Constructing Your Dream Home: Financial Strategies for Home Building


Get ready to navigate the intricate maze of construction loans with mortgage loan originator Julli Haley by your side! In a world where financing your dream home build could get tangled in red tape, we're slicing through the jargon to bring you valuable insights. From the one-time close appeal of a fully dispersed in-house loan to the enticing low down payment of a C2P loan, we're laying out your financing options. Owning land could give your down payment a hearty boost, and for the DIY-spirited, acting as your own general contractor comes with tips and tricks you'll need to keep the project on track. 

Join us as we break ground on the best practices for securing a home construction loan that won't leave your bank account in the dust. Pre-qualification isn't just a buzzword; it's your budget's best buddy, and we'll show you why. Julli Haley lends her expertise on why a fully dispersed in-house loan might just be the ace up your sleeve, offering lower interest rates and a single closing cost. We're also putting the spotlight on potential pitfalls—think budget overruns and cost estimation tripwires—and providing you with the know-how to sidestep them with confidence.  If you're looking to build this conversation is one blueprint you can't afford to overlook.


[00:00:00.750] - Chris Griffin
Welcome to Back to Your Roots, a podcast that provides insight into all things farming, financing, and farm life, guiding you back to your roots. Thanks for joining us today on Back to Your Roots. I'm your host, Chris Griffin.

[00:00:21.060] - Jordan Turnage
Hey, guys. I'm Jordan Turnage. Thanks for listening to us again. Today, we have the Mortgage Loan Originator, Mrs. Julli Haley with us. Julli, thanks for coming in.

[00:00:29.130] - Julli Haley
Yes. Thanks for having me.

[00:00:30.850] - Jordan Turnage
Just tell us a little information about yourself and what office you serve.

[00:00:35.340] - Julli Haley
I'm actually originally from Muhlenberg County. I graduated from there in 2016, and then I moved to Marshall County, and then I met my husband. He's actually from Graves County, and I work there in the Mayfield office, and Dakota Haley is my husband.

[00:00:52.330] - Jordan Turnage
Okay, so you came across the old Green River there in Muhlenberg County. I did. Nice. A little shout out to John Prine on that one.

[00:00:58.130] - Julli Haley

[00:01:00.260] - Chris Griffin
Obviously, it's springtime, and I know I'm getting a lot of calls myself about construction. People want to get pre-qualified. They're getting ready for their taxes, getting those tax refunds, going to use it towards their down payment. One thing here, we have a ton of construction loans, and I don't think people realize it. I think that's where we separate ourselves more than anything. Can you go over what type of construction loans River Valley offers and what the benefits those are for the borrower?

[00:01:24.080] - Julli Haley
Absolutely. We have three different options. The most common I've specifically done has been the in-house fully dispersed, like an all-in-one loan. So from the get-go, you do start making your full principal and interest payments. Some people don't necessarily like that, but the advantage is you have one-time closing cost. At the end of that twelve-month building period, you don't have to worry about refinancing. Some people have had some stuff happen where, heaven forbid, if you lose your job and then they're stuck at the end of that twelve months and then I'd hate for people to lose their house. If you can't afford that, plus you get ahead on your mortgage that extra year and you're just putting equity back in your home. Then we have the interest only in-house for the 12-month period. But like I said, you do have a refinance at the end of that 12-month building period. Both of those are 15% down minimum. We like to have 20% down, but we can work with you. Also an advantage, if you already own the property that you're building on, you can always use that towards your down payment. Then our secondary market AgFirst, we actually have something that's called a C2P, so that's construction to permanent.

[00:02:40.790] - Julli Haley
It's actually both of those that I just went over combined into one. You do pay interest only the first 12 months, so you do have the smaller payments, and it is go ahead and it's fixed from the beginning. Sometimes it's been a little bit higher than our current in-house rates, but not much of a difference. Also another advantage of that is if people don't have the bigger down payment to put down, you can put down 5%, and people really do like that option, too.

