Custom Mortgage Services, Inc. - Looking to Build a New Home?

The construction costs of your new home will be handled one of two ways:

1.	The builder may collect a 10-20% construction deposit from you, and then he will pay for the construction of the home. When the construction is completed, you, the buyer, will obtain a permanent loan on the home. The 10-20% deposit will be credited towards the closing of the permanent loan.
2.	Most of the time, especially for custom homes, the builder will require you to take out a construction loan to pay the costs of building the home, as they are incurred. In this case, there are two ways to obtain financing:
	a.	Construction loan only - This is where you, the buyer, obtain a loan for building the house only. Once the construction is complete, the construction lender will want their loan paid off immediately. At that point, the buyer will have to obtain permanent financing. This is not a desirable option, because there will have to be two closings, and two separate approvals. If the financial situation of the buyer changes during the construction period, it is feasible that the buyer may not qualify for the permanent loan.
	b.	Construction-to-Permanent loan, otherwise known as a "One-Time Closing" or "All-in-One Loan" - This allows you, the buyer, to close both loans at the same time! Also, you only have one set of closing costs. Since the loan automatically converts to permanent financing at the end of the construction period, you will not have to re-qualify. In almost all cases, this is the route that we recommend.