William Penn Bank
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Member FDIC.  Equal Housing Lender

Construction Loans

Mortgage Application Packet

William Penn Bank regularly helps people by providing financing for the construction of homes and other structures. Sometimes our borrowers are professional builders but often they are just people looking to build the house of their dreams. Sometimes they already own their lot and sometimes they need the loan to help finance the purchase of the lot and build the home.

Construction loans are structured so that the proceeds of the loan are disbursed at predetermined stages. This allows construction to proceed while the value of the collateral is increasing. Finally the building is complete and the loan is fully disbursed. During the construction period the borrower pays monthly interest only on that portion of the loan that has been disbursed so far. Construction loans can represent temporary financing when the borrower expects to sell the property or repay the loan upon completion of the project. More often the borrower relies on the loan for both construction and permanent financing. This enables the borrower to avoid the considerable cost of two settlements. Upon completion of construction, the loan is automatically converted to its permanent stage where monthly principal and interest payments are made to fully amortize the loan over a long term.

A borrower seeking construction/permanent financing is given the same options for their permanent loan as our borrowers seeking financing for other purposes. Please call Jim Douglas or Kathy Kelly at 215-396-8585 for further information or to obtain an application.

Please note that we often help borrowers who need to use the equity in their existing home to help with the financing of the construction of their new home. We would provide a single blanket loan encumbering both properties. We would release the lien on the original home when it is sold. This is another valuable method to help eliminate cost and facilitate convenience. Ask Jim or Kathy for a more complete explanation.