[00:03:08.860] - Chris Griffin
Yeah, I know. When I came here, and even now, when I give people a call about construction loans, it's almost overwhelming a little bit. I mean, most places do not have three different options. A lot of times, I would say, and I just call it the run of the mill construction, is that 12-month interest only, you have to refinance it at the end. When people call, I'm like, All right, buckle your seat belt, we're to go through three options, and I'm probably going to send you an email afterwards because I always wish I could see their face on the other line. They're probably like, I have literally no idea what all you told me. They're all so different. One thing, and I'll follow up what you're talking about, I mean, what I've noticed is on the fully dispersed, if somebody owns the land, and let's say they're either renting, living with in-laws, bless their soul, or they're living on, let's say, a camper on that land, They don't have a principal in interest, a full house payment at that point. Typically, it's a great option for them, and they love that. They love the fact that sometimes there's no draw schedule, like with the AgFirst, C2P.

[00:04:13.430] - Chris Griffin
You can be your own general contractor, which I don't always love, but it is what it is. But it gives them options there as well. I'd say the biggest thing, I haven't done a lot of AgFirst C2Ps just with the way the market's been. I think we'll see that more this year. But that act first construction of perm, you have to use a general contractor. It's a draw schedule. Really, I feel like from a loan officer's perspective, from our side of it, you're dealing more almost on the AgFirst C2P more with the contractor than you are the actual borrower. You got to have an awesome relationship with the contractor.

[00:04:47.370] - Jordan Turnage
It's a good covenant between the two of you.

[00:04:49.540] - Chris Griffin
Because I'm doing a draw today where before we even give them the money, borrower has got to sign a disbursement form, and then contractor comes and picks it up. We have to do an inspection every single time. We don't have to do that on the fully disbursed. And then your 12-month interest only, it's just your run of the mill, but you're going to pay double closing costs. I still don't understand it.

[00:05:09.480] - Julli Haley
Me either.

[00:05:09.750] - Chris Griffin
I've never understood it. I don't understand why people do it. I give everybody the option. I want the borrower to make the decision, but I don't know, you probably deal with this, too. When they make that decision, I'm like, I still don't. I'm like, you do realize you're paying the same closing costs twice.

[00:05:23.990] - Julli Haley
But sometimes- It's like maybe, yeah. Sometimes I'm like, maybe I didn't explain this the way I need to.

[00:05:27.690] - Chris Griffin
I go back and I'm like, I work numbers. I try to show it to them. I'm like, here's what. But sometimes it just, I think when they see two house payments, they just don't want to do it. Sometimes they just can't get by that. That's okay, too. But yeah, I know you do a ton of home loans, and I know that the construction site for us is... I think that's where we shine, personally, but I don't know.

[00:05:51.260] - Julli Haley
Personally, yes. Which I've been here. It was a year in January, and construction has been more of everything that I've done, other Aside from some home equity and stuff. But yeah, more than anything, I've talked to several people about construction loans, and I actually have several that I'm working on right now. Like you said earlier, I think the first warm day this year, everybody decided, Hey, I'm ready to buy a house, go to a house, do something.

[00:06:18.860] - Chris Griffin
Oh, yeah.

[00:06:19.310] - Julli Haley
Which surprises me, especially with the cost of new construction and even the interest rates. But speaking of interest rates, one thing that we do offer on our in-house the two interest only in the fully dispersed. We have something called note modifications.

[00:06:39.190] - Jordan Turnage
Yes ma'am.

[00:06:39.680] - Julli Haley
And personally, I've not found anywhere else that does anything like this.

[00:06:44.640] - Chris Griffin
Oh, I haven't either.

[00:06:44.880] - Julli Haley
So instead of having to refinance as rates come down, we automatically lower that, and that's free of charge now. So that's an image that I always try to let everyone know about, because with rates being like they are, you may not say a huge jump from 7% to 5%, but even as they gradually come down, we can lower their rate with it, and it's relocked.

[00:07:10.260] - Chris Griffin
Even on that construction, a permanent loan, that rate, I think you get the security of it not going up right at during the interest-only construction phase. But when you go to modify that loan at the end, if the rate is lower, you'll get the benefit of getting that lower rate. It just won't go any higher.

