A Construction to Permanent, or CTP, loan allows homebuyers to purchase a home site, secure financing of the construction of the home and provide permanent financing with only one closing. CTP loans have many advantages over traditional loans; here are just a few:
You can lock in today’s low interest rate. There is no need to worry about interest rates going up. We even offer a “float down,” if you lock in a higher rate. Then when you convert to permanent financing, you can still get that lower rate.
You save money. During the construction period interest is only charged on the amount the builder draws from the loan. This interest may also be tax deductible. You will only have to sign one set of loan documents; you don’t have to worry about requalifying, reappraisals or additional loan documents.
You can stay put. There is no need to sell your current home before buying your new home. If qualified, you can stay in your home while your new home is being built. There are six easy steps to obtaining your CTP loan.
1. Application process. You and America One Finance will complete an application package.
2. Approval. Within 24 – 48 hours of receipt of the completed file and all the necessary construction documents, a loan decision will be made and communicated in writing. We prequalify you at the beginning of the loan process, if it does not look good, we make you aware of what we see as potential underwriting problems before you spend money on appraisals, etc.
3. Closing. Your closing documents will be prepared and sent to the settlement agent. Part of the mortgage loan will be advanced to the builder at the closing for funding to help finance land acquisition.
4. Construction period. While your home is under construction, advances or draws are made according to a prearranged schedule. Before each advance, the following items will be obtained by the title agent or settlement agent: site inspection documentation, title update, and lien waivers along with any other documentation required if applicable. There will be monthly billings for “interest only” based on the amounts advanced. The interest rate during construction and length of time allowed for construction is determined by the loan program.
5. Completion Date. Once the construction is 100 percent complete per plans and specifications and a certificate of occupancy is provided, a final inspection is carried out by the appraiser.
6. Conversion to permanent financing. Upon completion of construction, the “interest only” payment will be converted to a “principal and interest” payment for the remaining term of the mortgage based on the program selected.
