Construction Loan Types

When you can’t find that home that is perfect, you may want to consider building a home that is just what you are looking for.

Building a home can be both rewarding, yet challenging at the same time.  The home building process is different than purchasing an existing home. It is important to work with an experienced custom home builder as well as an experienced construction lender such as our team.

While there are a number of places you can get a mortgage, there are even fewer where you can get a construction loan.

Dan has been an experienced construction & renovation lender since 1991 and has custom built two different homes. So he is well versed in this area of lending.

Option 1 – Construction Permanent Loan
(One Note Construction Loan)

With this loan, the client closes on one loan that provides construction as well as permanent financing.  This eliminates the need to pay two sets of closing cost and in cases where a client takes a fixed rate loan they have the ability to protect themselves from higher interest rates (Note few lenders offer a fixed rate construction loan – We do).  This option works well for clients who are expecting a potential rise in interest rates during the construction term.

Additionally, we offer options that allow you to modify and convert your construction loan to terms that may be more favorable upon completion of your loan.

Option 2 – Construction Only Loan
(Two Note Construction Loan)

With this loan, the client closes on a loan that is only good for the construction period of the home (typically a 12 month term).  With this product a client has two sets of closing cost.  One for the construction loan and a second for the permanent mortgage.

In addition, in most cases the client does not have a guarantee on what their rate will be for their permanent mortgage.  This option is the most favorable for the bank and rarely benefits the client as they have increased cost and greater interest rate risk.

If you need help with vacant land and new construction financing, please don’t hesitate to contact us.  With low down payment options, we have one of the most competitive construction products in the country.  Please contact us for more information.