[00:07:27.050] - Julli Haley

[00:07:27.530] - Chris Griffin
So I think, like you said, on the interest-only one, the problem is you run that risk as, Hey, if I'm at my max debt to income, or whatever that is, and let's say for some reason, COVID hits, whatever, there's some catastrophic event rates go up by a %. Well, that may be the difference. Now, what are you going to do at that point? It's definitely a little more, I think, peace of mind, the AgFirst need to be in the in-house full of dispersed.

[00:07:52.420] - Julli Haley

[00:07:54.280] - Jordan Turnage
For us, probies over here, like myself, that don't really get to test the waters on the home side of things, Let's just talk about what the best practices are for the home construction process. Where does an individual need to start? Do we need to get a contractor or do we need to start with a lending institution first?

[00:08:14.820] - Julli Haley
It depends. It's better. I like that if people have... If you plan to work with a contractor, having the bids and everything done, that's very important because we can't accurately.

[00:08:30.200] - Jordan Turnage
Is it just like normal try to get three bids?

[00:08:33.920] - Jordan Turnage
Or if I came to you, does it matter how many that we have?

[00:08:37.700] - Julli Haley
It doesn't matter. No. Whatever best suits you or whoever you decide to work with. Also, we have some people that want to be their own contractors, and that's fine, too. Sometimes it is a lot more difficult, though, to get people to show up and to self-contract it. I have ran into that several times.

[00:08:58.090] - Chris Griffin
Everybody thinks they're going to save money by being their own general contractor.

[00:09:01.550] - Julli Haley
And getting anyone to show up nowadays is so hard in itself. So when you do have a contractor, they have a lot more relationships. But either way, and sometimes contractors do want to know that you're pre-qualified before they go into all the trouble of getting you everything. I do recommend if you can get pre-qualified, just discuss beforehand and then maybe contacting them. But either way, we can make it work.

[00:09:27.060] - Jordan Turnage
In that vein, what type of construction loan do you mostly see people choose? And just why do you think that is?

[00:09:34.510] - Julli Haley
Every construction loan that I've done so far in the year that I've been here, they have all done the fully dispersed in-house with us, specifically because one of the note modifications, they really like the thought of being able to lower their rate and it being relocked each time.

[00:09:49.630] - Jordan Turnage
That really showed out. When I first started here in 2020, I really didn't know about the note modification process, and that was when interest rates just went. They were great for everybody, and we were just ginning out left and right note models, and looking forward to those days again.

[00:10:06.130] - Julli Haley
Me too. Yes. But yeah, no, that's the best thing that I've been able to express to the borrowers, along with the one-time closing costs because it's just saving you so much on the front-end.

[00:10:19.510] - Chris Griffin
Well, just like that, you're discussing the fully dispersed and the one-time closing. The other thing I've noticed on the fully dispersed is, like I said before, if they own the land, we're going to give benefit, we're going to give them credit for that equity that they have in that land. We typically... 85% loan of value is what we normally stick to. You hinted on this earlier, a loaded question. I think there's two ways to look at it. We can do 85% if they have some reserves in cash, because our concern is if they have overruns or let's say they have things they change, and let's say they go over budget, well, if you're already at that 85% LTV max, and you don't have any money to come out of your own bank account to pay for those overruns, then we can't loan you more money. So typically, if they don't have cash reserves and don't have a lot in the bank, just for as a safety net, then we try to go at 80% on the construction. Typically, if not, like you said, we can go to 85. But going back to that land you were talking about, I mean, if a piece of land is paid off and it's worth 100 grand, you're getting $100,000 worth of equity to get that loan of value to where it needs to be.

[00:11:21.420] - Chris Griffin
So you could literally only be out your closing costs to basically build a new house. One thing to mention, too, and just so people know this, is when If you get those construction loans, you could actually buy the property that you're putting the construction on and the house and do it all in one loan on the AgFirst or the in-house for it is first. So what I see a lot is on the AgFirst, and I know we haven't done a lot of them. We just haven't had the opportunity. I haven't either, really. I inherited a lot that I'm finishing up from being the loan officer. Going to that 95% loan of value, if they find a lot that's $50,000, they could buy that lot, build a $400,000 house, and do it all at one time, and only have 5% into it. Absolutely. That's a huge benefit.

