Build a Home

When deciding to build a home, it’s important to conduct research and know your builder before signing any contracts. Be sure to:

• Check References. Talk to people with homes built by the same builder. Also, contact your local home builders association to see if they’re a member in good standing.
• Inspect Work. Ask to view homes the builder has completed or visit a construction site. Make sure the builder is comfortable creating the type of home you like.
• Consider Compatibility. You should feel comfortable asking questions, talking about your ideas, and working closely with your builder.
• Review the Details. Be sure your builder has provided you a complete detail of items that are and are not included in the contract.

Construction Loans

Our experienced team will help you evaluate your construction loan options and work with you directly to guide you through our process from start to finish. With a construction loan from People's Credit Union, you can make your "dream home" a reality. And, we will be there every step of the way!

• Single Closing Options Available
• Flexible Disbursement Options
• Stick-Built, Modular or Major Home Improvement

Here's how we go about working with you on your home building construction project:

• Selection of Contractors, Sub-Contractors, Suppliers and Architects

  At People’s, you’ll have sole responsibility for the selection of all contractors, architects, engineers, sub-contractors and suppliers furnish services or material for your construction project. People’s has no responsibility for selecting these persons or entities, and as such, we do not have any responsibility for the quality of their workmanship, materials or designs. However, as your lender, our job is to make sure that the disbursements of the proceeds of the Note related to the construction project are handled correctly.

• Registered and/or Licensed Contractors and Builders

  It will be important that you ensure that all contractor(s) and sub-contractor(s) are registered and/or licensed to perform the work described. As part of your construction project documentation, we may require you to provide copies of such licenses. Building or General Contractors must be registered with the State of Rhode Island Contractor Registration Board. For electrical, plumbing or mechanical contractors, specific licensing is required from the Rhode Island Department of Labor and Training.

• Documentation of Construction Project

  As a borrower, you will need to provide a complete set of plans and specifications for your construction project. Additionally, we will ask you to compile a construction budget worksheet that includes all costs associated with your construction project. The budget worksheet will need to contain the names of all contractors, sub-contractors and others who will provide labor, materials, or services to the construction project as well as the total contract price for each of them. We will also ask you to provide signed copies of all construction contracts, sub-contracts, change orders, invoices, and estimates of the project.

• Contingency Reserve

  Your construction budget will need to include a contingency reserve of at least 5% of your construction costs. The reason we ask this of you is to make sure that you are able to cover unforeseen costs or overruns that may arise in the construction of your home. The good news is that contingency funds may also be used to cover change orders or upgrades.

• Conditions for First Disbursement

  Disbursement of construction proceeds will begin after your loan has closed and the rescission period has expired. Additionally, before the first construction disbursement, the following should have been received:

  • A copy of the building permit for the construction project (required prior to closing)
  • A certificate from your insurance company for Builders Risk Insurance (required prior to closing)
  • Verification that your Mortgage Deed has been recorded in the proper manner
  • A mortgagee's title insurance policy from the title company certifying that the disbursement requested will be secured by a first lien on your property

• Inspections

  An inspection of your construction site will be performed each time a request for disbursement is made. These inspections help us to make sure that:

  • Your construction project is proceeding in accordance with the construction contract and the plans
  • The work described on the disbursement request has been performed appropriately
  • The materials described on the disbursement request are on site and incorporated into the project

• Municipal Inspections

  Your local municipal authority will require a variety of inspections at different progress points of your construction project. These municipal inspections are separate from and not included in the site inspections performed for the purposes of disbursement processing. You and your builder will be making the arrangements for all municipal inspections.

• Conditions for the Final Disbursement

  Prior to making the final disbursement of your loan proceeds, each of the following will need to be received:

  • A Certificate of Occupancy from appropriate building authorities
  • A full and complete lien waiver(s) from all lien creditors, along with your contractor's affidavit listing all subcontractors, suppliers, laborers and material workers furnishing work or materials to your construction project
  • A report from the inspector that your construction project has been completed in accordance with the original contract, plans and specifications
  • If you have a private water system, a satisfactory water purity test

Congratulations on your newly built home!

Now that the construction phase of your project has ended, you will begin paying principal and interest in the specific mortgage product you chose with your Mortgage Loan Officer at the very beginning of the loan process.