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Regions Renovation to Permanent Programs

Is your home in need of some major renovations? Maybe you want to add a new room or put in a completely new kitchen. At Regions Mortgage, we provide an array of Renovation to Permanent Programs that allow the convenience of a one-time close during the renovation process. It’s fast, easy, and lets you focus on more important things, like which light fixtures to install.

Regions Renovation to Permanent Loans available with the following features:

  • One-time close
  • Option of Fixed-Rate and Adjustable-Rate Mortgages
  • 90% Loan to Value available on loan amounts up to $1 million
  • Loan amounts up to $2 million
  • Primary residence and second homes
  • Option of purchase or limited cash-out refinance

Understanding the Stages of Regions Construction-to-Permanent Loans:

A Construction-to-Permanent mortgage (CP loan) is a three-stage mortgage that allows you to finance the construction of your new home. A Regions CP loan will enable you to lock in your interest rate and close your loan before construction begins. Plus, there is only one closing with no need to re-qualify for the permanent phase of the loan.

During construction, disbursement is made to cover the cost to build, and interest is paid only on the outstanding balance. When construction is complete, the loan converts to a permanent mortgage. At this point, scheduled monthly payments of principal and interest plus escrows, if applicable, will take effect.

Stage 1: Application/Decision
During the application/decision stage, a Construction-to-Permanent Mortgage Loan Originator (MLO) will help you understand the different CP loan options, gather the appropriate documentation, submit your application, and notify you of the bank’s decision. Several essential aspects of Stage 1 include the following:

Builder Review: HK Home Development will be the builder on all of the loans processed. We recognize this is one of the most critical decisions in the home-building process. Regions reserve the right to review the builder and the contract when determining whether to issue the loan.

Appraisal: A licensed real estate appraiser will review your plans, specifications, property, and recent sales of comparable homes in your market to determine an estimated value of your home upon completion.

Draw Schedule: As part of Stage 1, you, HK Home Development, and Regions will need to agree upon how and when loan disbursements and draws will be made.

Builder Agreement: The builder will be asked to sign our standard Construction Loan Agreement, which specifies the Regions’ expectations for making funds available during the construction of your new home.

Title Review: We will work with your selected closing agent to ensure a clear title to your property, which is required for your loan to close.

Once we have completed the credit approval and the builder and project review are finished, our underwriter will issue final approval, and the loan will be ready to close. At that point, we can assist with opening a Regions checking account that can be used for disbursements during construction.

Stage 2: Building and Disbursement
The building and disbursement stage coincides with the construction of your home. Loan funds are disbursed based on the terms of your Construction Loan Agreement and draw schedule.

Disbursements: Regions require an inspection to determine that the requisite work has been completed before each assignment. Borrower funds will be used first, and then Regions will begin disbursing loan proceeds. Each construction disbursement is limited to the amount corresponding to the completion percentage according to the disbursement schedule. Funds are paid for labor and material that is completed or installed. No disbursements are permitted if a lien has been filed against the subject property.

Inspections: To order a review, you will need to contact your Regions Paralender, who will arrange for a local inspector to inspect the percentage of completed work based on the draw schedule. If you are concerned about the quality of artistry, you can contact a local inspector to request a quality inspection or discuss your concerns with the local building inspection department.

Draws: Draws are typically released within 2–3 business days of Regions’ receipt of your draw request.

Statements: You will receive monthly notifications the month following your first disbursement. Your information will include interest accrued on the loan funds disbursed through that statement date.

Stage 3: Conversion
Conversion is the final stage in which your loan is converted from the construction to the permanent phase. Be sure to speak with your Paralender about the fees due in advance of your conversion.

Costs due from you at conversion include:

  • An initial escrow of pre-paid items (such as homeowners insurance and taxes, if applicable)
  • Prepaid interest for the permanent phase
  • Unpaid construction phase interest
  • Additional title insurance fees, if required

Conversion marks the completion of the CP loan process and the beginning of your permanent loan. Your mortgage will then be transferred to our loan servicing team. Then, you can begin your regular mortgage payments as structured in your permanent loan.

Not all Construction-to-Permanent loans are the same. Ask your MLO about what sets our products apart from the rest.