[00:12:02.140] - Julli Haley
And it saves them a lot on the interest rate on the land. It does. Then there again, the closing costs. You don't have to have the closing costs multiple times.

[00:12:10.520] - Chris Griffin
That's the part you're talking about, and Jordan was asking about, I think, what's best. Do they come to you with a bid, not a bid? And so it's always tough because people come to me and they're like, All right, I'm pre-qualified. I'm like, yeah, you're pre-qualified, but you have to be married with a contractor. No. Because a lot of times for a contractor to get you numbers, it take sometimes weeks. So I normally... I think it's good to get pre-qualified so you know where your budget is.

[00:12:38.720] - Julli Haley

[00:12:39.410] - Chris Griffin
But maybe already start having a conversation with a contractor prior to that. Yes, prior. Build some type of relationship. So then the minute you get pre-qualified, be like, hey, listen, my budget, I can do 400,000 or 300,000. What can we do? And then it may be that lead time to get it back to us to start the loan, may be less.

[00:12:56.450] - Julli Haley
Especially, like you said, if they had someone in mind. For example, a lot of our borrowers that I've worked with like to use Chad Thomas, and they have a waitlist of a year or longer. So that's very important to reach out like, hey, I'm going to get my prequel and everything, but just checking a time frame. When would you even be available?

[00:13:23.480] - Jordan Turnage
That was going to be a question I was going to ask. So what is an expected within has been comfortability with folks, a turnaround from the beginning to end of the process to getting things closed? I know there's so many moving parts.

[00:13:39.380] - Julli Haley
It depends. If you have things, so from application to closing the loan to start in construction, to draws. That depends on the borrower. If you have all your ducks in a row, we can have it done in as little as 30 days. Sometimes it can be up to 60, but it just depends on how much you have stuff in order and lined out and how organized you are.

[00:14:05.890] - Chris Griffin
If they have that bid and everything, really, it's the contractor. If they have all that documentation and then they get you the documentation pretty quickly. I would say, realistically, 30 days is pretty doable on the in-house. Yes, absolutely. Secondary, maybe a little bit different, just depending on what the underwriting turn times are. But I definitely think in-house, I mean, title work, I would say, typically, you can get title work back within probably a week and a half to two weeks. And two weeks, I feel like is a long time. Appraisal is the same way. Appraisal, we'll have a two-week due date a lot of times, but most of the time we get it back within, I would say, five to seven days once we've ordered it. So once you get those back, you can really start processing the loan and getting ready for closing as long as you've gotten approval of a credit desk.

[00:14:51.280] - Julli Haley

[00:14:52.440] - Chris Griffin
I feel like we can knock them out fairly quickly on the house, honestly.

[00:14:57.040] - Jordan Turnage
Because I know there's way more hoops to jump through.

[00:15:01.030] - Chris Griffin
It's a lot different.

[00:15:02.130] - Julli Haley
It is.

[00:15:02.620] - Jordan Turnage
Like in my market where it's just we're looking to purchase real estate, I try to get between that 45 to 60 day turnaround. I like to be more closer to 30 to 45. But what happens with us with surveys, getting stuff back for appraisals, attorney work. But we don't have near the hoops that we have to jump through on my side of things, as opposed to you guys. You all have way more time-sensitive things and just closures.

[00:15:30.860] - Julli Haley
Very much so.

[00:15:31.550] - Chris Griffin
I always laugh doing both sides, but doing the commercial side and the home side, I love doing both sides of it, but they are so drastically different. Sometimes I have to switch my brain back and forth. I always laugh because the home side is definitely very black and white. The guidelines are very black and white. Commercial is there's a lot of gray. You can work in the gray a lot. But with all that said, on the home side, just like when we put a balance sheet together for an ag loan, like I'm doing renewals right now. If you say, hey, here's my balance sheet, I don't have to get every single piece of documentation to verify every single asset on your balance sheet. On the home side, you do. This is what is a little bit different, I think, on in-house and secondary. You need to wait and hide to your other kids and stuff. What's different on in-house compared to secondary. Secondary, you just got to show proof of funds. That's all you got to do. That's it. So you could have a million dollars. If you just need to show $10,000 in a bank account to close, that's all you need.

