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Company Loan Type APR Est. Pmt.

Construction To Permanent Loan

Posted on: 08th Dec, 2005 01:18 am
I have always dreamt of having my own house, which is build by me. I am ready to take a mortgage. I have been suggested by my cousin to take a construction to permanent mortgage loan. I want to know what is permanent loan is and are their any benefits of permanent to construction loans.
Hi Tony,

Permanent Mortgage is a long-term mortgage usually for ten years or more. It covers costs like development costs, construction loans, financing expenses, etc. It is also known as an end loan or permanent financing.

Posted on: 08th Dec, 2005 01:25 am

You must have got a fair idea about permanent loans from the above post.

There are benefits of construction to permanent loan.
  • Cost effective: It is more cost effective as there is only one set of closing and one point originating fee.

  • Conversion to permanent financing: Your construction loan will automatically get converted into permanent loan and therefore you can concentrate more on furnishing and decoration of your new house.

Posted on: 08th Dec, 2005 01:44 am
I have a construction to permanent loan because I recently had a home built. I did my closing at the beginning and I was informed that my final closing would be to convert my construction loan into a permanent loan without any financial obligation because of my initial closing cost. Now my home is complete and the bank and Title company are telling me that I will need to bring a check for $2500 for final closing. Why am I being charged again for closing cost when I was informed that one closing covers all?
Posted on: 19th Jan, 2009 01:05 am
Hi Leon,

You will have to speak to the bank and the title company and inform them that you were told that there would not be any financial obligation when you convert the construction loan to a permanent one. Try to negotiate with them. I think it will help you.
Posted on: 19th Jan, 2009 10:02 pm
We own our current home outright, value est $260k. We want to build a new house for about $300k. Is it better to pay for most of the construction through a CP loan on the new one, or a HELOC on the current house?
Thinking outloud, it seems like maxing out a HELOC and taking out a minimal CP loan make more sense because:
1. it's tax deductible
2. no points or fees
3. lower rate by about .70% from some online research

Are there any caveats we're overlooking here?
Posted on: 26th Jan, 2009 04:13 pm
You can take a contruction loan and build a new home. This will save your present property from being used as a collateral. Moreover, in case, you cannot finish the construction of the new house, you will be able to at least save your present home.
Posted on: 27th Jan, 2009 12:28 am
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