker.
Q	How will the borrower know when to request a re-pricing of the loan if it has a Roll-down option?
A	For loans which include Roll-Down options, both the promissory note and the mortgage instrument executed by the borrower have an addendum or rider which addresses the Roll-Down option and when an how the borrower may request a re-pricing of his loan. What constitutes completion varies geographically and is further explained in Exhibit "C" (the Draw Schedule) to the Construction Loan Agreement.
Q	If the borrower sells his or her current residence during the construction term and wishes to make a principal reduction to the loan, how will CIC treat this?
A	The borrower may make a principal reduction prior to conversion of the loan to the permanent phase. Upon conversion to the permanent phase, CIC will re-amortize the loan payments. The borrower will need to have completed the payment prior to any re-pricing under the Roll-Down option.