[00:16:28.560] - Chris Griffin
Us, if we're putting a balance sheet together for a capital position, if you say, I've got a 401(k) with $200,000, we have to get that quarterly statement. Then we have to verify all those assets. So there is a little bit more documentation on the in-house. I think the hoops on in-house Maybe sometimes are a little bit less at the end of the day than secondary. Secondary, you just never know. You're working with somebody that's not here.

[00:16:52.480] - Julli Haley

[00:16:53.350] - Julli Haley
And that's a point I would like to make. And some people are still in the old fashioned way. They like to be able to come in the office, local, pay their bills, check on everything, see the person. And that is an advantage of being in-house. We're not going to sell you off to somebody else, and you're able to come in and call me directly even after I've closed the loan if you're having problems with escrows or anything. If you do, secondary AgFirst, we can relay messages back and forth and reach out and help you get in contact with them, but we can't actually see the loan once it's closed and finished.

[00:17:29.670] - Chris Griffin
I I think with secondary, and Chris, actually, our Mortgage Manager and I were actually having a conversation about this this morning, is it's how you navigate that call with that borrower, I think. The very first question you ask them is, how much down do you have available? If they don't have that 15% down, well, you're automatically in-house is out. So now you're in secondary, that's your only option. Then once you get to 15 or more down, then it's like, Okay, let's look at the different options. Yeah, you get the right mod, but closing costs sometimes are a little bit higher on in-house compared secondary origination and different things. So it's just like, what does the borrower want?

[00:18:04.550] - Julli Haley
What do they have?

[00:18:05.610] - Chris Griffin
And I know you do this really well, but you just lay it out there, like the construction loans. I don't really try to push them in any direction. I want them to see the benefits and drawbacks of all of them and let them make the decision because I never want them to go, Why did you make me do this? I'm like, I didn't make you do anything. You chose it yourself.

[00:18:22.500] - Julli Haley
I gave you your options.

[00:18:23.200] - Chris Griffin
I gave you your options and you took the autonomy to pick it yourself. But yeah, I think we're We're really lucky that we have the benefit of doing both of them, doing house and secondary. I think it gives our borrowers a lot more options and flexibilities when they're trying to look for a home.

[00:18:38.690] - Julli Haley

[00:18:39.610] - Jordan Turnage
That all really just came around, opened up the doors for us in the past few years. More so for, I guess, for both of you, but more so for you, working in McCracken County.

[00:18:50.580] - Chris Griffin
When did you start?

[00:18:51.340] - Julli Haley
January of '23.

[00:18:52.830] - Chris Griffin
I started in June of '22, and I always laugh. I swear the day that I started rates started going up. I I worked at a big national bank before as just a home loan originator, and things were great and all this stuff.

[00:19:09.730] - Jordan Turnage
I can't say anything. I started a month in and we had COVID.

[00:19:12.450] - Chris Griffin
The rates went down. So maybe it was you. But I swear the minute I walked in the door, I swear it was you. I was like, what is going on? But yeah, doing the secondary, that's one thing I think we need to mention, too. In-house rates, a little bit different for probably, well, Well, maybe not, Mayfield the city limits. But if the property has a city tax bill, so on our in-house loans, we have to say it's not in city limits. Well, people are thinking, take Paducah, for example. They might think Lone Oak, well, it's city limits, but it doesn't have a city tax bill. So if it's in Hendren or Lone Oak Fire or Concord, we can do a in-house home loan. If it's in Paducah City Limits with a city tax bill, I can't do it. That's where secondary comes into play for us a lot, which is great because that gives the borrowers, again, another option. It's like, Well, it's in the city limits. I can't work with you. Well, that's not completely true. So I don't know if you see that a lot. I'm assuming if they're in Mayfield City Limits, I guess they have to probably go secondary.

