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Construction-to-permanent loans give you the ability to condense the loan process that usually comes with new home construction. Doing it the traditional way results in you going through two different loan applications and two loan closings. With a construction-to-permanent loan, you can avoid two applications and just get one loan. You get one loan that pays for the construction costs and then converts over to a traditional mortgage upon completion of the house.
Find a Lender
The first step in the process is to find a lender that utilizes construction-to-permanent loans. Construction-to-permanent loans are rare, so finding one may be difficult. It will take some work on your part to locate the right lender for you. Many lenders would prefer that you simply pay two sets of closing costs, because it means more money in their pocket.
To find a lender, you will have to shop around. The first place that you should look is in your local lending market. Check with all of the local banks and credit unions to see if they offer such a program. If a credit union in your area offers one, this could be to your advantage. They are non-profit organizations and therefore save a great deal of money on taxes. With this savings, they can offer you a discount on your interest rate. Check with them to see if they offer the loan that you need.
If no one in your local market offers a construction-to-permanent loan, you will need to go online to find what you need. There are several lenders online that offer construction-to-permanent loans and help you build your dream house. Check around and make sure you are getting the best interest rate before you apply.
Once you locate a lender, you will have to go through the application process to secure the loan. Applying for the loan is usually a simple process, but it may take some time. You will have to fill out all of your personal information as well as supply documentation that proves your income and employment.
After you provide them with the information that they need to process the loan, they will process everything and pull your credit file. If your credit score looks good, they will move on to verify everything else. They will check with your employer to verify your employment, income and stability of employment.
Decide on Terms
Once you are approved for the loan, the construction-to-permanent loan process requires that you figure out all the details for after the construction phase. They will have a loan program for the construction process and they will have options for after it is completed. You will be able to choose from a number of different options for your traditional loan including a 30-year fixed rate or an adjustable rate mortgage. Choose a loan that works for you and fits within your monthly budget.
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