December 1, 2020

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Articles Tagged With: FHA One-Time Close Construction Loan

The FHA One-Time Close Construction Loan: An Option In 2020

FHA Implements New Construction Loan Rule Changes

The FHA has announced rule modifications for its new construction loans. On October 22nd, 2020, the FHA and HUD issued a Mortgagee Letter detailing modifications made in 2018 and 2019 which have resulted in a need for further alterations of the rules for New Construction loans. Some of the changes end requirements for “Early Start Letters” and other requirements, others make provisions for “alternative inspections” as we’ll discover below. The FHA/HUD official site states there are also changes to the maximum financing policy for FHA New Construction loans. Effective immediately–lenders can choose to wait on implementing these modified rules until January 4, 2020, but have the option to start using the new rules now if they so choose) the following modifications are being added to HUD 4000.1: Eliminating Early Start | more...

 

One-Time Close Construction Loan Mortgage Payments: What You Need To Know

When do mortgage payments begin on a construction loan? If you are building on your own lot with a VA One-Time Close loan or an FHA OTC construction loan, you’ll want to know what you are liable for and when–and you’ll also want to know how delaying your mortgage payments until the home is complete will affect your monthly payments down the road. VA and FHA mortgage loan options include the ability to build a home on your own land using a VA One-Time Close construction loan or the FHA equivalent. One-Time Close loans allow you to build a house on your own land or purchase land in conjunction with building a home.  There is a single application and approval process–these loans are potentially more streamlined and easier to manage | more...

 
apply for an FHA loan

FHA Loan Credit Questions: Co-Signing

Here is a variation on a common question about FHA home loans: “I think my credit is fairly good but I have two cars in my name–one of which I thought I was only the co-signer. I’ve recently found a property that is fairly reasonable and my question is will my co-signing affect the loan approval decision? I do not make the payments on the second vehicle.” HUD 4000.1 has a great deal to say about credit, financial liabilities, and related issues. What does it say about this reader’s question? The general philosophy of the FHA is toward applicant credit information includes the notion that your credit history is the “most useful guide” determining things like: The loan applicant’s attitude toward credit obligations; The ability to predict a borrower’s future | more...

 
Who is eligible for an FHA Home Loan?

Building A Home, Buying A Home

Are you thinking about buying an existing home? Are you considering applying for a construction loan to build a house on your own lot instead? If you are trying to decide whether to build or buy, there are questions to ask before you commit to buying an existing construction property, or choose to apply for a One-Time Close mortgage to build on land you already own or purchase as part of the mortgage. What does it take to select the best option for your needs? There is an advantage to building a home from scratch–borrowers can influence the final outcome of the construction and help determine the nature of the house ahead of time. Some don’t enjoy sorting out such details, they gravitate toward the idea of looking at existing | more...

 
Build On Your Own Lot

FHA One-Time Close Loan Rules: Buying Land To Build On

You can build a home on your own lot, even as a first-time home buyer. Thanks to the FHA single-family loan program, which includes a construction loan option, you can build a home instead of buying an existing construction house AND take advantage of low FHA loan down payment requirements. FHA loan rules require only a 3.5% down payment even for construction loans, making the option to build instead of buy within reach of many who are just now exploring their options for becoming a home owner. But when considering a construction loan it’s good to remember that you don’t have to own land already–not all construction loan borrowers own their own property and need to purchase the lot as part of the loan. Building Your Home With A Construction | more...

 
Who should apply for a construction loan?

Who Should Apply For A Construction Loan?

Who should apply for a construction loan? There are two basic types of borrowers who should consider doing so–the house hunter who wants to build a house instead of buying someone else’s, and those who want to purchase fixer-upper homes and renovate them. The home loan for borrowers who would rather build their home on their own lot is called a One-Time Close (OTC) construction loan. It features a single loan application for both the construction of the house and the purchase of it once completed. Non-OTC construction loans may required two separate loans–one for the construction phase and one for the purchase of the completed house. This makes the process more complicated and having a single loan is definitely an advantage for the OTC version of these mortgages. OTC | more...

 
VA One Time Close Construction Loan

VA One-Time Close Construction Loan Options for Military Veterans Expanded

Some house hunters get fed up with looking for just the right home, while others start out their home loan journey knowing in advance they want a house built for them. What options to these borrowers have? There is an FHA home loan known as the FHA One-Time Close / Single-Close construction loan that lets borrowers apply for a single loan that covers both construction costs and the mortgage itself. The FHA version of this type of construction loan requires the borrower and lender to work together to establish a plan for the project including estimated completion times, interest rates, budgets, and more. Some borrowers aren’t interested in FHA home loans since they have other options; do qualifying military veterans have a VA loan version of the FHA One Time | more...

 
One Time Close Mortgage Loans: The Base Home Sales Price

One Time Close Mortgage Loans: The Base Home Sales Price

There are home loans for borrowers–even first-time home buyers–to allow the construction of a home from the ground up. They are called One-Time Close construction loans and are available from participating FHA, VA, and USDA lenders. One Time close loans, also known as single-close construction loans, feature one loan for both the construction of the home and the purchase of that home. When you apply for a construction loan, one area you’ll soon learn about is something called the base home sales price. This is essentially the base cost of the project using the contractor’s standard designs and features–you choose the design and features and those choices generate a base price. Choosing Features, Materials, Design How do these choices affect cost? Consider the design itself. What is the cost of | more...

 
FHA One-Time Close Construction Mortgage Basics

FHA One-Time Close Construction Loan Rules

What do borrowers need to know about FHA One-Time Close construction loans? There are two very important areas to keep in mind. One involves the lender’s specific requirements to qualify for this single-close construction loan, and the other involves FHA loan rules. The two are not always identical and this is something to be aware of when going into the loan application process. FHA One-Time Close mortgages are different than existing construction loans because the home must be designed, built, and paid for from the ground up and there are varying time frames under which this will be done. Purchasing an existing construction home means getting to move in much more quickly, but the trade-off is that you are purchasing someone else’s home rather than having one built especially for | more...

 
Construction Loans For First-Time Home Buyers

Planning Your One-Time Close Construction Loan

Some FHA loan applicants do not realize they have the ability to apply for a One-Time Close mortgage that lets the borrower build a home on their own lot instead of buying an existing construction home. The FHA One-Time Close (OTC) construction loan, like its’ VA construction loan counterpart, is a loan backed by the government that allows the borrower to apply for a single mortgage loan to cover both the costs of construction of a home from the ground up and the purchase of the home.  This is offered as an alternative to construction loans that require two loan applications (one for construction, one for the completed home) and two closing dates. OTC Loans Have The Same Down Payment Requirements As Other FHA Loans The One-Time Close loan avoids | more...