CONSTRUCTION TO PERMANENT TYPE CONSTUCTION LOANS

This mortgage gives you the financial power to build your own home -- you can borrow money to build a home from the ground up or to finish building a home that's currently under construction. This loan provides financing from the construction through the purchase phases of your new home.

Advantages:

• You enjoy peace of mind by locking in fixed interest rates on both the construction and permanent mortgage financing phases of your home purchase in one convenient loan.
  
  
• You can borrow a minimum of 95 percent of the construction cost or the as-completed value of the property (which means your down payment can be as low as 5 percent).
  
  
• You can use this mortgage to purchase land, or the lot, upon which you build your home.
  
  
• You save money because there is one set of closing costs, compared to those associated with separate loans for construction and occupancy. Therefore, you pay points and fees on just one loan.
  
  
• You pay interest only on the funds disbursed during the course of construction, prior to the time it converts to a permanent home loan.
  
  
• You can select all of your appliances, lighting fixtures, and floor coverings, when working with the contractor who will complete the construction. Upon completion, your home is 'turn key' ready for occupancy!

Some Additional Details:

• A minimum down payment of 5 percent for a one-unit home and 10 percent for two-unit homes, on the Fannie Mae variation of this product is available.
  
  
• Construction phases of six, nine, or 12 months, with extensions available up to six months, are allowed. This is to allow for inclement weather in some climates which effectively prohibit building during freeze-thaw cycles.
  
  
• This loan is available for one- and two-unit owner-occupied homes, one-unit second homes, and one-unit investor homes.

You can choose a 15- or 30-year fixed-rate mortgage, or adjustable type loan. You can also include in the construction phase(s) factors beyond the basic home such as hardscaping (concrete walks and driveways), landscaping (plants, trees, and irrigation systems), wells for irrigation or domestic use, sewage hookups, septic systems, and swimming pools (if completed concurrently with the home and finalized at the same time as the home by the local building department inspectors).

Variation:

A variation of this loan type is a renovation loan or "re-hab" (rehabilitation) loan. Encompassing nearly all of the same characteristics as outlined above, the terms of the loan provide for the rehabilitation and restoration, and improvement, of part of the nation's existing housing stock. These loans add the complication(s) of compliance with more stringent building code enforcement and zoning restrictions due to locations in areas of important geographics or political interest, conflicts with existing recorded documents such as homeowner codes, covenants and restrictions, etc. Borrowers should start by consulting their local building code enforcement section prior to a conversation with LenderDave for advice and counsel on application(s) and use of the rehabilitation loan products.


More Information On Home Building

STEPS TOWARDS CONSTRUCTION LOAN PLANNING
SELECTING A CONTRACTOR
REQUESTING AND REVIEWING BIDS
CONTRACTING WITH YOUR BUILDER