[00:20:10.230] - Julli Haley
If they are, yes. Which I've not personally actually ran into that yet. Mine have all been county.

[00:20:16.390] - Jordan Turnage
So going off of the limits on things, I want to ask a question as far as what are our... Do we have structure or acreage acreage limitations when it comes to coming to us to do home loans?

[00:20:36.320] - Julli Haley
Not necessarily, no. Definitely not on acreage. You can have 200, 300, 400 acres if you're going to build a home I wanted it.

[00:20:45.220] - Chris Griffin
It's awesome.

[00:20:45.870] - Julli Haley

[00:20:46.490] - Julli Haley
It's great.

[00:20:46.650] - Jordan Turnage
Because people call me and be like, Hey, I've got five acres. Is that going to be enough to work with us?

[00:20:52.150] - Jordan Turnage
I'm like, No.

[00:20:52.640] - Chris Griffin
On the home side, it doesn't matter at all.

[00:20:53.920] - Julli Haley
On the home side, it does not matter at all. If you're in the county, it does not matter. As long as you're not building, your dwelling cannot be more than... This year, they raised it $469,000 if you don't qualify any other way as far as you don't have an extra property anywhere else.

[00:21:11.140] - Chris Griffin
Tell the listeners, so I actually tell this in my networking group one day, there's Fannie Mae, there's Freddie Mac. Who handles that limitation for the farm side Farmer Mac. They laughed in my networking group. They're like, I didn't even know that was a thing. I'm like, Oh, so that's like another-

[00:21:27.740] - Jordan Turnage
We could use a Bernie Mac, all right?

[00:21:29.100] - Chris Griffin
Yeah. Yeah. Yeah. And like the limitations you said, I think sometimes when you present that to realtors, it's like, hey, we can do anything that any other home lender can do. Plus, unique things that others can't. Because most lenders, if they came to you and said, hey, I'm buying a house on 50 acres, most time that lender is going to make you survey off that house on a smaller lot because the land is carrying too much value.

[00:21:55.230] - Jordan Turnage
That's what I was going to mention.

[00:21:57.060] - Chris Griffin
That's where I'm trying to pound it, tried to get my message across here.

[00:22:01.560] - Julli Haley
Yes, that you don't have to do that.

[00:22:02.770] - Chris Griffin
I'm like, We can do anything that any other bank can do, any other lender can do. And we're competitive. I mean, rates are super competitive. So, yeah, I think it's a huge benefit for us again. It is.

[00:22:14.570] - Julli Haley
I actually have someone that I'm working with now, which we're still watching rates to see what they do. But he actually owns a little over 100 acres, and he's building about a $600,000 house, but he doesn't have to put anything down because he owns that land free and clear. So that right there is a big advantage in itself, and not having to worry about any private mortgage insurance. That is something that, AgFirst, the C2P, if you do only have 5% down Until you get to that 80% loan to value, you will have the private mortgage insurance, which in that can be anywhere from $70 to $100 or maybe a little more or less, depending on credit and other aspects of it. But in-house, we do not have any private mortgage insurance whatsoever.

[00:23:02.990] - Chris Griffin
I know that typically. I think if you go in at a 95% loan of value, you make on-time payments. It typically falls off around a year seven or eight. That's what the rough number is. Actually, you'll get a letter typically I close in and say, Hey, this gets safe, or whatever. But back to the construction a little bit, what are some pitfalls that you see? I don't know if you've had enough that have gone to completion yet or not, but during that construction period, some hiccups that have come up, some issues that might arise, and some things, maybe some things for the borrowers and the homeowners to be aware of.

[00:23:42.190] - Julli Haley
So this is actually a loan that I actually, in inherited. They were still in the process of construction when I started. It had already been closed and everything. They actually changed a lot of things from the original bid, in which we like... And they were working with the contract, but most times, contractors are strict on their ways.

[00:24:03.350] - Chris Griffin
Was this secondary or was this in-house?

[00:24:05.040] - Julli Haley
No, this is in-house.

