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shamrock_71

Construction loan...does this sound right?

shamrock_71
15 years ago

Hi everyone! We're about to close on our construction loan, though I'm starting to feel uneasy about it. Initially, the loan officer told us we would do a construction to perm loan. Now, he's telling us it's better to get a construction then refinance when we go to close. Here was his response to some questions I asked about the difference between the two...does this sound accurate?

"Ok. Honestly, there will not be much of a cost difference between the two options.

If you decide to do a true construction perm loan with one closing and a modification:

* this will limit any possible over runs in costs as we will not be able to alter the original deed of trust (without charging extra recording fees)

* this will limit my ability to shop for the best loan rate at the time of completion due to the construction perm will be with only one investor

* this will only require one approval on the front end and only employment verifications once the home is completed

* paperwork may be a little less at modification, but will more extensive on the front end

* fees will not be much lower because title insurance and mortgage taxes will be collected at the time of construction closing

If you decide to do a construction loan and then refinance into a perm loan at completion:

* I will be able to shop for the best rate at that time with 4 or 5 of my best investors

* this will give you the flexibility to adjust loan amounts, etc......if needed

* If there are any overruns in costs, Pinnacle will possibly be able to be more flexible

* Fees would be broken out into 2 loans instead of all being collected at the construction loan closing

* I would have to update your approval in several months (which shouldn't be a problem)

Thanks for any advice!

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