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Home >> Closing
Closing Before Construction Begins
Protect Yourself By Closing First
It is important that financing for your remodeling project be closed before work begins. Clients sometimes get into trouble when they try to begin their project concurrently with arranging financing. Of the loans available today that allow the borrower to close before construction begins, there are two that are most common:
The One-Time Close Loan
- Used for renovation of existing home or new construction; It applies to your primary residence or second home.
- Offer loans of up to $1,500,000.
- Are designed for construction periods up to 12 months.
- Finance up to 95% of appraised value AS RENOVATED, or cost basis.
- ONE application... ONE closing .
- Combines your remodeling loan and permanent mortgage into one final loan.
- Loan is pre-approved and closed before construction begins.
- Requires no credit updates or re-qualifying at end of construction.
- ONE set of fees; no duplication of costs.
- Loan is a one year ARM attached to the prime rate.
- Loan is interest only on drawn funds during construction.
- Offers tax deduction for interest paid during construction.
- No escrows collected during construction.
- Upon completion of construction or at one year, becomes a fixed or adjustable rate loan.
- No pre-payment penalty.
The Two-Time Close Loan
In today’s market, the One-Time Close loan is becoming increasingly popular. However, there may be reasons you need a two-time close loan. A two-time close renovation loan is for those who want to finish with an Adjustable Rate Mortgage (rather than a fixed), or have second mortgages or Home Equity Lines of Credit they want to keep in place. Additionally, should an investor need a renovation loan, the two-time close is available for the remodeling of the investment or residential property. Some of the highlights of the two-time close are:
- Used for renovation of existing home or new construction; It applies to your primary residence, second home or investment property.
- Are designed for construction periods up to 12 months.
- Finance up to 90% of appraised value AS RENOVATED, or on cost basis.
- Loan is pre-approved and closed before construction begins.
- No pre-payment penalty.
- Loan is interest only on drawn funds during construction.
- Offers tax deduction for interest paid during construction.
- No escrows collected during construction.
- Upon completion of the renovation, loan can be converted to any type (fixed rate, ARM, etc.)
If you are looking for a professional Virginia remodeling company, please call us today at 540-439-8890 or complete our online request form.