One-time close construction loans in Tennessee, sometimes referred to as “construction-to-permanent” loans, are a kind of funding that combines the permanent mortgage and the building phase into a single loan package.  

Borrowers only have to go through the loan application and approval process once when they apply for a one-time close construction loan. Compared to applying for separate loans for construction and permanent financing, this streamlines the financing procedure.Borrowers save time and paperwork because the construction and permanent finance are consolidated into a single loan. Once construction is finished, there’s no need to reapply for a mortgage, which can be especially helpful if interest rates increase while work is underway.

Fixed interest rates are usually available for both the construction period and the permanent mortgage on one-time close construction loans. This gives borrowers a stable and predictable monthly payment schedule.One-time close construction loans only require one closing procedure, as opposed to standard construction loans that call for two closings—one for the construction loan and another for the permanent mortgage. Borrowers save money and time by doing this.

As work is completed, money is paid to the builder or contractor gradually over the construction period. During construction, borrowers usually do not make payments on the monies that have been disbursed. The loan becomes a conventional mortgage after construction is finished, and borrowers start paying principle and interest.

For both the construction loan and the permanent mortgage, borrowers must fulfill the eligibility standards set forth in the lending programs. This covers elements including income, down payment, debt-to-income ratio, and credit score.

There will be particular specifications for contractors or builders working on the project. A builder must hold a license, be insured, and have experience working on projects of a comparable nature. Before authorizing a one-time close construction loan, comprehensive project plans, construction contracts, and cost estimates must be obtained. Comprehensive documentation defining the project’s scope must be provided by the borrower.

For borrowers in Tennessee wishing to expedite the loan application process and finance the building of a new house, one-time close construction loans may be a compelling choice.