What is a Colorado Single Close Construction Loan?
A single close construction loan, also known as a one-time close loan, is a streamlined loan that combines the construction loan and the permanent mortgage into one. So, you only have to go through the loan process once, with no separate loans and no multiple closings. This is perfect for building your dream home as it simplifies the process and reduces the cost of multiple loan applications and closings. With a single close construction loan, borrowers can focus more on the construction process rather than dealing with multiple financial transactions. Unlike conventional loans, which often require separate loans and multiple closings, single close construction loans simplify the process significantly.
Benefits of Single Close Construction Loans
One Loan, One Closing: The biggest benefit of a single close construction loan is that it combines the construction loan and the permanent loan into one transaction. This simplifies the financing process for home construction, making it more efficient and less complex. So, you only have to deal with one set of closing costs and one loan application. This can save time and money, making the overall home-building experience more enjoyable.
Fixed Rates: Single close construction loans often have fixed rates, so you have stability and predictability during the construction period and beyond. Knowing your financial commitments helps you plan your budget more effectively and ensures peace of mind.
Simplified Process: By combining the construction and permanent financing into one loan, the process is less complicated and more streamlined. Perfect for first-time homebuyers or those who have never been through the construction loan process. This straightforward approach can alleviate stress and make building your dream home more accessible.
Why Choose Bob Fabian for Your Single Close Construction Loan in Colorado?
When it comes to a single close construction loan in Colorado, working with an experienced loan officer is key. Bob Fabian at GO Mortgage stands out as a trusted partner for several reasons:
Construction Loan Expert: With years of mortgage experience, Bob Fabian specializes in construction loans, including single close construction loans. He knows the loan process inside and out. His expertise ensures that you receive the most suitable loan options tailored to your specific needs. Bob can also help transition from a construction loan to a long-term home loan, ensuring a smooth and seamless process.
Personalized Service: Bob is known for his personalized approach; he tailors loan solutions to each borrower’s needs. He takes the time to understand your situation and guides you through the entire process. His personalized service guarantees a smooth and customized experience for every client.
Competitive Rates: Bob Fabian offers some of the best rates in the market, so you get the best terms for your loan. His competitive pricing makes it easier for you to achieve your dream of building a home within your budget.
Customer Satisfaction: Bob’s clients rave about his responsiveness, professionalism, and making sure the loan process is positive. He is committed to customer satisfaction. His dedication to his clients ensures that you will have a seamless and stress-free experience.
The Process for Single Close Construction Loans
The process for single close construction loans is:
Pre-Qualification: First, you get pre-qualified for the loan. This involves providing basic information about your financial situation and the construction project. Pre-qualification helps you understand your borrowing capacity and sets the stage for a successful application. Qualified veterans can integrate a VA loan into the single close construction loan process, providing favorable terms and benefits.
Loan Application: Once pre-qualified, you’ll need to fill out a full loan application. This will include more detailed information about your income, assets, credit history, and the construction project. A comprehensive application ensures that all aspects of your financial situation are considered for approval.
Approval and Closing: After the application is reviewed and approved, you’ll move to the closing phase. This is where the loan terms are finalized and you sign the documents. A smooth closing process sets the groundwork for the next steps in building your home.
Construction Period: During the construction period, the loan funds are disbursed in stages to pay for the construction of your home. Inspections are done to make sure the project is progressing as planned. Proper management of this phase ensures that the construction stays on track and within budget.
Permanent Financing: Once construction is complete, the loan converts to permanent financing. You start making regular mortgage payments based on the terms you agreed to at closing. Transitioning to permanent financing marks the final step in realizing your dream home.
Qualifications for Single Close Construction Loans
To qualify for a single close construction loan, you must:
Minimum Credit Score: Lenders require a minimum credit score to qualify for a single close construction loan. This can vary, but 620 is often the minimum. Maintaining a good credit score enhances your chances of getting favorable terms.
Down Payment: A down payment is required for most single close construction loans. The amount can vary depending on the loan program and lender. Planning for a down payment ensures that you are financially prepared for the loan requirements.
Income and Employment Verification: You must provide proof of stable income and employment. This is to help the lender determine your ability to repay the loan. A stable financial profile is key to securing a construction loan.
Debt-to-Income Ratio: The lender will review your debt-to-income ratio to make sure you can handle the loan payments along with your other financial obligations. A healthy debt-to-income ratio demonstrates your financial responsibility and ability to manage loan payments.
Single Close Construction Loan Options
There are several loan programs for single close construction loans, each with its own benefits:
FHA Single Close Construction Loan: Backed by the Federal Housing Administration, this loan program has low down payments and flexible credit requirements, so it’s available to a wide range of borrowers. It provides an accessible path to home ownership for many potential buyers.
VA Single Close Construction Loan: For qualified veterans, this loan program has favorable terms, including no down payment and competitive interest rates. This makes it an attractive option for veterans looking to build their dream homes.
