A construction-to-permanent loan is a type of financing that is used to finance the construction of a new home or renovation project. This loan combines the financing for the construction phase and the permanent mortgage loan for when the project is completed.
Security America Mortgage is a mortgage lender that offers construction-to-permanent loans. Their construction-to-permanent loan provides financing for both the construction phase and the long-term mortgage, allowing borrowers to finance the entire process with a single loan. A single closing transaction is also referred to as a one-time close construction loan.
During the construction phase on other types of construction to permanent financing, borrowers make interest-only payments on the loan, which is based on the amount of money that has been drawn from the loan for the construction project. Once construction is complete, the loan automatically converts to a permanent mortgage, with principal and interest payments based on the total loan amount. However, Security America Mortgage construction to permanent loans work a little bit differently, and I’ll explain more below.
Overall, construction-to-permanent loans with Security America Mortgage can be a convenient and efficient way to finance a new construction project or renovation. It simplifies the financing process and may provide more favorable terms and rates than obtaining separate construction and mortgage loans.
How does construction to permanent loans with a One-Time Close (OTC) work?
There are various types of construction loans and not all have equal benefits. A One-Time Close (OTC) is a Construction-to-Permanent loan program that provides all-in-one financing for the construction process.
What is the construction to permanent requirements for one-time close home loans?
There are many requirements but first, let us discuss the type of home you can build. You can build a manufactured, modular, or stick-built home.
Can I finance my land payoff or purchase a lot with a construction-to-permanent loan?
Yes, Building to permanent One Time Close loans allow borrowers to finance the building of a home, lot purchase/land settlement, and permanent mortgage with just one closing. However, it is much more advantageous and easier if you already own your land.
What are the benefits of owning land or having a current land loan before obtaining a construction-to-permanent OTC home loan?
If you own land or have land that is currently financed you’ll have a much easier time closing on a one-time close construction loan. The reasons are simple. If you don’t own land but get it under contract without a flexible close date, without a builder, and without plans then it will be difficult to close everything at the same time. It’s very important to have your plans and builder secured if you are trying to close on a new piece of land and your construction loan at the same time.
What types of construction loans are available and are there ones suitable for first-time home buyers?
Security America Mortgage offers the One-Time Close construction to permanent through FHA, VA, USDA, and Conventional financing. All of the construction to permanent products are suitable for first-time home buyers. VA construction loans can provide 100 percent financing as can USDA construction loans. FHA and Conventional construction loans require a down payment.
When comparing a 3% down conventional construction loan vs an FHA construction loan one will likely see that the Mortgage insurance premium is more with conventional. The VA loan has a funding fee that is similar to private mortgage insurance but it’s waived with over 10% disability and also can be financed. A VA loan for construction to permanent OTC is the way to go if you don’t have 20% down payment because you’ll likely find a better interest rate.
What are The Benefits of Construction-to-Permanent Loans that feature a one-time close with Security America Mortgage?
- No payments due from borrowers during construction is a great option
- Normally there is no re-qualification once the borrower is approved, and no property value recertification is required for (FHA, VA, and USDA)
- Single close reduces total closing costs because you only need to pay one set of closing costs, which can save money on financing
- Solo construction administration fee which comprises: construction interest, building draw inspections, construction closing coordination, building underwriting, and title updates
- Customers also have the ability to apply for down payment assistance programs.
- Because home buyers can lock in their mortgage rate before construction begins, they may be able to protect themselves from rising interest rates
Is It Inexpensive to Buy or Construct a House?
That’s a question that depends on many factors such as the cost of materials at the time, the type of home you want to build, and the options on the market in the area that you desire to live. It’s a great idea to let Security America Mortgage approve you for both a purchase, renovation, and construction loan so that you have options to take advantage of the best opportunity in the market.
Apply for a Construction-to-Permanent Loan Today with Security America Mortgage
Garrett Puckett the CEO of Security America Mortgage has a team of experienced with Construction loans. They work with all home buyers but highly emphasize serving Military Veterans and active duty servicemen and servicewomen. VA loans don’t require a down payment and they don’t require mortgage insurance. SAM can provide you with a traditional mortgage as well.
Interest rates vary by product and are dependent on market conditions. Also, construction costs go up and down. Let us help you make an informed decision so that everything will go smoothly when you are ready to start the building process. There is no need to pay additional closing costs for home construction loans. Also, there is a lot of risk when your monthly mortgage payments are tied to a variable rate. If you are already stuck with a variable rate, let us look at a permanent financing solution for you.
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