We are still paying on our property and are looking at starting the loan process to build. We are assuming the total loan amount will be around $300k here in Hidalgo County. What options do you know of or have you see on the different loan types? We have been working with a bank who has a lower down payment but coupled with their closing costs, it seems a bit much. Are there any advantages to the banks that do one time closing vs closing at the start & end? I havent ran the numbers to see who much you save/pay for the convenience.

The advantage of a one time close is that you don't have to requalify upon completion, don't need a second appraisal and don't have to pay a second set of closing costs.

What loan to value ratio are you looking for? 80%? 90%?

90%

My email is on my profile if you'd like to discuss.

It is possible to get one time close construction loans with as little as 3.5% down.

Jay@AgsReward.com said:

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It is possible to get one time close construction loans with as little as 3.5% down.

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Interested in hearing more about the structure and terms of this type of loan.

Jay@AgsReward.com said:

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It is possible to get one time close construction loans with as little as 3.5% down.

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Yeah, is that 3.5% + land paid or 3.5% for land+construction?

Jay@AgsReward.com

Interested in hearing more about this too!

sorry for the delay! Here is an overview of the product:

• You can borrower up to 96.5% of the appraised value. The appraised value is determined based the expected total value (land + home) post construction. The appraiser will use the plans + building materials + land value, in addition to recently sold comparable properties in the area, to determine the appraised value.
• Closing costs are typically $5-6k which are paid at closing prior to construction beginning. These cost can potentially be rolled into the loan if the appraised value is high enough.
• There is a 5% contingency that is required in case there are cost overruns on the build. The contingency is based on the build cost only (not including the land). The 5% can be provided at closing or potentially rolled into the loan if the appraised value is high enough. If provided at closing, you will received any unused portion of the contingency back when you move into the property. If rolled into the loan, you will received a principal reduction on any unused portion.
• In addition to the borrower, the builder will need to be approved prior to construction beginning and the loan closing.

Obviously, more to it then just this but a start.

Jay@AgsReward.com said:

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sorry for the delay! Here is an overview of the product:

• You can borrower up to 96.5% of the appraised value. The appraised value is determined based the expected total value (land + home) post construction. The appraiser will use the plans + building materials + land value, in addition to recently sold comparable properties in the area, to determine the appraised value.
• Closing costs are typically $5-6k which are paid at closing prior to construction beginning. These cost can potentially be rolled into the loan if the appraised value is high enough.
• There is a 5% contingency that is required in case there are cost overruns on the build. The contingency is based on the build cost only (not including the land). The 5% can be provided at closing or potentially rolled into the loan if the appraised value is high enough. If provided at closing, you will received any unused portion of the contingency back when you move into the property. If rolled into the loan, you will received a principal reduction on any unused portion.
• In addition to the borrower, the builder will need to be approved prior to construction beginning and the loan closing.

Obviously, more to it then just this but a start.

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Approximate best tier rates?

pmi for duration of loan ?
Is this a conventional loan ?

It is a FHA loan and as of now PMI for the life of the loan. Also 1.75% of loan stacked on the base loan.

It is an FHA loan best tier rates on the One-time close construction program are currently right around 4.25% for a 30 year fixed. This is higher then a purchase or refinance rate in a FHA loan by a decent amount but there is a lot more risk and a whole lot more moving costs on this type of loan than a purchase/refinance loan.

Just a any FHA loans the PMI is .60 a month and is on the loan for the life of the loan along with the 1.75 upfront that can be financed. BUT, you can always refinance if it makes sense at the time once you get the loan to value where a conventional loan would not require mortgage insurance.

This program, along with the VA program that allows for 0% down, are great for a segment of the population because it allows them to be able to get a custom construction loan with less then 10% or more down which most construction programs require. It will also allow for lower credit scores then most One-time close construction programs will allow as most bank portfolio products require very strong borrowers. It also important to note the the FHA/VA programs are 30 year fixed programs where most bank portfolio products are ARM's which is just fine for a lot of borrowers and makes sense, but some borrowers do like the security of the 30 year fixed.

It is not the place for a borrower with 780 credit score and 20% to put down. We put those borrowers into a different construction program or refer them to a referral partner that has a great program for them. But, it certainly allows a lot more folks to finance their custom construction which is great.