Looking to construct a new home, but your price range is outside of conventional mortgage restrictions? GO Mortgage understands the frustration of searching for a mortgage that will let you construct your dream home. A Jumbo Single Close Construction Loan may be the solution to your frustrations.
Here we’ll introduce you to what exactly a Jumbo Single Close Construction Loan is, how you can qualify, the benefits, and more.
A Jumbo Single Close Construction Loan is a form of Construction to Permanent financing that goes beyond normal mortgage restrictions set by the Federal Housing Financing Agency. Conventional conforming mortgages only allow a loan of a certain amount for a household. Most counties limit a conforming loan to a maximum of $510,400 per one-unit home, although high-cost areas can expand on this limit. If a borrower wishes to go beyond this conventional loan limit, they’ll need to seek out a jumbo loan.
Jumbo loans are less common, considering they’re a larger risk for loan companies. These loans, which are also called non-conforming loans, cannot be guaranteed by Freddie Mac or Fannie Mae. Since they are riskier, they often have stricter qualifications and restrictions.
Now that we’ve explained what a jumbo loan is, where does the Single Close Construction Loan come into play?
Building a new home is an expensive ordeal. Traditionally, when building a new home, a borrower will have to take out two loans - one for the construction of the new home and one for the mortgage. These two loans can be rather expensive and time-consuming for a borrower considering they will need to close twice on these loans.
A Jumbo Single Close Construction Loan is a solution that helps future homeowners purchase and construct a new home that is outside the price range of a conventional conforming loan. A Jumbo Single Close Construction Loan eliminates the need for multiple closings. Multiple closings only add to the project’s expenses.
With a Jumbo Single Close Construction Loan, the primary construction loan will convert into a permanent loan once the construction is finished. This loan is especially helpful to people seeking jumbo loans since the mortgage is already significantly larger than a traditional conforming loan.
For these types of loans, the maximum loan amount is up to $1,350,000 and $1,500,000 for high-cost areas, respectively maximum loan amount is subject to LTV and FICO score restrictions.
As stated previously, restrictions are stringent for a Jumbo Single Close Construction Loan. Banks must be able to guarantee a borrower will pay. Here are some general qualifications for a Jumbo Single Close Construction Loan:
There are many benefits to a Jumbo Single Close Construction Loan. When you choose a Jumbo Single Close Construction Loan, you’ll benefit from:
There are, what seems like, endless options for mortgages, so if you’re worried that a jumbo loan is not in your price range, no need to worry. Here are a few alternatives to Jumbo Single Close Construction Loans:
If none of these alternatives are suited for your needs, don’t stress. GO Mortgage can help you find the perfect mortgage solution for you!
Jumbo Single Close Construction Loans vary from bank to bank, but below are some general guidelines for the application process:
GO Mortgage is a leading source of Jumbo Single Close Construction Loans to homeowners everywhere. When you partner with GO Mortgage, you get a partner to guide you through the entire, complex process. For information on qualifying and more reach out to us today!