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Construction-to-Permanent Loans:
With more and more people looking to build their “dream
homes” or vacation homes, construction-to-permanent
(CTP) loans have become an increasingly popular choice for
financing these purchases. This type of loan provides a single
approval and closing for the three stages of construction:
- Land Acquisition
- Construction Financing
- Conversion into a permanent loan
You do not have to re-qualify for the permanent loan when
construction is finished!
Lot Loans:
A lot loan allows customers to purchase land. This type of
loan is typically used when a customer wants to build a new
home on this land, but not immediately.
Benefits of a construction-to-perm loan:
- Free float down to better rate available once home is
built
- One time close – No re-qualifying required for
permanent financing
- Only one set on closing costs
- No payments during construction period
- Potential for $0 down for entire transaction
Drawbacks:
Lot loans are typically held for two-five years - after that
the balance comes due (balloon payment) or you would need
to get construction-to-permanent financing and begin building
your home.
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