Summary
Construction loans are a two-step process. There is a construction loan and there is a permanent loan. There are 2 closings, one for the construction loan and the other after the house is complete. We will partner with a local bank for the construction loan. Once the house is complete, the construction loan will be refinanced into a traditional mortgage.
- 1st Transaction - Construction Loan - Purchase land and build or build on land already owned. The construction loans are available up to 12 months. The builder essentially has 12 months to build and complete your home. During this time, you will make interest only payments on disbursed funds to builder. Payments will be much less than the actual mortgage payments.
- 2nd Transaction - Permanent Loan - After the construction is complete, the construction loan is converted into a permanent loan. This is where we will obtain a second appraisal to confirm the property value and re-verify income and employment. The permanent loan is typically a 30-year fixed loan. The permanent loan essentially refinances the construction loan into a traditional home loan.