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There are many advantages to building your own home, and a construction loan is required whether you own the land or not. It’s an excellent choice for homebuyers who are open to building from the ground up and creating their very own dream home and can afford to wait the 6 to 9 months or more for move in.

When you decide to build your home, the most important decision is how to finance it. One-time loans for construction are also known as:

  • Single close loan

  • Construction to Perm Loans

  • One-time close loans

  • construction conversion loans

  • You can even get “all-in-one loans”

Here are some facts for you to consider.

What is a construction loan: A construction loan is a short-term loan used to finance the construction of a home and then to transition to a longer term mortgage loan. Typically, two loans are required for traditional new homes or stand-alone construction when the builder is not financing the construction. These two processes can be completely different and may involve two different lenders and two different interest rates.

What is a single close construction loan: A Single Close Construction to Permanent Loan is a home loan that can be used for both construction and permanent financing at the same time. The Single Close Construction loan streamlines the entire process. One mortgage loan originator, one loan and one closing. This helps you save money, reduces the time it takes to move in your home, and protects against any unforeseen rises in interest rates as well as circumstances affecting the ability to close on the second loan. This is why the one-time, close construction loan concept was created.

Benefits of a Single Close Construction Loan

1. You only need to qualify onceHomebuyers repeatedly point out that loan qualification is the most difficult part of buying a home. So why should they do it twice? A Single Close Construction Loan allows you to be approved at the start of construction.

2. Single Close Reduces Risk for Borrowers - A buyer could be required to qualify for home construction up to three times and a bad investment, a career change, or other cash flow issues could cause you to lose your home and everything you’ve put into it. The single close provides protection from this risk.

3. Fixed interest rates are a benefit - Variable or adjustable interest rates on 30-year home loans can surprise you as they can “balloon over time”. Fixed rates are offered by for one-time, close construction loans.

4. Only one closing is required - Closing costs are typically between 3% and 5% of the loan amount and multiple loans usually require multiple closings costing you thousands for each one.

5. You Get Single Appraisal Valuation - Appraisal valuation can be a major problem for both new and old homes. Your financing package could be at risk if the home’s appraised value is lower than you expected. Single Close Construction loans are not affected by this: Just one appraisal is required before the loan can be closed.

For more information on Financing the Construction of a New Home or to be connected to a lender or builder participating in these programs call Geni Manning, a Certified New Home Specialist, at 469-556-1185 or fill out the contact information below.

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