 Samantha
Community Mentor
Joined: 16 Sep 2005
Posts: 1606
Location: MASSACHUSETTS
150.38 Dollars($)
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 Posted: Thu Oct 13, 2005 2:53 am Post subject: RE: |
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Hi Jacobs
Welcome to the forums.
The advantage with construction loans is the there is only one application process and one settlement procedure as a result of which you can pay minimum costs.
Some lenders may charge slightly higher interest rate when you choose to convert your construction loan to permanent financing, but you may be offered a longer rate lock period by the lender. Although the lender decides upon the loan terms and type of permanent loan program during the closing of the construction loan, yet you can avail a rate lock with a float down option. This will help you to take advantage of declining interest rates.
You have the option to refinance your construction loan and take advantage of lower rates in case the market rates are indeed low. You can also avoid paying the conversion fee and thus make up for the costs in refinancing. But before you go for a refinance loan, just check whether the construction loan has any prepayment penalty, minimum loan term commitments or other penalties. In such cases it is best to consult a mortgage professional who can assist you in taking decisions regarding the permanent loan.
Hope we have been able to guide you.
May God bless you.
Regards,
Samantha. |
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