Conventional Single Close Construction Loan: For borrowers with good credit and a stable financial history. Competitive interest rates and flexible terms. A conventional loan offers traditional benefits for those who meet the criteria.
Costs and Payments
When you get a single close construction loan, you need to manage the costs and payments:
Closing Costs: Since it’s one closing only, the closing costs are lower than separate loans. But you need to budget for them upfront. Understanding the cost structure helps you plan your finances accordingly.
Private Mortgage Insurance (PMI): Depending on the loan program and the down payment amount, you may need to pay PMI. This is to protect the lender in case of default. Accounting for PMI is crucial in your budget planning.
Monthly Mortgage Insurance: Some loan programs may require monthly mortgage insurance payments. This is an ongoing cost you need to factor into your budget. Monthly insurance payments ensure that your home investment is well-protected.
Interest Rate: The interest rate on your loan will affect your monthly payments and the total cost of the loan. Shop around and compare rates to get the best terms. Securing a favorable interest rate can save you money over the life of the loan.
Conclusion
Building your dream home in Colorado is a big deal, and a single close construction loan can make the financing part easier. Work with an experienced loan officer like Bob Fabian at GO Mortgage, and you’ll be guided through the process with ease. Personalized service, competitive rates, and customer satisfaction guaranteed. Contact Bob today to find out how he can help you get to your dream home. Bob Fabian's expertise and dedication make him the ideal partner for turning your home-building vision into reality.
Single Close Construction Loan FAQs
Below is a compilation of frequently asked questions regarding single close construction loans. These questions cover various aspects of the loan process, eligibility requirements, benefits, and other key details. Familiarizing yourself with these commonly asked questions can help you gain a better understanding of single close construction loans and make informed decisions when considering this financing option.
What type of property can I finance with a single close construction loan?
Single close construction loans apply to a wide range of property types. When you connect with us, we’ll discuss whether your property and build type will qualify.
Below are common property types we’re able to finance with single close construction loans:
Single family residences
Owner occupied
Modular
Manufactured
Site built
Stick built
Doublewide
Factory built
“Build on your lot”
Land home
Barndominiums
Post Frame
Do I need good credit to qualify for a single close construction loan?
Credit is one factor used to decide how much you can finance with a single close construction loan.
The minimum requirements vary depending on the loan program. In many cases, a credit score of 640 or higher is often best. A credit score of 700 or above is considered low risk, while a score of 800 to 850 is exceptional.
We will examine your entire financial outlook and work with you to find a loan solution that meets your needs, considering many factors including your credit score, current income, and investments.
Do I need a down payment for a single close construction loan?
Whether you need a down payment for your loan depends on the specific loan program you decide to use.
Our single close programs offer down payments anywhere from 0-3.5% to a maximum of 5%. This is a small fraction of what other lenders typically ask for with traditional construction loans, which require a down payment of around 20% to get the best loan terms.
How do single close construction loan interest rates compare to other construction loans?
Interest rates for single close construction loans vary based on a variety of factors including your credit score, the location where you want to build, your loan type, and loan amount.
To know what interest rate your situation would qualify for, get in touch with one of our loan advisors for more specific information.
What happens with financing after closing a single close construction loan?
Most of the lending process will be handled for you behind the scenes by our team and your builder. You’ll just want to be ready to discuss your needs with your builder and read contracts closely at each stage of the process. We’re always here to help.
With a single close construction loan, you receive both an interim construction loan and a 30-year permanent loan at the same time. You get a single promissory note and one deed of trust. You’ll sign the 30-year amortizing promissory note at closing.
Once the promissory note is signed, any liens on the land will be automatically paid off. A draw amount will be made available to the builder so construction can start right away.
When the project is complete, you’ll receive a loan modification to amend the date for first payment. After the loan modification is signed, the 30-year amortizing loan works like any other home loan with fixed interest rates.
How does my lender get involved with the construction of my new home?
We have an in-house single close construction management team. Using our years of experience and home-building expertise, our experts review and approve documentation from every stage of construction.
This includes project budget and timeline, planning and specifications, permits and inspection, and building code best practices.
At the start, you’ll want to find and engage the builder of your choice as long as they meet the quality standards for our program. Our builder vetting process ensures that all builders accepted into our program have a sterling record of on-time completion for their home projects. Quality, safety, and efficiency are our top priorities.
Our team will help keep your project on track every step of the way. This allows potential problems to be dealt with before they can turn into major delays.
Our completely hands-free building process means you never need to worry about applying for building permits or arranging inspections as your construction takes shape. It is all handled for you. The documentation you might need in the future is centralized all in one place.
Are there other names for single close construction loans?
Single close construction loans have other names as well.
As you work with builders and lenders, you might hear single close construction loans referred to as single close loans, construction-to-perm loans, one-time close loans, construction conversion loans, CTP loans, or even all-in-one loans.
