Memphis Construction Home Loans

In Memphis, one-time close construction loans, often called “construction-to-permanent” loans, represent a financing solution that merges the construction phase and the permanent mortgage into a unified loan package.

When individuals seek a one-time close construction loan, they are required to complete the loan application and approval process only once. This streamlines the financing procedure compared to obtaining separate construction and permanent financing loans. By merging construction and permanent financing into one loan, borrowers benefit from reduced time and paperwork. There is no necessity to reapply for a mortgage upon the completion of construction, which can be particularly advantageous if interest rates increase during the construction period.

Construction-to-permanent loans generally feature fixed interest rates for the construction phase and the permanent mortgage. This arrangement allows borrowers to benefit from a consistent and reliable monthly payment structure. In contrast to standard construction loans, which necessitate two separate closings—one for the construction financing and another for the permanent mortgage—one-time close construction loans streamline the process by requiring only a single closing. This efficiency results in significant savings in both time and costs for borrowers.

During the construction phase, payments are made to the builder or contractor in increments as different stages of the project are completed. Borrowers often overlook these payments while construction is ongoing. After the construction, the loan converts into a standard mortgage, and borrowers repay the principal and interest.

To qualify for the construction loan and the permanent mortgage, borrowers must satisfy the eligibility criteria specified in the lending programs. These criteria include credit score, debt-to-income ratio, income level, and down payment amount.

Contractors and builders involved in the project must fulfill specific requirements. Builders must have a valid license, insurance, and relevant experience with similar projects. Before a one-time close construction loan can be approved, complete project plans, construction contracts, and detailed cost estimates must be submitted. The borrower is responsible for providing comprehensive documentation that defines the project’s scope.

One-time close construction loans may be a compelling choice for Memphis borrowers who wish to expedite the loan application process and finance the construction of a new house.