Arizona One Time Close Construction Loan

Buying a home is a dream not many can afford. But with a sufficient amount of savings and the determination to see it through, it’s not impossible. If you’re the ambitious kind and have chosen to build your house from scratch instead of buying an already built one, what you’re getting is a construction loan. To explain in full detail, we will tackle construction loans and the many complexities involved in applying for them.  

What Is A Construction Loan?

Anybody looking to build their dream home will use a construction loan. Used to cover the expenses in rehabilitating and building a house, a construction loan is like any other home loan but carries a higher interest during the construction phase and must be converted to permanent financing once completed. Contrary to a commercial home loan determined by the condition of the property and its market value, residential construction loans are based on the projected worth of the property after completion. 

Used to cover the expenses in rehabilitating and building a home, a construction loan is like any other home loan but carries a higher interest during the construction phase and must be converted to permanent financing once completed. Contrary to a commercial home loan determined by the condition of the property and its market value, residential construction loans are based on the projected worth of the property after completion. 

A single-close construction loan is a home loan that the borrower may use to close both the construction phase and the permanent financing of the new home at the same time. Only one loan covers both the interim construction and the permanent loan under one promissory note and one deed of trust with a single closing.

Benefits Of One-Time-Close Construction Loan

• Reduced and Limited Closing Costs

A single-close construction loan carries one set of closing costs instead of two. After completing the home, the borrower doesn’t have to get interim financing for the construction loan and permanent funding. Since there is only one set of closing costs, this construction loan saves the borrower some money by not paying for closing costs twice.

• Fixed Interest Rate Option

With a one-time close construction loan, the borrower can lock the rate at any stage of the construction. The interest rate is predetermined, and there are no surprises at the end.

• One-Time Qualification Process

The borrower has to qualify for the loan only once. There is always an element of risk in a two-time close transaction because the borrower must be eligible twice, once for the construction stage, and re-qualify again for the loan when the house is finished. 

• Single Appraisal Requirement

The traditional two-time close construction loan carries two sets of closing costs along with two separate appraisals, both paid by the borrower. The first appraisal is done for the construction loan and the second for permanent financing.

A one-time-close construction loan requires only one appraisal before closing on the loan. This means no surprises when the house is completed.

For additional information and details about one-time-close construction loans, please feel free to reach out to our Loan Specialists at 800-960-4565 or use the tools on this site to get started.