ONE TIME CLOSE CONSTRUCTION LOAn

 A one-time close construction loan, also known as a single-close construction loan or a construction-to-permanent loan, is a type of financing used to fund the construction of a new home or major renovation project. Unlike traditional construction loans, which require two separate closings (one for the construction phase and another for the permanent mortgage), a one-time close construction loan combines both phases into a single loan.

Here's how it typically works:

1. Application and approval: The borrower applies for the one-time close construction loan, and the lender assesses their creditworthiness, income, and other relevant factors to determine eligibility.
2. Construction phase: Once approved, the borrower works with the builder and the lender to develop detailed plans, specifications, and cost estimates for the project. The loan funds are disbursed in stages or "draws" as the construction progresses, and the borrower makes interest-only payments during this phase.
3. Conversion to permanent mortgage: Once the construction is complete, the loan automatically converts into a permanent mortgage. The borrower doesn't need to go through a second closing or reapply for a new loan. At this point, the loan transitions from a short-term construction loan to a long-term mortgage with regular principal and interest payments.

One of the main advantages of a one-time close construction loan is its convenience. With a single loan, borrowers save time and money by avoiding the need for two separate loan applications and closings. It also provides greater certainty in terms of interest rates, as the permanent mortgage rate is typically locked in at the beginning of the construction phase, shielding the borrower from potential interest rate fluctuations.

It's worth noting that eligibility criteria, loan terms, and processes can vary among lenders, so it's important to consult with a mortgage professional or lender to understand the specific details and requirements of a one-time close construction loan.