Say goodbye to Construction to Permanent Mortgages
A construction-to-perm loans offer financing to both a newly residential construction project and a permanent mortgage payment. As background, there are two different types of a construction-to-perm loans: a "one-time close" and a "two-time close".
A 'one-time-close' is a single- close transaction that merges the construction and the long term mortgage loans into one agreement, covering the closing cost for both the construction and the permanent mortgage loan. The lender will be responsible for managing the disbursement of the loan proceeds to the builder, contractor, or other authorized suppliers. Once the construction phase is complete, a 'modified agreement' converts into the permanent, long-term mortgage. Lenders may structure the construction phases into segments of 3, 6, 12 months or more depending on contract but the loan term may not exceed longer than 30 years.
A 'two-time close' agreement refers to two closing costs, one for the construction, the other for the permanent loan. Some prefer a two-time closing because it allows the borrowers to shop around for better mortgages while finishing the construction but with rates on the rise, this is not the best choice. Once the construction is complete, a permanent mortgage will be implemented to cover the cost of the construction loan and is often considered a refinance transaction. This options tends to be more costly due to paying two closing costs.
Features and Benefits of our ONE TIME CLOSE PROGRAM:
We can help you obtain a new home construction loan with one settlement. Contact us today!
A 'one-time-close' is a single- close transaction that merges the construction and the long term mortgage loans into one agreement, covering the closing cost for both the construction and the permanent mortgage loan. The lender will be responsible for managing the disbursement of the loan proceeds to the builder, contractor, or other authorized suppliers. Once the construction phase is complete, a 'modified agreement' converts into the permanent, long-term mortgage. Lenders may structure the construction phases into segments of 3, 6, 12 months or more depending on contract but the loan term may not exceed longer than 30 years.
A 'two-time close' agreement refers to two closing costs, one for the construction, the other for the permanent loan. Some prefer a two-time closing because it allows the borrowers to shop around for better mortgages while finishing the construction but with rates on the rise, this is not the best choice. Once the construction is complete, a permanent mortgage will be implemented to cover the cost of the construction loan and is often considered a refinance transaction. This options tends to be more costly due to paying two closing costs.
Features and Benefits of our ONE TIME CLOSE PROGRAM:
- Roll in the cost of the land purchase, land improvements such as well & septic, construction, landscaping/driveway, etc all into ONE loan.
- Reduction in total cost due to only one closing
- Reduces interest rate risk
- FHA 96.5 LTV , VA & USDA 100% LTV financing only
- Only one closing prior to the start of construction, long term interest rate locked in at that time
- No payments due from borrower during construction
- Borrower’s first payment begins once construction is complete
- No credit, document or appraisal expiration once the loan closes
- No re-qualification of borrower once construction is complete
- Builder/Retailer must be licensed contractor
- Builder/Retailer is allowed staged funding draws during construction based on line-item percentage completion
- Eligible for manufactured, modular and stick built homes
- Requires a minimum 620 FICO credit score
We can help you obtain a new home construction loan with one settlement. Contact us today!
