Webinar: A New Way to Finance Building Your Dream ADU!

Author: Renée J. Schomp, Director

Join us here to catch a recording of our webinar done in partnership with Redwood Credit Union, A New Way to Finance Building Your Dream ADU! Scroll down to see an overview of the product!

We were joined by three panelists for the webinar:

Please click on the “cc” button on this YouTube video for closed captioning.

  • Scott Johnson, ADU Expert for Napa Sonoma ADU Center and Founder, Pocket Housing, LLC

  • Laureen Barnes, Mortgage Lending Manager, Redwood Credit Union

  • Sean Charter, Assistant Manager – Construction Lending, Redwood Credit Union

Covered in this Webinar:

  • ADUs 101

    • Types of ADUs

    • ADU Process

    • Budgeting for an ADU

    • How to use our ADU Calculator Tool

    • Brief note on prefab ADUs

  • Redwood Credit Union financing options for your ADU

  • Redwood Credit Union ADU-specific loan product

    • What it is

    • Why it’s so helpful

    • How to qualify for it

  • Live audience Q&A

Webinar Content Index:

  • Minutes 3:13 - 10:57 | Napa Sonoma ADU Overview

  • Minutes 10:58 - 23:45 | ADUs 101

    • Types of ADUs

    • ADU Process

    • Budgeting for an ADU

    • How to use our ADU Calculator Tool

    • Brief note on prefab ADUs

  • Minutes 23:46 - 45:00 | Financing your ADU with Redwood Credit Union: Traditional & ADU-specific loan options!

  • Minutes 46:00 - 1:02 | Live Audience Q&A

Redwood Credit Union ADU Construction Loan Overview

What is the Redwood Credit Union ADU Construction Loan?

The ADU Construction Loan is a 20 year fixed rate second mortgage loan with an initial draw period of one year with interest only payments for that time. The interest rate offered is 4.375% and the loan amount can be up to $300,000.

This is a second lien product and will not impact any mortgage you currently have. It also takes into account the future valuation of your property - be it straight property value increase or rental income from your ADU or both, which can allow homeowners to qualify who may have difficulty otherwise. As a result, homeowners who otherwise might not have the income or existing equity in their home necessary to qualify for a traditional loan to finance their ADU are able to unlock capital to build their unit!

What is the process for applying?

RCU will look at standard credit qualifications. They will then partner for an assessment of your property value - remember, this is the new projected value once your project comes to fruition. This can also be done as a pre-approval before you submit your plans for permit approval, so you can see if it’s feasible before putting out the funds to get your permit.

What documentation will be required?

For your final approval, you will need an approved building permit, a complete set of plans and specifications with a stamp of approval from an approving authority, and a fixed price construction contract with a line-item project budget.

Further, as RCU will act as your funds manager, you will have to provide your contractor’s current license, their W-9, and their certificate of General Liability insurance as well as Workers’ Compensation Insurance.

What makes this different from existing second lien loan products?

The ADU Construction loan has a 20 year amortization, compared to a maximum of 15 years for the other second lien products. The interest rate is fixed, where a HELOC is variable with the Prime rate. In addition, this product will take into account future property value and proposed rents to qualify, which no other product will rely on. Finally, with other products, it is up to you to manage your funds and track your payments, but this product allows you to hand over those responsibilities to RCU to act as your funds manager.

How does RCU Manage the funds?

For an individualized consult with Redwood Credit Union, contact Sean Charter, Assistant Manager - Construction Lending to learn more about how you can finance your ADU: (800) 609 - 9009 or scharter@redwoodcu.org.

Join us for future ADU webinars by registering for upcoming opportunities on our Webinars page on our website! 

The content in our ADU webinars is simply information, and is not legal or customized advice regarding your specific ADU project. Keep in mind that local ADU rules change over time, and every homeowner’s ADU project and parcel is unique so always make sure to consult directly with your local city or county before diving into your ADU project.

If you’d like a 1:1 ADU Feasibility Consultation with our ADU Expert, you can sign up for one right here to get your project kickstarted today!

Links referenced during the webinar:

WebinarRenée J. Schomp