Construction Loans: Single vs. Dual Closings - Which is Right for You?

If you are considering getting involved with a construction loan, there are a number of variables that you will need to consider. Many people plan on having two different loan closing with this process. However, you might want to consider a loan that allows you to close just once.

Two Closings

The traditional method of getting financing for a construction loan involved two different closings. You might even be working with two different lenders for this process. You will start out by closing on the construction loan itself that allows you to build the property. Then, after the property is built, the first loan will be paid off with a traditional mortgage. This would involve going through a second closing process. This means that you have to pay closing costs twice with this type of loan. Since you are going to be paying thousands of dollars in closing costs for each time, this can be very expensive.

One Closing

Perhaps a better option for you to consider is getting a loan that only has one closing. Many lenders are offering construction loans that will automatically convert into a traditional mortgage once the property is finished. When you use this product, you will only have one closing to worry about and one set of closing costs.