[00:24:05.660] - Chris Griffin

[00:24:06.430] - Julli Haley
So you can't pick out laminate floors and then, Hey, actually, I changed my mind. I want to go get real hardwood floors.

[00:24:13.510] - Chris Griffin
It's a big difference.

[00:24:14.800] - Julli Haley
It's the same thing with counter tops.

[00:24:15.570] - Julli Haley
It's the big swings, yeah. And they were actually short over 100,000 and ran out of funds, and the house was incomplete. And there was nothing we could do without completely refinancing and everything. It was just a big ordeal. So that's one thing on the front end, because there you go again, even doing the fully dispersed. If you run out of money, there's absolutely nothing we can do. You're going to have to pay closing costs and everything again.

[00:24:38.770] - Chris Griffin
Especially if you're at that 85 %. If you're at the 80, and maybe you-

[00:24:42.840] - Julli Haley
We have maybe a five % a little bit.

[00:24:44.360] - Chris Griffin
Maybe you can get a little bit more money.

[00:24:45.690] - Julli Haley
So we always suggest putting that cushion for the cost overrun, just in case, and picking out, making sure you price, especially for the self-builds people that want to be their own contractors. I'm like, go pick out the specific stuff that want and make sure you price it right, because I don't want you to run out of money and then be having a house that's not complete. Where if you have a little extra, at the end of that, you can always apply it back to principal.

[00:25:14.930] - Jordan Turnage

[00:25:15.730] - Julli Haley
So that's much safer than not having enough and not picking out what you actually want.

[00:25:21.690] - Chris Griffin
It's crazy because things I've seen, too, is a lot of times if you're your own general contractor or you're doing a self-build, I don't think people realize That's what all construction can include. And they get frustrated. I think sometimes when I ask questions or I need, Hey, if you're going to be your own GC, I need a bid from the HVAC company just to protect you. I mean, it's not... I just need to know Not just an estimate on paper. Yeah, because we don't run in a situation where we've got an incomplete house. Because I think that's another thing for the borrower to realize is our rates really don't change when we do the fully dispersed construction compared to if you went to purchase. I would say more than Well, I definitely would say this, and I know our credit office probably would, too, is we're doing a fully dispersed. It's still a lot of risk on us as the lender. Absolutely. We're getting money out on a fully dispersed, on something that's not built at all. We're just assuming that that collateral...

[00:26:17.010] - Julli Haley
Is going to be there.

[00:26:17.830] - Julli Haley

[00:26:18.250] - Chris Griffin
And be completed well and done and be secured. I think when we're working with a borrower, that's the reason we ask these questions is because, yes, we're trying to protect the borrower, but we're just trying to make sure we're all on the same page. We're not trying to make their life any more difficult.

[00:26:34.220] - Jordan Turnage
I always feel like I always try to make sure that when we talk about that in our podcast, we don't... As loan officers, when we ask questions, it's not a point of trying to interrogate.

[00:26:46.150] - Chris Griffin
No, not at all.

[00:26:46.800] - Jordan Turnage
It's a point of just trying to make sure that there's no stones unturned. It's a help me help you situation.

[00:26:53.390] - Chris Griffin
I think the longer you're in it, you see those issues arise and those hiccups and bumps in the road. It's not that you get gunshot, but I think you just learn as a loan officer or a loan originator, you're like, Okay, we need to... Wait, what did you just say? Because sometimes they'll skirt over a question, but they don't give you 100% answer. They're like, Hey, can we go back to that question and dig in a little bit deeper? Then once they explain, I'm like, Oh, well, that's fine, but this is how we need to do it. And if you just listen to me, I'll coach you through that, and it'll make it way easier.

[00:27:23.360] - Julli Haley

[00:27:24.390] - Chris Griffin
But yeah, I think, like you said, getting the documentation, asking those questions about being your general contractor and stuff. It's really important. But we're not interrogating. We're just trying to protect us as a lender, but also put the borrower in a really good footing before they build their house.

[00:27:40.200] - Julli Haley
Because the goal at the end of that construction period and whatnot, we both have the same goal. We want the house that you wanted to be there and be complete.

[00:27:50.630] - Chris Griffin
We want everybody to be happy.

