Construction Perm Loan Program
Construction perm loan programs are my specialty. Our lenders make several varieties of construction perm loans available to meet your needs.
Step” or Prime Based Construction Perm Loan Program
“One Step” or Lock and Build Program
As an alternative to the Prime
based programs, we have several lenders offering construction perm loan programs, which
offer fixed rates during both the construction and the permanent phases of your
loan. These programs have the advantages of eliminating potential increases in
the Prime Rate during construction. Another important benefit of these newer
programs is to eliminate the need to pay an extended lock fee if rates are
rising. However, long term (30 and 15 year fixed) rates are higher than mortgage
rates would be if you were purchasing an existing home because the lender is
effectively paying for your extended lock cost and is adding the cost to your
rate. Some progressive lenders are now offering a flexible program, which gives
you a fixed rate during construction and a single rate adjustment at
modification. Most of my clients want to put a minimum amount of cash into the
transaction and understand that the value of their new home will be greater than
the cost to build. Many of these transactions will require Mortgage Insurance
when the loan to value is greater than 80% when the loan modifies. As a result,
I generally suggest the shortest term ARM available in this situation, as you
will probably want to refinance after construction to lower your interest rate
and eliminate the mortgage insurance.
In years past, the Prime based
programs were the only alternative and remain a good choice if you plan for a
substantial down payment. However, many of my clients are now choosing the One
Step or ARM based programs given their lower rates and elimination of extended
I have a list of documentation needed to process.
There is a new page detailing construction loan fees.
I have detailed information on extended interest rate locks with a float down option.
I have a page on calculating mortgage qualification ratios.
I have included detailed Frequently Asked Questions and common misconceptions about the process of building your home with a construction/perm loan.
If you are not ready to build but have found the perfect lot. The new Purchase Plus Lot Loan can save you a great deal of money.
New! One of my favorite lenders has finally reopened their lending department. They offer you the ability to modify into the incredibly flexible Cash Flow Loan when your project is complete.
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As a Certified Mortgage Planning Specialist, I offer an analysis of your situation today can make suggestions on how small changes in how your debt is structured today can have a life changing effect in the years to come. Read more about this free, no obligation service.