WHAT IS CONSTRUCTION-TO-PERMANENT FINANCING?
Construction-to-permanent financing refers to rolling your construction financing into your permanent mortgage. This can be an excellent option if you’re looking for a one-stop-shop as the same lender commonly handles these loans.
However, there are a couple of things to keep in mind. Because construction-to-permanent financing uses the borrowed funds to build your home, you will need to make payments throughout the construction. However, these payments will be interest-only and will not reduce your principal until your loan is converted to a permanent mortgage.
With us One-Time Close Loan, we close before construction and modify the loan as needed throughout the construction phase. This modification involves updating some final details rather than being an entirely new closing.
BENEFITS OF OUR ONE-TIME CONSTRUCTION LOAN
We designed our One-Time Construction Loan to simplify your mortgage process.
The first way we do that is by giving you only one closing date rather than two!
That means you won’t have to worry about when your actual final close is – you can mark your calendar right away!
Our OTC Loans also come with various options.
We pride ourselves on having a wide array of products to fit our customers’ needs best,
and our One-Time Close is no exception.
Borrowers can apply for Fixed Rate terms of 15 or 30 years, not counting the construction term on conventional and government-backed products.
Plus, qualified borrowers can enjoy our low down payment options:
- Conventional loans up to 95% loan-to-value with mortgage insurance
- FHA loans up to 96.5% loan-to-value
- VA loans up to 100% loan-to-value
- USDA loans up to 100% loan-to-value
If you have any questions or would like to learn more about our down payment assistance option, contact us!
Our expert consultants will be eager to help!
The best part is our team, which is with you every step of the way. Having peace of mind will give you the time to customize your dream home to your heart’s content; just make sure to stay within your budget!
REQUIREMENTS
If our One-Time Close loan sounds like the right fit for you, read through the following requirements to ensure your eligibility.
Mortgage Insurance
Taking advantage of our low down payment options is a great way to secure your dream home, but your loan-to-value could mean added mortgage insurance.
Borrower-paid monthly mortgage insurance must be obtained from Arch, Genworth, MGIC, or National MI for any loan with a loan-to-value over 80%.
Our Approved Builder
You must be working with our approved builder.
We want to be sure your builder has the ability to complete your project, so we review every builder before construction. Reach out to us to find out if your builder is already approved.
Inspections
Your home will need to be inspected throughout the process to ensure construction progresses according to plan and ensure the work’s quality. We want to make sure your house lives up to your expectations and that your builder hits their deadlines!
Additional Documentation
Throughout the process, you may be asked to provide additional documentation.
This can be items like building permits, plans, construction contracts, land contracts, or any other miscellaneous documents related to your construction.
Insurance
Before drawing from your funds, you will need to provide proof of home insurance.
We want to make sure you are protected. You will also need to give a hazard insurance quote before underwriting. The quote is required when the loan is converted to a permanent mortgage.
STEP BY STEP: HOW IT WORKS
Step 1: Get Prequalified
- Getting prequalified is the first step to get you on the right track.
- Pre-qualification can be easy with our Mortgages Simplified App!
Step 2: House Shopping
- House hunting is even more exciting with new construction. You can customize everything.
Step 3: Preliminary Review
- The construction company sends over all the required documents.
- You may be asked for additional documentation.
Step 4: Underwriting Review
- The loan is submitted to underwriting for approval.
- Our dedicated team of Project and Construction Underwriters reviews the application.
- Permits are also required before closing.
Step 5: Final Approval
- Once final approval is issued, the loan is locked.
- Stay confident with our loan lock options.
- We have Cap/Float Down and Float lock options!
Step 6: Construction Begins!
- During construction, your Certified OTC Specialist will approve any draw requests and help facilitate any paperwork requests, should any additional conditions need fulfillment.
- Land Gorilla administers the drawing process.
- Land Gorilla obtains draw inspections and makes funding recommendations.
- Try to avoid taking out additional credit at this time.
- You’re responsible for any tax bills or assessments that come due during the construction period.
Step 7: Loan Nears Completion
- 45-60 days before the house is finished, we will begin preparing the loan for conversion to a permanent loan.
- This stage is when your final rate will be determined if you used a cap/float down option.
- Your mortgage consultant will advise you if there are additional funds required at modification. Did you choose upgrades? Go over contingency? Value didn’t come in as originally appraised?
SIMPLIFY YOUR DECISION
With the market as competitive as it is, it can be challenging to find your dream home.
Choosing to build it instead can be an excellent option, and with us.
One-Time-Close Construction Loan, the process will be a simple as it gets!
Building a home can be daunting, so let us worry about your financing.
Reach out to one of our Certified OTC Specialists to learn more!