Everyone knows that you can purchase an asset, be it a car or house, with a loan, but what happens when you don’t yet have the asset in hand? That is the dilemma when you build a house. You need funds to cover costs during the build, but you don’t yet have the asset to use as collateral. The good news is that a mortgage broker can help you successfully navigate construction loans so you can be on your way to your dream home.
Construction loans are sometimes referred to as Construction-to-Permanent loans, CTP for short. There are two types of CTP loans. One is a two-time close loan and the other is a single-close loan. With a two-time close loan, you’ll need to qualify for the construction loan twice: once for the start-up construction funds and again to pay the final balance when the home is complete. In a single-close loan, there is just one qualification process involved. This latter option has several benefits, including peace of mind about the mortgage terms. Given the complexity of construction loans, it is wise to work with a mortgage broker who can explain the loan features, so you don’t run the risk of failing to qualify because of a mistake during the process.
At the BRM Lending Team, we take the time to explain the process of obtaining construction loans, including the fees involved and the due diligence that you and your builder should understand. We’ll address common questions such as when your payments begin, what happens if the completion is delayed, and if the lender will need to review the builder. Reach out to us today if you would like answers from an experienced mortgage broker about construction loans or any other type of mortgage.