Single-close construction loans aka One Time close VA construction loans not only save time and money; they also reduce interest rate risk and requalification risk.
There are different benefits to getting a VA Construction Loan. You would find that the OTC loan offers more advantages than 2 closings.
One of the best parts of a VA Construction loan or any one-time close construction loan is that it saves time and money. You can secure financing for the purchase of your land, construction, and permanent mortgage of your home in a single closing. This means you save money as you don’t have to pay double the closing costs, and you can also save time.
Once your home has been built, the borrowers will not have to re-qualify for the permanent mortgage. That’s because the permanent mortgage is closed before the construction even starts.
The LTV ratio for OTC construction loans is between 90% and 100%. This means that borrowers would only need a down payment from 10% to nothing at all, depending on the construction loan that you apply for.
The interest rate for an OTC loan is fixed. Since the permanent mortgage is closed before construction starts, the interest rate would not change during the construction phase or even after. You won’t have to worry about the interest rate suddenly increasing while your house is being built.
A VA one-time close construction loan is amazing because it lets you build a home with a VA loan, FHA loan, conventional loan, or USDA loan and it can cover the cost of the land and the construction in one close.
One-time close construction loans are mortgages designed to help you build a home in a reasonable amount of time such as 6 months. When you close on a one-time close construction loan your rate is locked and permanent as opposed to construction to permanent mortgages. Construction to permanent mortgage loans typically have a variable interest rate, and when the home is finished, you’ll seek permanent financing.
A borrower of a one-time close construction loan will receive their funds through an escrow account. Once the loan is closed, the amount will be kept in an escrow account and disbursed for construction as needed.
The minimum credit score for an OTC construction loan is 580 and up, but it depends on the loan that you get. An FHA OTC construction loan requires a minimum FICO of 620, but an FNMA OTC construction loan.
Security America Mortgage specializes in helping Veterans with the VA Construction Loan. They are one of the few VA construction loan lenders out there because this is a specialty niche loan that has become more favorable in 2023.
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