You’ve thought about building your own home. You can. A construction loan can make it happen.
There are different types of construction loans. So let’s look at two of these loan types: a) the one-time close construction loan, and b) the two-time close construction loan.
With the OTC, you qualify one time for two loans.
The 1st qualification is for your construction loan. The 2nd qualification is for your permanent loan.
And then there is the two-time close (“TTC”) construction loan.
The TTC is a riskier loan than the one-time close. Due to the fact that with the two-time close, you will need to qualify based upon your credit and your income a second time- after your home is built.
With the TTC, any reduction in your income or a drop in your FICO Score – while your home is being built – could make it more difficult to qualify for your permanent loan.
Another potential risk to consider with the two-time close is, What if the construction phase doesn’t go well? What if construction is not completed? What if it’s delayed?
In either situation – a) a drop in your credit score or a reduction in your income, or b) challenges with construction, with the TTC, qualifying for your permanent loan could be put at risk.
Key points…
The one-time close construction loan: one loan approval
The two-time close construction loan: two loan approvals.
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