In Part I and Part II , I told you about the ONE TIME CP LOAN.
I told you that the ONE TIME CP Loan where all the loans are combined into one. You close ONE TIME. . .for the Land, the Construction Loan and the Final Mortgage. Are all combined in your first approval. I spoke about the benefits:
Benefits:
- You (or your clients) need not re-qualify following the completion of the
home. - A second application need not be taken.
- You (or your clients) could lock the interest rate at the first closing
And I mentioned the appraised value financing model. Many have faced the unfortunate situation that the borrower does not have the money to close on their "end" loan after construction is complete. This puts the builder in a very unfortunate situation of bargaining or taking the home -- it also puts the homeowner in an extremely stressful AND uncomfortable situation.
Now I want to be sure to let you know that the CP Loan is not the end all be all -- things certainly happen -- but it does allow certain contingencies to provide the process goes smoothly and the homeowner can enjoy the new home they designed.
I am still working out the details of which lenders offer the best package to use for Energy Efficient Mortgages EEM's but in regards to Financing in Energy Efficient Improvements (EIM's). these are available to "ride" on a CP Loan to make it more attractive. So, as I look at it, here’s what I see that can work for you and your clients:
- One closing - saves time and money
- Interest rate can be locked so if rates go up, they are locked at a lower rate. If rates drop (unlikely these days) they can take advantage of the rate drop.
- No "re-qualifying" after the occupancy permit is obtained - a simple "modification" package modifies the loan amount the funds actually used
- REALTORS® are paid at close.
- Builder does not need to disclose financials, have proof of assets, have reserves, etc --
- Homeowners can keep their money in their investment product making hopefully making 10%+ and pay I/O on the draws -- they make money while they are building and normally come to the table with little if no money.
- If builder owns the land, the builder can be paid for that at close. S/he walks away from the table with money before even breaking ground.
In today’s market where the trend I toward healthy-built homes , sustainable design and planning, I am very excited a bout the ONE TIME CP Loan. If you have questions about it, be sure to let me know, and stay tuned for more information in a future posts on my BLOG.. or email me if you have questions or immediate needs.
I take great care of projects!!!
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Mary, I know that you're still doing some of your research, but I would be very interested in having you present information about the financing packages you are exploring here to our team.