Customer purchased and constructed home with no financing needed but now needs money to complete shop, interior items, and expenses. Customer wants to do 7 year loan from beginning. No advances will be done. Home equity loan?

I think it depends on what "interior items" means exactly. Having the outer shell of the home built doesn't mean the home is fully constructed, if it still needs cabinets, fixtures, carpeting, floors, wiring, etc. IMO. If "interior items" just means buy a refrigerator, then i'd look at it differently. The point i'm trying to make is either the construction is complete or it isn't. If it isn't, then your loan would be a TRID construction loan.

Even though he already owned the land and house and now wants to borrow the money for the other items?

I edited my post above to more fully explain my opinion.

So it would be a purchase?

Actually, i guess i should amend that......"construction" not "purchase" is what i should have said, if the home is not fully built.

Sorry, i let my HMDA brain override TRID for a second.

Ok. Yes like refrigerator and small items it would be home equity? How would you do a construction on a 7 year monthly payment? Is that possible?

I'm trying to say--

Either the home is fully constructed, both on the interior and exterior, or it is not. Needing to buy a refrigerator doesn't mean the home isn't fully constructed IMO. Needing to do the wiring, flooring, carpeting, etc. is an indication to me that the home is not fully; constructed.

So, if the home is fully constructed and he just needs money to buy a few appliances, yes, i would call it a TRID home equity loan.

If the home is NOT fully constructed and he needs money to finish the interior, i would call it a TRID construction loan. If you want to fully advance the loan and not do a draw-down LOC, that is a separate issue.

What is the separate issue? I understand the other. Thank you for your help.

Basically i'm saying the decision to fully fund the loan or do a draw down LOC with inspections is a safety & soundness concern that your bank must make a decision on.

Ok. I understand. I don't think our system will let me do a construction loan on 7 year monthly payment, which will not be a issue on this one. Maybe I should contact our software for future.

I'm only saying this is a TRID construction......not that you have to call it a "construction" loan elsewhere in your LOS.

Ok what would you call it then?

So could I call it a home equity for software

You have 3 options as i see it.....(please note the S&S caveat mentioned above).

1) Fully fund the loan at consummation, and your 7 year monthly P&I payment scenario shouldn't be an issue.

2) Do a 2 phase, construction-perm loan.

3) Break the application up into 2 loans--a temporary construction loan followed by a perm loan upon the completion of the construction.

What would you call it your LOS?

At my bank, we'd be breaking this up into a temporary construction loan and a perm loan to follow, and giving 2 LE's with this application. We'd be coding this first loan as a construction loan.

Ok. What would you call it if you did only 1 LE with monthly payments?

that is my issue what purpose since my LOS won't let me put construction.

I guess I disagree. This is not construction for TRID - that only applies for "initial" construction. Finishing a partially built house is not "initial".

If you want to do draws and have it all be one loan, then you would do a one-time close just like any other combined construction/permanent loan.

Randy, what choice would you make for TRID? HE? I guess i've defaulted to the idea that you can only "construct" a dwelling once.....and until it's completed, any loan to finish the construction must be "construction". But i can see your argument i suppose.

So i guess to clarify......in my interpretation, i've taken the word "initial" as sort of superfluous in the TRID definition of construction.

Just my opinion - but the only other choice would then be Home Equity. Really might come down to the specific circumstances. Especially, if they might already be actually living in the property. Plus, I would not call "complete shop, interior items, and expenses" initial construction.

That's why i tried to pin down what "interior items" meant. I would agree if that just meant buy a refrigator and living room furniture......but if it means get the floors, carpeting, wiring, etc. done, then (IMO) you're back to finishing construction.