This blog is for educational purposes only, not an offer of credit or advertisement for current loan terms. It does not provide legal advice. Refer to our loan web pages or consult professional advisors for specific information.
Building your dream home is a thrilling opportunity to create an ideal space for your lifestyle, needs, and aesthetic preferences.
However, the financial aspects of home construction can be daunting.
If you want to turn your vision into reality, a one-time close construction loan has the potential to provide the perfect blend of simplicity, cost savings, and convenience.
There are several benefits to one-time close construction loans that make them an ideal option for future homeowners in the Sunshine State—let’s go through them here.
Apply now with MIDFLORIDA Credit Union.
The construction phase vs the close-out phase
The construction phase and the completed phase of building a home differ significantly in terms of both physical progress and financing.
Physical building
During construction, the home is being built from the ground up. This stage includes:
- Site preparation
- Foundation pouring
- Framing
- Installing electrical and plumbing systems
- Finishing interiors
Each construction step will often occur sequentially, each dependent on the completion of the previous.
The property is not yet livable, and the builder plays a central role in managing timelines and ensuring quality.
Financing differences
During this phase, the loan functions as a short-term construction loan.
Funds, called "draws," are disbursed incrementally to pay contractors and suppliers as work progresses.
Borrowers typically pay interest only on the amount disbursed, minimizing costs during construction.
Close-out phase differences
The financing must transition into a long-term, permanent mortgage once the home is fully built and considered move-in ready.
This new loan repays the old construction loan and adopts standard terms, such as fixed or adjustable interest rates, for the repayment period.
You now make full monthly payments, including principal and interest, and can begin enjoying your new home.
How a one-time close construction loan works
A one-time close construction loan—also known as a Construction-to-Permanent Loan—combines the financing for the construction phase and the permanent mortgage into one seamless loan.
You're eliminating the need for multiple loan applications, approvals, and closings, providing a straightforward path to homeownership.
Benefits of a one-time close construction loan
Business is booming for newly-built homes. If you want to build your own using a construction-to-permanent loan, look forward to the following benefits.
Simplified process
A key advantage of a one-time close construction loan is its simplicity.
With this type of loan:
- You only need to apply and be approved once.
- There’s a single closing, reducing the paperwork and stress associated with multiple closings.
- The construction and permanent financing phases are integrated, ensuring a seamless transition once your home is complete.
This streamlined process is particularly beneficial for busy individuals or families juggling work, life, and the complexities of building a home.
Cost savings
Closing costs can add up quickly, especially with traditional construction loans that require separate closings for the construction and permanent financing phases.
A one-time close loan consolidates these costs into a single closing, saving you money upfront.
Additionally, with fewer fees to worry about, you can allocate more of your budget to building the home of your dreams.
Rate security
One-time close construction loans often allow borrowers to lock in their interest rate during the initial approval process.
This protects you from potential rate increases while your home is under construction, offering peace of mind in a fluctuating market.
Knowing your rate is secured means you can plan your finances more confidently, avoiding surprises when your loan transitions to a permanent mortgage.
Fewer hurdles
Managing two separate loan approvals can be time-consuming and stressful.
With a one-time close construction loan, you only need to meet the qualification requirements once, reducing the risk of complications or delays.
This is especially beneficial if your financial situation changes during the construction process, as you won’t need to requalify for the permanent mortgage.
Predictable disbursements
During construction, funds are disbursed to your builder in predetermined stages, ensuring the project remains on track.
Because the loan terms are established upfront, you and your builder clearly understand the financial expectations, promoting a smoother construction timeline.
Why a one-time close construction loan is perfect for your home building journey
When building your ideal home, the last thing you want is to be bogged down by complex financing arrangements.
A one-time close construction loan aligns perfectly with the needs of homebuilders by simplifying the process and reducing financial uncertainty.
- Aligns with your vision: A one-time close loan allows you to focus on creating the home you’ve always envisioned, free from the distractions of managing multiple loan approvals and closings.
- Supports long-term goals: By securing your financing upfront, you’re better equipped to stay within your budget and avoid unexpected costs, making it easier to achieve your long-term homeownership goals.
- Minimizes stress: From start to finish, a one-time close loan minimizes the stress associated with building a home—it’s a predictable process with fewer moving parts, so you can enjoy the journey of bringing your dream home to life.
Why MIDFLORIDA is the right choice for your construction loan
When financing your dream home, choosing the right lender is just as important as selecting the right loan.
MIDFLORIDA offers the expertise, flexibility, and personalized service to make the homebuilding process as smooth as possible.
Our experienced mortgage professionals understand the unique challenges of home construction financing. We’re here to guide you through the process, answer questions, and ensure you feel confident every step of the way.
Our competitive rates and flexible loan options can match various needs.
With MIDFLORIDA, you can lock in your rate upfront and rest easy knowing you’ve secured financing that works for you.
As a local credit union, MIDFLORIDA deeply understands the communities we serve.
We’re committed to helping our neighbors build homes they love, and we’re proud to be a trusted partner in your homeownership journey.
Start your application today
Ready to turn your dream home into a reality? Learn more about one-time close Construction Loans at MIDFLORIDA or begin your journey today with our online application.
Let our team help you build the home you’ve always envisioned.
