New Construction Loans
Construction / Permanent financing is for homebuyers who want to build a custom home on a lot of their choosing. Borrowers have two loans – the construction loan and the permanent loan that are combined into one C/P loan.
During the construction phase of the loan – as the home is being built – the C/P loan is an interest only loan with monthly payments based on the actual funds used to build the home. When the home is completed and all funds have been paid for the completion of the home the loan automatically converts to permanent financing. The advantages that have new home buyers considering construction perm loans include the homeowner can pick the lot location and the builder, a custom home built to your specifications and you work with one lending professional from pre-approval to the time you move in. Often, your builder will help with your closing costs. And, a C/P loan can lend the homebuyer up to 90% of the fair market value of the completed home. This allows a homeowner to get a lot more home for less out of pocket expense.