Florida Mortgage Construction to Permanent FAQ’s

how much can I borrow?
can I roll in closing costs?
how does the builder get his funds?
what is my payment during construction?
how do I lock in my rate?
what is modification?
will there be unexpected fees at modification?



Q. How much can I borrow?

A. Your loan amount is based on two criteria. First, the loan program you choose will have Loan to Value (LTV) mortgage limits just like any other mortgage program. Those limits will depend on Credit Scores, Type of Documentation, and Mortgage Product choice. If you have owned your Lot at least 12 months (seasoned) our construction to permanent mortgage allows you to use the appraised value.  This is a great advantage especially when the appraised value is higher than the original contract price of your Lot. With our construction to permanent program you could save by financing more.  Call our Construction to Permanent Specialists and discover you options. Call at 1-321-987-9876.

Q. Can I roll in Closing Costs?

A. Yes. It’s the best feature with our construction to permanent programs. If your appraised value is large enough, you can roll in closing costs.

Example: Your new build price is $250,000

      Your seasoned Lot price is $50,000 with a small $10,000 mortgage balance

      Your estimated Closing costs are $10,000

      The mortgage loan program you have chosen allows for a 90% Loan to Value (LTV). That is, you can borrow up to 90% of the Lot appraisal plus the consturction costs.

If your appraised establishes a Lot vale of $50,000; your loan amount, at 90% LTV, is $270,000. That loan amount will allow you to cover the Contractor’s price of $250,000, the Lot balance of $10,000 and the estimated closing costs of $10,000.  You could close on your Construction mortgage financing with $0 out of pocket. Contact us for a free Good Faith Estimate or call now at 1-321-987-9876.

Q. How does the builder get their funds?

A. When you close the builder will be given usually 10% of the loan amount to begin the ground clearing, permitting and foundation.  As soon as the foundation is laid, the Contractor will fill out a form that requests the next draw based on what percent of construction is completed. You will need to sign that form acknowledging that the work is complete up to that point.  The CP Department will send out an inspector within 48hrs and then distribute the next draw.  The draw can be a joint check needing your signature along with the builder (keeps you in control of draws) or a wire directly into the builder’s account.

Q. What is my payment during Construction?

A. Your payment during construction is based on the interest that is due on the mortgage funds that have been drawn. The rate during construction is usually Prime + 0.50% or Prime Rate + 1.00%; much like that of a home equity line of credit (HELOC).  Remember your mortgage payment will only be based on whatever funds have been used at the time the bill is calculated each month.  This continues every month until your new home is completed and you modify your existing construction mortgage loan into your permanent mortgage.

Q. How do I lock in my rate?

A. This is the best part of our construction to permanent mortgage.  Most of our mortgage programs available with the construction to permanent financing provides a locked in Rate Cap.  This Rate Cap is extended to cover the amount of time your builder needs to accomplish building your new home.

You also get to enjoy an interest rate float down that allows you to obtain the lowest rate available.  The float down is requested by you the owner up to 30 days prior to the Modification or completion of you new home.

Call our construction to permanent mortgage professionals and you’ll be sure to get all of the details; 321-987-9876.

Q. What is Modification?

A. Modification is the process you go through after your home has been completed. Since you already closed once, there is no additional closing or costs; you merely are modifying your construction loan terms into your permanent mortgage.  You will meet at the title company, where you closed prior to the construction of our home, and sign your Permanent mortgage financing. You will need to bring any property taxes due, Homeowner’s Insurance for 12 months, and any additional escrows (if applicable).  Your builder will receive their final 10% and will give you the keys to your brand new dream home.

Q. Will there be new unexpected fees at Modification?

A. Absolutely not; closing costs will all be paid at the original closing, prior to the start of construction.  The only funds you will need to bring at modification are your escrows (if applicable) and your 1 year Homeowner’s Insurance Policy.

Contact BeechTree Mortgage and we will provide a very accurate Good Faith Estimate and answer any questions you have regarding this article. Call now at 1-321-987-9876

Back To Construction Perm Information
Back To Mortgage Information Center
Ask A Question