Construction To Permanent Loans
Not able to find a home that’s a perfect fit for you and your family? Did you know there’s a loan that will allow you to build a home, start to finish? This may be a great alternative to battling with other potential homeowners in the hot Colorado real estate market.
A construction to permanent loan, sometimes called a single-close loan, is a financing option that covers the cost of the land, construction of the home, and the mortgage of the home once construction is complete. You get to work with the architect of your choice to design and build the home of your dreams.
Save money with a lower interest rate.
Lock in your rate today before they rise.
How Does a Construction To Permanent Loan Work?
What makes the construction to permanent loan special is that it combines what would typically be two separate loans. It used to be that you would need a construction loan to buy the land and build on it, then you’d need a mortgage loan to finance the home once it was completed. You would have to go through each loan’s application and approval process and then pay closing fees on each.
With the construction to permanent loan, you initially take out a loan to pay the builder. While the home is under construction, you only pay interest on the loan, which lowers the monthly payment. This can be a huge benefit since you’ll likely still be paying a mortgage on another home. Once the home is complete, the loan converts into a 15 or 30-year fixed-rate mortgage.
With a Construction To Permanent Loan, You Have Control
One of the most significant benefits of getting a construction to permanent loan is it allows you to take charge of the design and build of your home. You’ll set a budget, get the funding, and go to work.
It is important to note that you cannot add to the amount you are borrowing once the construction to permanent loan is locked in. This means that you should overestimate your budget or be prepared to come in with your own cash in the event the project goes over budget.
What Is Needed To Qualify For a Construction To Permanent Loan?
The requirements for getting a construction to permanent loan are more demanding than other types of mortgages. First, you will need to have at least 20% to put down in order to be approved. The home that is being built must be your primary residence, and only single family homes are eligible.
You will also have to provide your written contract with a licensed and insured contractor, plus the building plans for your home. Your contractor will be required to submit a schedule of when work will be completed and when money will be drawn. They will also have to check in throughout the process.
Want To Use a Construction To Permanent Loan To Build Your Colorado Dream Home?
If the construction to permanent loan is something you’d like to learn more about, let’s talk. We would love to go over the process, requirements, and financing needs in detail to see if this is the best option for you.