Catherine Evans's Blog
14
Jun

How to Get a Construction Loan

I have to admit, being in the real estate world for 15 years & this topic was one of the most confusing aspects of the business to understand. That is why I thought it would be a good idea for a blog. 

When it comes to buying something new, it's important to first figure out your budget and secure financing so you can begin house hunting. Get pre-approved by a bank or mortgage lender. Decide how much money you want to invest in a new home.

 

 

Buying a new home offers a variety of different loan options.  Speak with a few banks or mortgage companies to see which one will be the best option for you. 

 

There are different types of construction loans:

 

  • One-Time Close Construction Loan

A one-time close, also called an "all in one" construction loan, is a fairly simple way to go about building your home. This type of loan offers a single close, and a single rate for both the construction term and the end financing. Typically, these loans allow for a maximum 12 month construction term. Once the loan is settled construction may begin.

 

  • Note Modification Construction Loan

The second option to finance your new home is a construction loan with a note modification. This loan looks a lot like the previous loan, but with a few unique features. The first difference is that there are often two separate rates. The first rate covers the construction term (often based on prime), and the second rate is the end loan rate. The construction rate is typically fixed during the construction term, and you'll be asked to pay interest on the amount that is disbursed based on that rate. As construction progresses, your payment will increase accordingly. The end loan rate can either be locked, or left to float with the market. That decision is up to you.

 

  • Two-Time Close Construction Loan

The third, and final type of construction loan that I'll discuss is a two-time close construction loan. This loan is just as it sounds, there is one closing at the start of construction and a second closing to refinance the construction loan into a permanent mortgage. Upon closing on your construction loan you'll begin making interest only payments to the lender, and just as before these payments will increase as construction progresses. Once your home is completed, you'll need to refinance your construction loan into a permanent mortgage.

 

I recommend you shop around for the best rate & below are a few lenders I work with in Flagler County, Florida:

 

HARBOR COMMUNITY BANK

Randy Gorick

Cell: 904-669-9669

O: 904-797-8840

randygorick@harborcb.com

 

OLD FLORIDA NATIONAL BANK

Mary Thomas

Cell: 386-299-2922

Direct: 407-388-6171

mthomas@oldfnb.com

 

FIRST FEDERAL BANK OF FL

Jen Chaney

Cell: 904-806-1267

chaneyj@ffsb.com

 

ORANGE BANK/FLORIDIAN BANK

Bert Thompson

Cell: 386-405-4606

O: 386-677-7900

bthompson@floridianfinancialgroup.com

 

BB&T BANK

Sandra Abraham

Sabraham@bbandt.com

 

 

Visit our featured builder for Flagler County, Auburn Homes, Inc. by visiting http://www.dontworrysignhappy.com.

Feel free to email me with any questions cat@dontworrysignhappy.com



Catherine Evans
BK3063790
Office: 855.597.0047
eMail: Contact

Palm Coast and The Beaches Real Estate
7 Florida Park, N, Ste A
Palm Coast, FL 32137
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