Are you looking for the easiest way to build your dream home? The One Time Close Construction Loans has made that a reality. This creative financing tool enables a simple, one stop transaction that transforms short-term construction financing into permanent mortgage financing. No more worrying about successive closings, this is the clear winner option for conventional and VA Construction Loan borrowers alike. Boosting project success rates through simplification, this allows homebuyers, builders, and contractors to deliver these purchases with professionalism and cost effectiveness.
What Are the Characteristics of One Time Close Loans?
One Time Close loans are designed specifically to simplify the homebuilding process. They eliminate the need for separate approvals and closings by combining construction and permanent financing into one transaction. Only one qualification: Saving time, money and stress for borrowers. Money is released according to a defined draw schedule tied to milestones in construction. Forward funding enables builders to build homes without the uncertainties of uncertain financing because the money is in place upfront, and builders can just build a good home.
Key Features of the Program
- Single Closing: One transaction for construction and permanent mortgage financing, different fees are paid upfront
- Draw initial funds: Provides initial funds to contractors to get started on the project right away, and then disperses additional funds at agreed-upon intervals according to the draw schedule.
- Flexible Financing Options: Work for both purchase and refinance. Purchase loans are used to cover the costs of purchasing a lot and building a home, while refinance loans help borrowers pay off existing liens on the lot and finance the construction of their home.
- Flexible Terms: Construction Terms can be 1 to 11 months. Higher initial draws may be allowed on modular homes if approved.
The Simplicity of Fewer Approvals
With a thorough contractor and project approval process handled by an experienced VA construction loan lender. Builders and contractors are vetted extensively, including license, insurance, references, and signed contracts. Requires 3-5 business days contractor approval with $150 contract review fee.
The additional steps for VA loans include a VA Builder ID that requires you to fill out the Builder Information and Certification, Equal Employment Opportunity Certification, and Affirmative Marketing Certification. This is processed by the VA to issue what is known as a Builder ID, ensuring that the builder is indeed compliant and that your VA loan approval process goes smoothly!
Project approval requires detailed plans, breakdown of costs, permits, and appraisals. The $300 project review fee is payment made by borrowers to keep everything about their construction project on track and organized.
Risk Management and Insurance
The One Time Close Construction Loans require a Builders’ Risk Policy. This is a special type of insurance and acts as a coverage for the property in the case of any damage while construction. With VA loans, the builder must include the cost of this policy in their budget. Also, borrowers need to supply a homeowner’s insurance quote to verify correct insurance payments after the property is finished.
Benefits of a One Time Close Loan
With this loan program, borrowers gain access to an efficient and straightforward means of funding the property of their dreams. Combining construction and permanent financing, it takes the pressure and expense out of juggling two separate loans. The same process is advantageous to first time homebuyers, repeat borrowers, and builders. This means borrowers only have to qualify for a loan one time, (peace of mind!), and builders are paid in a timely manner from a pre-approved draw schedule so work can progress without interruption.
Beyond saving money, the program provides unmatched ease. Borrowers sidestep high interest rates big down payments and requalification headaches commonly tied to traditional construction loans. Funding is confirmed so builders can efficiently finish projects, improving productivity.
Building Your Dream Home
Whether you purchase a parcel of land and need to finance the land, refinance an existing parcel, or are ready to build your dream home on an existing lot, the One Time Close Construction Loans sets the stage for you to build your dream home. Supported by reputable VA construction loan lenders, this program guides you through every step of the process, allowing you to build your dream home with assurance.
Ready to Build Your Home with a One Time Close New Construction Loan Take advantage of the ease, adaptability and effectiveness that this sort of financing allows, and make a house you’ll enjoy for many years.
What are the Types of One Time Close Construction Loans?
FHA One Time Close Loan
An FHA One Time Close loan is a viable choice for borrowers with lower credit ratings or little money to put down. This loan, backed by the Federal Housing Administration, is intended to make homeownership more accessible. Key features include:
- 3.5% Down Payment: As low as 3.5% of the total amount financed.
- Flexible Credit Requirements: Can work with borrowers who have imperfect credit histories.
- Streamlined Process: Construction and permanent financing are combined into one loan with one approval process.
- Mortgage Insurance: Required for the life of the loan.
USDA One Time Close Loan
USDA One Time Close loans are designed for borrowers who want to build in qualifying rural locations. Supported by the United States Department of Agriculture, this loan offers:
- Zero Down: 100% financing for eligible borrowers
- Focus on Rural Development: Only for properties in USDA eligible areas.
- Low Interest Rates:Â Â Competitive rates to make homebuilding more affordable
- Income Limits: Targeted for moderate to low-income families.
VA One Time Close Loan
The VA One Time Close loan is for eligible veterans, active-duty military and certain family members. Supported by the Department of Veterans Affairs, it provides:
- No Money Down: Up to 100% Financing
- No Private Mortgage Insurance: More affordability than other conventional loans
- Builder Vetting: The builder has to be VA approved builder and registered with the VA.
- Construction Cost Coverage: Builders pay for the Builders’ Risk Policy premium.
Conventional One Time Close Loan
Conventional One Time Close loans are best suited for borrowers that are ineligible for government backed programs and would like more flexible terms. These loans provide:
- Higher Loan Limits: Ideal for borrowers who are constructing larger homes.
- No Consolidated Mortgage Insurance: In contrast to FHA loans, there is no upfront premium.
- Flexibility: Suitable for primary and secondary residences
- Credit requirements: Typically needs higher credit scores and a bigger down payment.
These three types of loans have been designed to suit the requirements of various types of borrowers. If you’re a veteran using VA Construction Loan benefits, a rural resident getting USDA funding, or need the flexibility of a conventional loan, there’s a One Time Close option for you.