Building a home is the perfect way to create a living space that meets all of your needs in a location you choose. You have the freedom to build your dream home exactly as you want. It’s an exciting (and potentially overwhelming) opportunity with so many decisions to make and questions to answer. Sometimes the project doesn’t go according to plan or stay on track with the original timeframe, and extra costs may pop up due to circumstances beyond your control.
Securing financing for your home construction project is an essential step in the process — and it’s something you can control.
How Construction Loans Are Structured
Getting financing for new home construction tends to be more complex compared to getting a mortgage for an existing home. There are so many moving parts involved in purchasing a lot and building a home, and it’s important to have a flexible financing program from start to finish. Understanding how the process works can help you make the decisions needed to move your project forward.
Many traditional construction loans are set up with two separate closings and a requalification process. This means you may have to qualify for your loan twice and go through two loan closings. Another drawback of traditional construction loans: They typically have variable rates that may fluctuate during the construction phase, which can result in higher monthly payments. There’s a simpler option that can help you avoid those extra steps and costs.
Benefits of One-time Close Loans
With a One-Time Close Construction Loan, you can finance the construction and purchase of a new home with a single closing. That means there’s only one set of closing costs and loan documents. These loans have a fixed rate, so you don’t have to worry about rising interest during the construction period. A One-time Close Construction Loan gives you the flexibility to choose a mortgage program that fits your long-term needs. You have more control over the process and the opportunity to lock in a fixed rate for your permanent financing.
Here’s a quick overview of benefits of a One-time Close Loan:
- Use the financing for lot and/or construction and permanent loan of a new home.
- Fixed rate during construction period.
- Down payment options available.Initial construction phase has one extension available.
- Convenience of one loan, one application and one closing date.
At Amegy Bank, our mortgage experts can help you explore financing options carefully so you can begin the construction phase with confidence. Learn more about Home Construction Loans or connect with a mortgage banker at Amegy Bank.