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Construction-to-Permanent Loan
Planning on building your dream home or renovating your existing home? Our “no-payment” Construction-to-Permanent Loan is a single loan for both construction and your permanent mortgage. Some of the features include:
One Loan Means One Loan Application
Gathering the documentation for a loan application takes time. Why go through the process more than once? With our easy Construction-to-Perm loan, the three loans you need for lot purchase, construction costs and the final mortgage, are all wrapped up in one application. So you can focus on building your dream home, not on filling out paperwork.
One Loan Means One Loan Settlement
Settlement costs, such as title insurance, attorney fees, document preparation, and recording fees can add up quickly. But since the Construction-to-Perm covers your lot purchase, the line of credit to fund the construction of your home, and the mortgage loan on the completed house, you incur these charges only once…and save thousands of dollars.
Cross-Collateralization
Need money for a down payment? The Construction-to-Perm loan allows you to use the equity in your current home toward the purchase of your new home all in a single transaction. This saves you time and money by avoiding additional closing costs that would be necessary with a home equity line or bridge loan.
Interest-Only Payments During Construction
Where will you live while your new home is being built? It’s most likely you’ll be paying your current mortgage or renting, so it’s important to manage the payments on your new home during construction. Our Construction-to-Perm loan keeps those payments as low as possible during the construction phase with interest-only payments. And, since it is a line of credit, interest only accrues on the outstanding balance, so you’re only paying interest on the money that has been drawn.
Interest Reserves
Our Construction-to-Perm gives you the added convenience of including the interest-only payments with your loan financing. This eliminates the need to make payments on two properties during the construction period.
All-Inclusive Cost Basis
Some lenders exclude costs such as building permit fees, inspection fees and construction related closing costs when determining the maximum amount they will lend you. This could cause you to pay for these costs out-of-pocket. But the Construction-to-Perm loan includes all the customary costs – even estimated interest payments during the construction phase – in the cost basis. So most, if not all, of your cash requirements are in your down payment.
Extended Construction Period
Some lenders mandate short construction periods, sometimes six months or less. And, while this may be plenty of time to build your home, what if unavoidable weather or material delays occur? You could be stuck with unexpected and unbudgeted loan extension fees. We obtain extended construction periods that virtually eliminate these concerns.
Flexible Draw Schedules
Unlike lenders who dictate your home’s construction schedule by defining the work that must be completed before each draw is issued, our Construction-to-Perm loan assigns a percentage of the overall project cost to each major element. This allows your builder the flexibility to determine the most efficient building sequence for your new home.
Contingency Reserves for Unexpected Changes
Cost overruns are a fact of life in construction projects. Option selections change or you may decide to make changes after the project is underway. With our Construction-to-Perm loan, we’ll establish a reserve account to cover these changes so you’ll never need to worry about funding unexpected costs out of pocket.
Building a custom home is an exciting opportunity to have the home you’ve always wanted, in every detail. That’s why we offer the Construction-to-Perm loan. We’ll work with you and your builder, every step of the way, to ensure that the home building process goes smoothly and efficiently.
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