Enrolling Your Builder onto Mercantile Bank’s Active List
Enrolling your builder is a critical first step in securing a construction loan. This process protects your investment by verifying the builder’s credentials, financial stability, and past performance.
Key Benefits*
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Guarantees your builder has the necessary licenses and insurance.
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Ensures your builder has a proven track record for completing quality projects.
*Not all builders will be eligible for enrollment.
Builder Review Package
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Current licenses are up to date.
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Proof of liability and workers’ compensation insurance.
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Articles of organization or other business documentation.
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References from past clients or completed projects.
Mercantile Review
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Mercantile evaluates the builder’s financial stability, project references, and experience.
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The review is intended to determine the builder’s capability to complete the project successfully.
Approval Timeline
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Once all documents are submitted, the review process takes 5-7 business days.
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Upon approval, your builder will be added to Mercantile Bank’s active builder list.
The Draw Process
The draw process is a systematic way for your builder to access funds from your
construction loan as work on your home progresses. Funds are released in stages
tied to specific construction milestones.
Why It's Important
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Ensures funds are used exclusively for the project.
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Protects homeowners by verifying progress before additional funds are disbursed.
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Keeps the builder accountable for meeting deadlines and quality standards.
Interest-Only Payments
Payments are based on the amount disbursed and the loan’s interest rate.
Payment Methods
Make payments via Online banking, visiting a Mercantile Bank branch, or by mail.
Payment Due Date
Payments are typically due by the 1st of each month.
Builders Risk Insurance
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Purpose: Protects against fire, theft, vandalism, weather damage, and faulty construction.
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Provider: Either the builder or the homeowner.
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Duration: From the start of construction until the Certificate of Occupancy (C of O) is issued.
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Requirement: Mandatory for loan approval and draw disbursements.
Homeowner's Insurance
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Purpose: Protects the completed structure, provides liability coverage, and covers personal belongings.
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Timing: Must be in place before the C of O is issued and no later than the first day of permanent financing.
Property Taxes During Construction
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Calculation: Based on the land’s current assessed value and any improvements.
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Payment: Made directly to the taxing authority.
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Who’s responsible to pay? The borrower. Taxes cannot be escrowed until after the loan converts.
Tax Increases After Construction
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Reassessment: Property will be reassessed to reflect the new value.
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Factors: Location, size, and cost of the home.
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Preparation: Request an estimate from your local assessor’s office and factor the increase into your budget.
End of Construction Requirements
When submitting for a final draw the following requirements must be met.
1. Final Appraisal Inspection - Home must be 100% complete per appraisal requirements, final draw requested, and final inspection conducted. A Construction Specialist ensures the request aligns with the approved budget and timeline.
2. Certificate of Occupancy (C of O) - Must be permanent and not temporary. Mercantile Reviews the request.
3. Proof of Homeowners' Insurance
4. Overage Payments - The balance of any remaining payment to the builder are paid before the final loan funds are used.
