One-Time-Close Construction Loan: Everything You Need to Know!
August 17, 2022
Many people dream of home ownership, but with limited home inventories and a competitive real estate market in Southeast Texas, some residents have turned to buying land and building a home that meets their specific needs. However, it can be hard for buyers to know the best way to pay for construction costs, their plot of land, and the home mortgage.
One-time-close construction loans are a great way to secure the financing needed for every aspect of your property purchase and new home construction. Learn how these loans work, the benefits they offer, and how Texas Gulf Bank can partner with you.
What Are One-Time-Close Construction Loans?
One-time-close construction loans, also known as construction-to-mini-permanent* loans, are residential loans that allow borrowers to combine financing for the lot, construction project, and mini-permanent mortgage into a single loan. The result is a streamlined loan program that simplifies the home buying process and ensures a more stable transition from closing to construction to home ownership.
*NOTE: Some creditors may offer one-time-close construction loans that include a permanent mortgage, but Texas Gulf Bank’s one-time close construction loans only include a mini-permanent mortgage.
Choosing a one-time-close construction loan offers four distinct benefits in comparison to financing each step in the process individually.
1. Single Qualification for Borrowers
The most important reason to choose a one-time-close construction loan is that borrowers only have to complete a single qualification process for their home financing. Instead of applying for multiple loans and going through several qualification processes, you only have to complete a single qualification, appraisal, and closing process, saving significant time and resources.
This is an important benefit because borrowers don’t have to stress about not qualifying later for their mini-permanent mortgage once construction has started. Locking down a mini-permanent loan in advance will allow you to make financial decisions on large purchases such as furnishings or appliances.
2. Fixed Interest Rates
One-time-close construction loans provide for a fixed interest rate throughout the length of the project and mini-permanent mortgage, which should give you some peace of mind.
In addition, most one-time-close construction loans are structured to allow borrowers to pay interest only while the home is under construction. Once construction is complete, the loan terms change to a mini-permanent financing structure where the borrower begins paying both principal and interest.
3. Lower Closing Costs
An added benefit of a single close loan is that borrowers only have to complete one closing process, resulting in lower closing costs out of pocket. This can provide tremendous savings for homeowners.
Comparatively, borrowers who finance construction projects and their mini-permanent mortgage separately may end up having to pay double the closing costs. They might also have to endure a more stressful home buying experience. That’s why we recommend a one-time-close construction loan because it offers simplicity and money savings for buyers compared to handling each step under separate contracts.
4. Reduced Risk
Finally, one-time-close construction loans provide much less risk to borrowers since the single contract provides stability and constancy throughout the entirety of the process. Borrowers will appreciate steady financing throughout the entire construction project, and there are no hidden costs or surprises at closing.
One-time-close construction loans are some of the most effective loan products a potential borrower can choose from because of the flexibility and ease throughout the entire construction and purchasing process.
Apply Today for a One-Time-Close Construction Loan
Whether you are a first-time homebuyer, building a second home, or constructing your dream vacation home, applying for a one-time-close construction loan through Texas Gulf Bank is a straightforward process. The first step is contacting our expert lending team to discuss your loan needs and project goals.
Borrowers interested in one-time-close construction loans will need to provide personal, financial, and construction builder information, including the following:
- Personal tax returns
- Proof of income
- Statement of existing debts
- Statement of current assets
- Property information
- General Contractor or builder information
- Construction plans and timelines
From there, our team of expert loan officers can guide you through each step of the application process to ensure a smooth and efficient experience. We strive to ensure our loan products are a perfect fit for your specific financing and construction needs.
Texas Gulf Bank has over 100 years of experience helping Texans achieve their dream of home ownership, and we value building strong relationships with our clients.
Reach out to us today to discuss one-time-close construction loans and how Texas Gulf Bank can guide you on the path toward homeownership. To get started, you can stop by one of our neighborhood banking locations, give us a call, or complete our contact form. We look forward to supporting you and your family!
All Loans Subject to Credit Approval