Mortgage Blog

If you're thinking about building a new home and wonder how the financing works, I'll give you a quick run down on the options we have.  We offer a One-Time-Close loan that sets up the contstruction financing and permanent 30 year or 15 year fixed financing all at the same time and we have the closing before ground is broken.  Some advantages of this is that it gets everything out of the way in one closing and you avoid paying twice for mortgage taxes and appraisals.  The disadvantages of doing this is that the interest rate could be higher on the permanent loan and it's sometimes difficult to find a builder that would qualify for or be willing to work with you on this type of loan. 

The more popular, simple, and flexible way of lining up the financing for building a new home is for me to set you up with a seperate loan for the construction part, which we can also use to buy the lot with right from the start, and then pay that loan off with a seperate permanent loan.  The second loan then becomes a refinance, which means the loan amount is derived from an appraised amount and not from a construction cost figure.  This is a much smoother way of financing the construction of the house, and the builder's prefer this on their end as well, because they don't have to qualify for the financing themselves.

Colby