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Construction Perm Loan is currently unavailableConstruction perm loan programs are my area of expertise. Construction perm loan products are flexible and are available from several lenders to meet your needs. Email Construction Perm questions. “Two Step” or Prime Based Construction Perm Loan A Prime Rate based construction perm loan program charges interest only on the funds disbursed at an interest rate equal to the Prime Rate during your construction period (First Step). We have several lenders offering this type of construction perm loan with a construction period pricing ranging from Prime – 1% to Prime + 1% depending on your credit profile, debt ratios, and Loan to Value. You must choose your permanent loan program (Second Step) prior to submission of your construction loan to underwriting so the construction perm loan can be underwritten to the parameters of the permanent loan. The construction period is expected not to exceed one year and you will incur additional charges if your construction phase exceeds one year. You may lock your permanent loan interest rate at any time after your loan application but an extended rate lock will require the payment of additional fees. The common maximum LTV is 95% to $417,000; 90% to $650,000; 80% to $750,000; and 75% to $1,000,000.“One Step” or Lock and Build Construction Perm Loan 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 construction perm loan 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 LTV 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 building 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
lock costs. I have written a newsletter covering them, and a construction perm FAQ is available. 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. I have also included information on the specialized areas of log home, modular home, or timber frame home financing One of the questions I frequently get from my clients is about finding a qualified and reliable contractor. After a great deal of research, I do recommend Reliable Remodeler. I have personally used their free service and was very pleased with the outcome. Please complete their contractor referral form for up to 4 local pre screened contractors. 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. New! View my Wealthbuilder presentation and learn the safe way to manage your debt and fund your retirement. I hope the information on this page was useful to you. Please view my Mortgage Market Guide. It is a weekly publication explaining the financial markets from a consumer's perspective that is available on this website or by email subscription. I have nearly 8,000 subscribers today and would be happy to have you as well. Your email address will never be used for any other purpose.
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