Securing financing for your HPM Home is a crucial step in building your new home. Whether you’re a contractor or an owner-builder with a contractor, it's important to understand the financing process, the role of bonding, and the specifics of an HPM Performance Bond to ensure a smooth and successful project.
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The Financing Process
The first step in securing financing for your home is completing the necessary paperwork. If you're working with a contractor, be sure to inform them early on that you'll be applying for a loan. This allows the contractor to prepare for the bond application process.
For Owner-Builders, starting the bonding process early is key to ensuring a smooth bond and loan application process. You'll need to submit a packet of information to our bonding team, including project details like cost estimates and loan qualifications.
Understanding Bonding: When and Why It’s Required
Bonding will be required by all financial institutions in Hawai‘i in order for them to make a residential construction loan. Even if you don't need a loan, you may still be required to secure a bond. For example, in certain subdivisions, the Home Owner's Association will require a bond.
The HPM Performance Bond: A Guarantee for Your Project
The HPM Performance Bond is a guarantee a project will be completed per plans and specifications and that all project costs will be paid, providing peace of mind for both homeowners and financial institutions.
To obtain an HPM Performance Bond, contractors and Owner-Builders will need to submit an underwriting packet that includes project specifics, financial information and collateral. If a contractor has previously bonded with HPM, some information may already be on file. A pre-bond meeting is held after a bond application is submitted and approved to review the documents and ensure clarity between the homeowner and contractor. After the bond is secured and the loan records, the bank releases funds to HPM in stages, and HPM manages the payment process to ensure everyone is paid. The time it takes to secure the bond can vary depending on the bank or credit union.
Avoiding Common Mistakes
During the financing process, it's important to avoid making significant purchases or changing jobs as these actions can impact your loan approval. Planning is crucial in avoiding stress and preventing delays. Knowing what you want and planning every detail can make the process smoother for both contractors and homeowners. If changes are necessary during the project, clear change orders should be used to specify the change and its cost. Additionally, it's important not to start construction before your loan closes, as this can complicate the financing process.
A Strategic Approach to Collaborating with a Banking Partner
Collaborating with a banking partner can greatly streamline the financing process. A banking partner experienced in construction loans and bonding in Hawai‘i can provide valuable insights and guidance throughout the process. They can assist with paperwork, navigate bonding requirements, and ensure a smooth loan closing process. A banking partner can offer personalized advice based on your financial situation and project specifics, helping you make informed decisions and avoid common pitfalls.
Securing financing for your home construction project may be complex, but with a clear understanding of the process, from paperwork to securing an HPM Performance Bond, you can confidently navigate the process and the next steps toward the dream of building your own home. Let HPM be your trusted partner in making your home construction journey as stress-free as possible.
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Ready to Begin Your Homeownership Journey? Contact our HPM Home Planning Consultants to schedule a consultation. Hilo: (808) 865-5820 | Waimea & Kona: (808) 865-5865 | Kaua‘i, O‘ahu & Maui: (808) 727-1039
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