One Time Close Construction Loans

One-Time-Close Construction Loans

If you are looking for financing to build your new home, you may not know where to start. It can be a headache to deal with the different stages of a tradition construction loan: the “pre-approval” or “commitment” stage, the “interim lending” stage, and the “permanent loan” stages. This is where the One-Time-Close option comes in. With a One-Time-Close construction loan, those three stages are combined into one single process. With this type of transaction, the borrower is able to obtain permanent loan approval, as well as close the interim and permanent loan transaction before construction begins, all in one single transaction.

Loan Requirements

Credit

  • FHA: Minimum 530 FICO (limits to LTV/CLTV may apply)
  • VA: Minimum 530 FICO & Including No Score
  • Conventional: Minimum 700 FICO (limits to LTV/CLTV may apply)
  • Full tri-merged credit report with scores—Credit report valid for 90 days

Loan Term

  • Fixed Rate Mortgage (FRM): 10—30 year terms

Max LTV

  • FHA: 580+ FICO and No Score: 96.5% LTV calculated per FHA Guides
    < 580 FICO: Maximum 90% LTV
  • VA: 100% LTV plus VA funding fee
  • Conventional: 70% LTV Maximum

Occupancy

  • FHA & VA: Owner Occupied Only
  • Conventional: 1 Unit Owner Occupied, 1 Unit Second Home

Property Eligibility

  • FHA
    • New Construction: Modular (off-frame only), Manufactured (double-wide or larger), and Traditional Construction.
    • Manufactured Homes: Engineer must certify foundation plans meet FHA guides. Must be titles as real property or have recorded affixation affidavit.
    • Loan may include simultaneous purchase of the land/lot or loan can be guaranteed for the construction of home on land/lot already owned by borrower.
  • VA
    • New Construction: 1 Unit Residential Property, Condominiums, Manufactured (double-wide or larger), and Modular Homes.
    • Condominium: Project must be acceptable/approved by VA.
    • Manufactured Homes (off frame only): Must meet all MPR-related requirements for proposed or under construction per VA Guides. Manufactured Homes can be new or used, however used Manufactured Homes to be moved to purchaser’s lot to be affixed to permanent foundation require additional inspections.
    • Loan may include simultaneous purchase of the land/lot or loan can be guaranteed for the construction of home on land/lot already owned by veteran.
  • Conventional
    • Single-Family-Detached, Modular (off frame only), and Manufactured. No Co-ops.
    • Manufactured Homes: Property may not have been currently installed prior to subject lot.

Credit History

  • FHA: Borrowers with traditional credit histories and credit scores will be underwritten on their own merits. Non-traditional and derogatory credit history considered.
  • VA: Borrowers with credit scores will be reviewed based on existing credit history. Borrowers with no score must provide alternative credit references.

Fees the Builder Must Pay

  • On a VA construction / permanent home loan, the builder is responsible for:
    • Interest payments during the construction period
    • All Fees normally paid by a builder who obtains an interim construction loan. This includes, but is not limited to:
      • Inspection fees and re-inspection fees
      • Title update fees
      • Construction loan fees
  • On an FHA construction/permanent home loan, the builder is TYPICALLY (though not required) responsible for the fees listed above.

Fees the Borrower Can Pay

  • FHA: The borrower may pay any fees and construction interest. A specific agreement between Borrower and Builder as to the responsible party for fees and interest is required.
  • VA: The veteran may not pay any fees that are the builder’s responsibility.

Additional Information

  • Conventional
    • All contracts must be fixed price.
    • Payments during construction will be based on the outstanding drawn balance and will be drawn from interest reserve if applicable, otherwise payment will be due.
  • Maximum 12-month construction period.
  • Maximum of 9 draws; Local inspections make for an easy draw process.
  • Payment automatically converts from Interest Only to Fully Amortizing payment after construction.
  • Investment properties, jumbo loan amounts, spec builds, & self builds not available with the 1x-close construction program; these options are available with the 2x-close (traditional) construction program (call or email for more info).

GDP, Consumer Confidence & Consumer Sentiment

GDP

Consumer spending got a boost in the third estimate for fourth quarter GDP. It is now at 2.1 percent annualized growth vs. the second estimate of 1.9 percent. Consumer spending rose at a 3.5 percent pace in the quarter vs. economists’ predictions of 3.0 percent, the rate in the prior estimate.  The rise reflects upward revisions for service spending, now at 2.4 percent vs. an initial 1.8 percent, and nondurables, now at 3.3 vs. prior  estimates of 2.8 percent.  Spending on durables reflect the strong vehicle sales seen in the quarter, up an 11.4 percent rate for a one tenth decrease from the prior estimate. A negative in the report is a $3.4 billion upw2ard revision to inventory accumulation now at a level of $49.6 billion in the quarter. Though this adds to the GDP it is a reminder that heavy inventories may be slowing down first quarter output. Another negative is a $5.4 billion widening in the net export revision to a negative $605 billion, reflecting a sharp decrease for exports combined with higher imports. Nonresidential fixed investment downgraded to 0.9 percent from 1.3 percent with residential investment keeping steady at a strong 9.6 percent that ended two prior quarters of contraction. The government component is downgraded to 0.2 percent from 0.4 percent. The GDP price index is also revised, up one tenth from the prior estimate to a level of 2.1 percent with the core (core excludes food and energy) also up one3 tenth to 1.8 percent.

Consumer Confidence

March consumer confidence index was at a level of 125.6 making it the strongest reading since December of 2000. At 113.8, the expectations component hasn’t been this high since again 2000, in the month of September. The present situation component is at 143.1 for its best reading since August 2001. Subcomponents, watched closely for indications on the monthly employment report, are very positive. Fewer say jobs are hard to get this month at 19.5 vs 19.9 percent and many more are saying jobs are plentiful at 31.7 vs. February’s 26.9. A key reading on the expectations side is income whose results were also very positive. More see their income increasing over the next six months and fewer see their income declining. 21.5 vs 19.2 percent see their income rising where only 7.0 vs. 8.1 percent see their income declining. Buying plans are mixed autos are up but homes are down. A negative in the report is a two tenths decline in the 12 month inflation expectations only 4.6 percent, a very low reading for this component. Consumers are upbeat which doesn’t fit the lack of inflation expectations or the actual consumer spending which has failed to match the strength of consumer confidence.

Consumer Sentiment

The consumer sentiment index slowed, down 7 tenths lower in the final half of March to a level of 96.9 below economists’ predictions but still 6 tenths higher from February’s gain of 96.3. The current conditions component rose 1.7 points in the month to a level of 113.2, a positive indication for the March consumer spending. Expectations held unchanged at 86.5, the expectations component pivots on the outlook for jobs which appears to have had no change in the month. There was a noticeable decline in inflation expectations in this report, down 2 tenths for the one year outlook to a level of 2.5 percent and down 1 tenth to 2.4 percent for the five year outlook.