Building a home might be complicated, but financing it doesn’t have to be. This is where our One-Time Close Construction to Permanent Loan comes in.
Financing the land and construction in two phases seems a little cumbersome to us. Rather than one closing prior to breaking ground, and then a second closing prior to move in day, this program has just one closing. In one settlement the financing for the construction, lot purchase (if not already owned), and permanent loan are all arranged.
Available in both FHA and VA options, it’s clearly simpler than the typical process, but there are some additional benefits to be had as well:
- Save Money
One appraisal, one set of closing costs, one underwriting and approval process…Eliminating the redundancy of a second closing reduces all of these costs, potentially saving the borrowers time and money when it counts.
- Reduced Interest Rate Risk
Because the interest rate is locked in prior to the single closing and before the start of building, it eliminates the concern that rates could rise during construction. Any increase in rates could make the home less affordable or even jeopardize loan approval if ratios are tight.
- No Payments During Construction
Once the loan is finalized, the payments don’t start until the home is complete. This is a huge selling point for many buyers who need to pay for another place to live until they can move into the new property.
- No Re-Qualification
Once the closing is complete and the loan is in place, borrowers don’t have to worry about re-qualifying. With many traditional construction to permanent loans, the buyers will have to re-qualify at the end of the construction phase. Now the buyers can enjoy preparing for life in the new home without concern that purchasing new furniture or other items could impact their loan approval.
- Low Interest Rates
Because OTC Construction programs are backed by either the FHA or the VA the pricing is extremely competitive, making building a new home a more affordable option.
To learn more about construction lending options contact us today.
Photography by [Igor Zakharevich] © 123RF.com
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Tags: construction loan, one-time close