Construction to Permanent Home Loans – Planning Stages

I hear it all the time when I’m working with buyers: ‘The House That I’m Looking for Just Isn’t Available.’

Many times in the Arlington housing market, and Northern Virginia’s larger market, this is true. Due in large part to the long period low inventory we’ve experienced, the home of your dreams isn’t for sale. It has to be built, and usually built on top of an existing home.

This can seem like a daunting process to many, but it is being done all over Arlington, Falls Church, McLean, Alexandria and Fairfax County right now. So where does someone start?

The best place to start is with a quality builder. Sit down someone with an expert knowledge of home building in your area and have a realistic discussion about what you want and what you can afford to spend.

Once you’ve worked out a budget, you need to find a suitable piece of land for your dream home. Once again, the builder’s input during this process is important, as they will have insights into what lots are suitable and what lots won’t work for what you want.

So let’s say you’ve found the perfect lot, and you have a realistic budget for building costs. How do you pay for your dream home?

Over the years, I’ve had the best experience with Construction to Permanent Home Loans when building custom homes for clients, and my clients have felt the same way too. What is a Construction to Permanent Home Loan?

Construction to Permanent Home Loans Explained

The lender advances the money to pay for construction. After the home is built, the same lender rolls the loan balance into a standard mortgage.

Advantages: You only have to close once, at the beginning of the process. While your home is being built, you pay only interest on the outstanding loan balance. Once the home is completed, it becomes a standard mortgage, and you lock in a maximum mortgage rate at the beginning, when construction begins.

To me, the biggest advantage is simplicity. If you’ve ever bought a home before, and dealt with the underwriting process, you know that it can be uncomfortable and financially limiting in the weeks or months leading up to closing. Imagine having to go through the process twice, pay closing costs twice, and have the additional worry of a potential change in your financial situation that might keep you from being able to qualify for a standard mortgage once the home is complete.

In my mind, it’s a no brainer to get a construction to permanent home loan when building your dream home.

This topic is something I know more about that most Realtors® As a homebuilder for over 30 years in Northern Virginia, I’ve gone through this process more times than I can count, and I know the ins and outs of the entire process from start to finish. If you’re looking for someone that can help guide you through the entire process, get in touch anytime:

Lou Sagatov, Realtor®


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