[00:27:51.790] - Julli Haley
Yes, absolutely.

[00:27:52.910] - Chris Griffin
And it's always about, I always tell the borrowers, and I hope they do this with you, too. I'm like, just a clear and open line of communication. Yes. So don't start changing stuff. If you're going to change something, just tell me.

[00:28:04.860] - Julli Haley
Let me know.

[00:28:05.190] - Chris Griffin
It's okay. I just need to know what's going on. I'd rather go now than three weeks before your house is getting ready to be done.

[00:28:12.240] - Julli Haley

[00:28:13.190] - Julli Haley
Another thing.

[00:28:14.190] - Jordan Turnage
The joy

[00:28:15.170] - Julli Haley
Oh, go ahead.

[00:28:16.030] - Jordan Turnage
The joys of all this.

[00:28:18.100] - Chris Griffin
The joys of lending.

[00:28:19.513] - Jordan Turnage

[00:28:19.810] - Julli Haley
Another thing that I would like to point out on that, which as far as helping the borrower. So we always do quarterly inspections, sometimes even more than that on the in-house, especially, to go make sure that we're going to hold the contractor accountable, that they're having what they're saying they're going to have done at this point. We understand things don't always go as planned, and we can give you a little grace period and extend it a little bit if we need to. But we just want to make sure that if we're paying them, they're doing what they're saying for your benefit, too, to hold them accountable.

[00:28:57.590] - Jordan Turnage
So one last little thing I want to ask, and then we'll wrap this is, so when somebody comes in here, what are the tangibles that a borrower would need to bring on the front end to you to start that initial conversation? That way they know listening to this on what to bring when they want to do this.

[00:29:16.230] - Julli Haley
So like we said, number one, the bids or a rough estimate, even a blueprint or even like a sketched out.

[00:29:25.090] - Chris Griffin
Some top of the rendering or something.

[00:29:26.330] - Julli Haley
Yes, it's like, here's what I'm thinking, here's what I'm wanting, the type of house and everything. And then taxes. We usually do the last two years of taxes, your federal tax return. Also W-2s, last two years of W-2s, 60 days of bank statements, and 30 days of pay stubs. It's kinda the big that you can get everything rolling and going pretty quick and have that 30 day turnaround time.

[00:29:53.540] - Chris Griffin
Give you a pretty good idea at that time. I think on the home side, it's really on either side, commercial or home. It's just the urgency of the borrower. If they get you what you need and you can process along in a timely manner, then really the ball's on our court to get it done. That's what I try to tell people about is, hey, the quicker you can get it to me- The quicker we can get it done. And the quicker we can get it done. Sometimes I put a imaginary deadline. I probably might be ratting myself out, but sometimes I say, We need this by a ball date or so and so. It's amazing. They'll get it to me within two or three days. It's all there.

[00:30:29.450] - Julli Haley

[00:30:30.040] - Chris Griffin
it's my own imaginary deadline on my timeline, but it works.

[00:30:35.050] - Chris Griffin
Sometimes you got to poke...

[00:30:35.920] - Chris Griffin
I think if you can get this sense of urgency for the borrower, because they want to close their... Like you said, they want to close a loan and start moving forward as quick as possible always. But yeah, I think that's really, really important.

[00:30:48.030] - Jordan Turnage
Well, guys, I think we really took some time today, and we talked about some really amazing products that we offer here at River Valley AgCredit. Julli, thank you so much for coming in.

[00:30:58.720] - Chris Griffin
Great job.

[00:30:59.530] - Jordan Turnage
Really appreciate Take your time and all you do for us. As always, thank you for joining us on Back to your Roots podcast. For Chris, I'm Jordan. Thanks for listening.

[00:31:07.200] - Chris Griffin
Thanks for tuning in to Back to your Roots, where we dish the dirt on all things ag. Be sure to never miss an episode by following and subscribing. While there, leave us a review about what you want to hear next. Stay in the know between episodes by following us on Facebook, Instagram, Twitter, LinkedIn, and TikTok. For more resources, go to our website at rivervalleyagcredit.com.

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