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CP

We offer construction-to-permanent (CP) financing which finances construction/building of a new property.  This loan can be utilized and be combined with financing and purchasing the land, or on land you already own.  CP financing is similar to renovation financing, but CP financing does not require there be an existing dwelling.  CP financing requires 5%+ down.

 

Construction financing will fund the construction. During construction, we lend money as milestones are met by the builder.  Our appraiser inspects the property and approves the milestones which thereafter allows us to send additional funds to the builder as progress on construction is made.

With a construction loan, a home buyer can choose between a two-time close or a one-time close.

A one-time close offers a mortgage loan that is structured to fund the construction throughout the construction period, and then after construction is completed, it automatically converts to a permanent loan, via a loan modification.

A two-time close offers a mortgage loan which is for financing construction, with after construction is complete, we refinance the construction loan with a permanent loan.  Even though there are two loans, we apply for the two loans and process the two loans simultaneously.  The permanent loan closes after the construction is complete.

The best option between the two will depend on the comparative terms of the two loan products.  The loan will be a fixed rate and there is a minimum credit score of 700 to qualify. We only finance primary residences with the CP loan.

During construction, the loan payments are made interest only and afterwards the payments are both principal and interest.

The maximum loan amount is the conforming loan limit (In the DC area in 2022 it’s $970,800).  Learn more: https://www.alexjaffe.com/conventional-loans 

The buyer selects their builder.  We do vet the builder, checking their references and gather supporting documents in order to approve them to receive the construction financing.  The builder will need to be licensed and insured among other requirements; the buyer cannot be the builder.

 

CP financing is best utilized when a buyer wants to customize the property and build on a lot of their choosing.  Since they are financing a property to be built, the entire process takes longer than standard financing. But the end result is a property that’s built to a buyer’s preferences, and specifications!

Questions? Please reach out to me.  240-479-7658 or [email protected]