Building a Home - Raleigh, NC
Construction to Perm Financing
How Does Construction to Perm Financing Work?
Five Easy Steps to Construction to Permanent Financing
Construction to perm programs can be advantageous to anyone considering building a home. There's only one set of closing costs, and usually only one approval needed. Here's the basics:
1. Credit Qualification
- A mortgage lender will review your credit, income and assets - same as they would for any kind of new home financing.
- Total purchase price will be determined - this is the cost of the land and the cost of construction. If your land is already paid for, the equity can be used as part or all of the down payment, in most situations.
- Size of down payment is determined.
- Duration of construction determined - will it take 6, 9, or 12, or 18 months to build your new home? Work with your builder to answer this question.
- Decide to lock or float your interest rate.
- The builder will need to be registered and in good standing with the lender, or will need to register with the lender and provide any necessary back up documentation.
Your builder will provide:
- Architectural plans for your new home.
- A line item cost breakdown.
The lender will request:
- An appraisal of the proposed home and land combination.
- Underwriting gives final approval.
- Construction Department gives approval.
- Funding department disburses initial draw.
5. Construction to Permanent Department
Before the builder receives funds at each stage of construction, a formal inspection is scheduled through the lender.
The lender's inspector visits the home site and verifies the stage of construction (framing, siding, cabinets, etc). Once the inspection report is returned to the bank, a "draw" is disbursed to the builder. These inspections protect the lender and the homeowner throughout the construction process.
When construction is complete, the builder will provide a "certificate of occupancy", which is applied for through the city or county inspections department, and the lender will complete a "final inspection". At that point, the lender will work with you to convert to permanent financing.
Finding a Construction to Perm Lender
Not all lenders offer construction to perm programs. Among those that do offer the program, downpayments can vary from 5% to 20% (compared to 3.5% to 20% for "standard" financing).
When building a new Raleigh home, we'd recommend talking to:
Florica Hafiz at Suntrust Mortgage - 919-282-7075.
Steve Thorne at Meridian Residential - 919-459-1313.
Lender requirements vary, so check to see what the latest requirements and standards are.
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Articles copyright Stanton Homes 2006-2013. Unauthorized use is not permitted. Provided for informational purposes only, no claims are made by Stanton Homes regarding the validity of any statements. Please note: all listing information per MLS, and current as of posting date. Information subject to change. Stanton Homes does not make claims to ownership of any lot listings, but can work with homebuyers to purchase available lots and build. Home plans to be approved on an individual basis, subject to neighborhood restrictive covenants and lot restrictions. Ask for further information regarding any community, lot or floor plan. Photos represent typical homes and details of each neighborhood, to help highlight different options available in the Raleigh/Triangle area. No claim of ownership is made to homes or land pictured.