One Time Close Construction Loan

Are you looking for a simple and convenient way to finance your dream home? Do you want to avoid the hassle of multiple loans, closing costs, and appraisals? If so, you may be interested in a one time close construction loan.

A one time close construction loan, also known as a construction-to-permanent loan, is a type of mortgage that combines the financing for the land, the construction, and the permanent loan into one single loan. With this loan, you only have to qualify once, close once, and pay one set of closing costs.

Is Construction-to-Permanent Financing Right for You?

A construction-to-permanent loan may be right for you if you:

• Have a clear vision of what you want your home to look like and where you want it to be located
• Have a reputable builder who can complete the project within the agreed timeline and budget
• Have a stable income and credit history that meets the lender’s requirements
• Have enough savings or equity to cover the down payment and closing costs
• Prefer to lock in your interest rate and loan terms at the beginning of the project
• Want to save time and money by avoiding multiple loans and closings

Benefits of Construction-to-Permanent Financing

Some of the benefits of a construction-to-permanent loan are:

• You only have to qualify once, which reduces the risk of changes in your income, credit, or market conditions that could affect your eligibility
• You only have to pay one set of closing costs, which saves you money and simplifies the process
• You can lock in your interest rate and loan terms at the beginning of the project, which protects you from future rate fluctuations and gives you peace of mind
• You have more flexibility and control over the design and quality of your home, as you can choose your own builder, materials, and features
• You have the option to choose from various loan programs and repayment options, such as fixed-rate, adjustable-rate, or interest-only loans

The Construction-to-Permanent Loan Process

The construction-to-permanent loan process involves the following steps:

1. Step 1: Apply for the loan and get pre-approved by the lender
2. Step 2: Find a suitable lot and a builder who meets the lender’s criteria •
3. Step 3: Sign a contract with the builder that specifies the cost and timeline of the construction
4. Step 4: Close on the loan and the lender pays for the lot and the construction costs as they are incurred
5. Step 5: Make interest-only payments on the loan during the construction phase
6. Step 6: Once the construction is completed, the loan converts into a permanent mortgage and you start making principal and interest payments
7. Step 7: Enjoy living in your new home

Documentation Required

To apply for a one-time close construction loan, you will need to provide the following documentation:

• A completed loan application form
• Proof of income, such as pay stubs, W-2 forms, or tax returns
• Proof of assets, such as bank statements, investment accounts, or retirement funds
• Proof of identity, such as a driver’s license, passport, or social security card
• A copy of the contract with the builder, including the plans, specifications, and budget of the construction project
• A copy of the title or deed for the lot, or a purchase agreement if you are buying the lot
• A copy of the appraisal report for the lot and the proposed home
• A copy of the builder’s license, insurance, and references

Frequently Asked Questions

Here are some common questions and answers about one-time close construction loans:

Q: How long does it take to get approved for a one-time close construction loan?
A: The approval process may vary depending on the lender and the complexity of the project, but it typically takes between 30 to 60 days.

Q: How much down payment do I need for a one-time close construction loan?
A: The down payment requirement may vary depending on the lender and the loan program, but it typically ranges from 5% to 20% of the total project cost.

Q: What are the interest rates for a one-time close construction loan?
A: The interest rates may vary depending on the lender, the loan program, and the market conditions, but they are usually comparable to or slightly higher than the rates for conventional mortgages.

Q: What are the fees for a one-time close construction loan?
A: The fees may vary depending on the lender and the loan program, but they typically include origination fees, appraisal fees, title fees, inspection fees, and closing costs.

Q: Can I make changes to the construction project after closing the loan?
A: You may be able to make minor changes to the construction project after closing the loan, as long as they do not affect the value, quality, or completion date of the home. However, you will need to get the approval of the lender and the builder before making any changes, and you may be responsible for any additional costs or delays that result from the changes.

Elm Tree Funding, LLC is a Mortgage Broker licensed by the Connecticut Department of Banking, Consumer Credit Division, NOT A LENDER OR A CORRESPONDENT MORTGAGE LENDER

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