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A construction-to-permanent loan — also known as a one-time, single-close or construction-perm loan — is a type of mortgage for those building a home. It funds the purchase of land and the ...
With a construction-to-permanent loan, you borrow money to pay for the cost of building your home. Once the house is complete and you move in, the loan is converted to a permanent mortgage.
Types of construction loans. Construction-to-permanent loan – A loan to pay for construction costs, which then converts to a permanent mortgage once the home’s finished and ready for occupancy.
In this case, the gap lender is often the construction lender. Where the gap lender has agreed prior to construction to make the gap loan, the document that ties together the construction loan, the gap loan, and the permanent loan is the buy-sell agreement.
The rest of the loan's balance (called "holdback") [1] is given to the builder upon the achievement of certain milestones related to the sale or lease of its residential space. [2] For example, a bank may advance 80% of the balance of a property loan to the builder, and release the remaining 20% upon the successful construction lease or sale of ...
Multiple Advance, Closed End: This type of loan (typically a construction loan) advances incremental amounts up to a certain limit, based upon some criteria such as inspection and approval of a draw request. Any principal reductions received during the loan period are not available to be drawn on, but rather have paid down the loan balance.
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