Construction Loans

One Time Close Construction-Permanent Loans (OTC)

At Main Street Mortgage Company, we are delighted to offer One Time Close Construction-Permanent Loans, streamlining the process for our clients.

Here's what sets our OTC loans apart:

Single Loan Application and Closing: We consolidate the Construction Loan and the permanent mortgage into one seamless process. Say goodbye to the hassle of multiple applications and closings.

Progressive Disbursements: During the construction phase, funds are disbursed in stages based on the progress of the construction. This ensures that you have the necessary funds at each step of the building process.

Interest-Only Payments: While your home is under construction, you make interest-only payments each month, calculated on the outstanding loan balance. This provides financial flexibility during the construction phase.

Seamless Transition: Upon the completion of your home, the loan effortlessly transitions into a permanent mortgage. You then start making regular monthly payments covering both principal and interest.

Locked Rates: The construction rate and the permanent rate are established upfront during the initial loan closing, providing stability and predictability.
Efficient Process: With fewer options for permanent mortgage terms, our OTC loans offer a straightforward and efficient process. You don't need a refinance transaction, saving you time, effort, and expenses.

Choosing Main Street Mortgage Company for your construction financing needs means a simplified and streamlined experience from start to finish. Let us be your trusted partner in turning your dream home into a reality. For information on Lot Loans for purchasing land, please visit our Lot Loans page.

Contact Main Street Mortgage Company today to discuss your construction financing options and start the exciting journey of building your new home.

Construction Loans vs. Traditional Mortgages

Construction loans differ significantly from traditional mortgages. Here's a comparison to help you understand the distinctions:

• Purpose: Construction loans are exclusively for building or renovating homes, while traditional mortgages are for buying existing homes.
• Payment Structure: Construction loans have progressive disbursements, while traditional mortgages provide a lump-sum payment at closing.
• Interest Payments: Construction loans typically require interest-only payments during construction, while traditional mortgages involve both principal and interest payments from the start.
• Appraisal: Traditional mortgages require an appraisal of the existing property's value, whereas construction loans consider the property's projected value upon completion.
• Loan Conversion: Construction loans can be converted into a mortgage, while traditional mortgages do not go through this conversion process.

How Do Construction Loans Work?

Construction loans follow a structured process to ensure funds are disbursed efficiently and the project stays on track:

• Application: Borrowers apply for the construction loan, providing detailed plans, budgets, and estimates for the project.
• Approval and Underwriting: Lenders review the application, evaluating the borrower's creditworthiness, project feasibility, and budget.
• Loan Terms: Borrowers agree to loan terms, including interest rates, repayment schedule, and disbursement plan.
• Progress Payments: As construction progresses, lenders make payments directly to contractors and suppliers.
• Loan Conversion: Upon project completion, the construction loan is converted into a permanent mortgage.

Types of Construction Loans

Construction loans come in various types to suit different needs:

• Construction-to-Permanent Loan: This common type combines the construction and permanent mortgage into one loan, simplifying the process.
• Stand-Alone Construction Loan: In this option, borrowers secure a separate construction loan and later refinance it into a permanent mortgage.
• Renovation Construction Loan: Ideal for major home renovations, this loan covers both the cost of purchase or refinance and renovation.

Construction Loan Requirements

To qualify for a construction loan, borrowers typically need to meet certain criteria:

• Strong Credit: Lenders often require a good credit score to approve a construction loan.
• Detailed Plans: Detailed construction plans, budgets, and project timelines are essential.
• Down Payment: A down payment or equity in the project is typically required.
• Income Verification: Lenders may request income documentation to ensure repayment capacity.
• Experienced Contractor: Working with a qualified, licensed contractor is usually a requirement.

Now that you have a comprehensive understanding of construction loans, you're better equipped to embark on your journey to financing and building your dream home. For personalized guidance and loan options, contact us today.