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One-Time Closed Construction Loan

Mortgage options refer to the various choices available to homebuyers when selecting a loan to finance their property purchase.

One-Time Closed Construction Loan

A one-time construction loan is a financing option specifically designed for individuals or companies who want to build their own custom homes or investment properties.

What is a one-time-closed construction loan?

A one-time close construction loan, also known as a construction-to-permanent loan, covers both the construction and permanent financing of a property. This means that instead of obtaining two separate loans (one for construction and one for permanent financing), borrowers can get one loan that covers the entire process. The loan is typically structured in two phases: the construction phase and the permanent stage.

Why is a one-time-closed construction loan essential?

There are several reasons why a one-time close construction loan is essential:

  • Convenience: By obtaining one loan that covers construction and permanent financing, borrowers can avoid the hassle of obtaining two separate loans.
  • Cost savings: A one-time close construction loan can save borrowers money in closing costs and fees associated with obtaining multiple loans.
  • Predictability: With a one-time-close construction loan, borrowers have more control over their financing, which can lead to better budgeting and financial planning.
  • Time savings: A one-time close construction loan can save borrowers time by streamlining the financing process and reducing the time needed to secure funding.

How does a one-time-close construction loan work?

A one-time-close construction loan is typically structured in two phases:

  • Construction phase: During construction, borrowers can draw funds from the loan to pay for the costs associated with building their property. The lender will typically disburse funds to the borrower in stages as construction milestones are reached. Interest-only payments are made during the construction phase.
  • Permanent phase: The loan is converted into a permanent mortgage once construction is complete. At this point, the borrower will begin making principal and interest payments on the loan. The interest rate on the permanent mortgage is typically locked in when the loan is originated.

Here are some key features of a one-time close construction loan.

  • Interest-only payments during the construction phase
  • Lower down payment requirements than traditional mortgages
  • Fixed interest rates on the permanent mortgage
  • Construction draws are typically based on the percentage of work completed.
  • Construction contingency reserves are required to cover unexpected costs.

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Premier Capital Mortgage, LLC

Many years of dedicated service have allowed us to play a crucial role in turning home aspirations into reality, always with a keen eye on keeping it within our customers' financial reach.
(910) 603-4269renzo@premiercapitalmortgage.com
588 Executive Pl, Suite 202
Fayetteville, NC 28305
Company NMLS: #2372311
NMLS Consumer Access
Disclosure:
The content provided within this website is presented for information purposes only. This is not a commitment to lend or extend credit. Information and/or dates are subject to change without notice. All loans are subject to credit approval. Other restrictions may apply. Mortgage loans may be arranged through third party providers.
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