September 8, 2022
Financing custom construction unlocks a myriad of possibilities. From personalizing your floor plan to adding amenities that reflect your unique lifestyle, custom homes can truly make your new home dreams a reality.
At Mitchell & Best Next Door, we partner with First National Bank and Sandy Spring Bank to make this dream come true with construction-to-permanent financing. Here’s what you need to know about this accessible and versatile financing option.
What is a construction-to-permanent loan?
Instead of securing financing separately for the lot, construction, and mortgage of your home, a construction-to-permanent loan consolidates everything into a single product.
Your bank will finance the lot purchase and construction.
Why choose a construction-to-permanent loan?
Private home construction was up by 1.4% in June 2022 compared to the previous year. For many prospective homeowners, construction-to-permanent financing is a flexible and convenient option.
A construction-to-permanent loan could allow you to lock in your mortgage rate up to a year in advance. This is an advantage with current rates exceeding 5% and showing no signs of decreasing soon.
These loans can also help you save money. You can roll the land purchase, construction financing, and mortgage into a single product with one set of closing costs. Plus, you’ll save valuable time and energy with a single application process.
You’ll start making interest-only payments on disbursed funds while your builder works on your home.
Moreover, some states offer additional savings on transfer and recordation taxes when you register your new property using this type of financing.
Lastly, construction-to-permanent loans are flexible. You can use them for your primary home or even a vacation home. You can also choose between a fixed or adjusted rate mortgage.
Most of all, a construction-to-permanent loan makes custom construction accessible and easy to navigate!
How do construction-to-permanent loans work?
Let’s take a closer look at what financing a project with a construction-to-permanent loan entails:
- Your first step is to seek pre-qualification or submit a loan application. The bank will review your project and reach out to the custom home builder to value the property.
- Once you’re approved, the bank will disburse the first portion of the funds to finance the lot purchase and the construction process. You’ll start making interest-only payments.
- Once construction is over, the loan will enter its permanent phase.
Finance a custom home in the DMV area with Mitchell & Best Next Door.
Construction-to-permanent loans aren’t very different from the traditional mortgage process, except for consolidating the financing of the lot, construction, and mortgage into a single product.
Thanks to our lenders at First National Bank and Sandy Spring Bank who have impressive construction-to-permanent loan programs, you’ll experience expert guidance and personal attention every step of the way when you build custom with Mitchell & Best Next Door in the DMV area.
Get in touch with us to learn more and experience lifelong luxury!