The Benefits of Construction to Permanent Financing
May 18, 2023
Building a home deals with many parts. You have the design considerations, finding land, and of course, financing. Understanding the financial aspect of your new construction home is essential for you to get the best possible deal, which is what we want for you at Ameri-Star Homes in Maryland. With Ameri-Star Homes as your custom home builder, you can get the benefits of construction to permanent financing, also known as a construction perm loan or co-perm loan.
One Simplified Loan
You could get one loan to finance your home construction and a second to fund your mortgage, but a construction to permanent loan simplifies that. Naturally, it combines these two loans into one, meaning you only have to deal with one closing cost instead of two and have a seamless transition from the construction payment to the mortgage payment.
For example, when building with Ameri-Star Homes, the construction phase will take out funds from a line of credit as each part of the project progresses. After the county issues an occupancy permit, the loan will change into permanent financing, the mortgage for the home.
In addition to the smooth and simplified financing, it also saves homeowners money. It saves on the transfer tax. The transfer tax amount depends on the land cost rather than the construction cost, saving hundreds if not thousands of dollars.
You also can get a tax deduction with a construction to permanent loan, particularly for the interest-only funds you pay during the construction phase. Please consult your tax advisor for details.
Lock In the Interest Rate
Ameri-Star Homes knows how to help you reduce your interest rate significantly. In addition, the construction perm loan gives you a fixed mortgage rate, so that you know exactly what amount you will pay. Plus, you don’t have to worry about unpredictable interest rates because you can lock in your rate for up to 12 months!.
You don’t have to sell your house to get started on your CP loan. That is a huge relief, because it means you can comfortably live at home during the new home construction. If you use the amount for your sold home on the new mortgage, you can refinance your loan.
Interest-Only Payments During Construction
You do have to start paying for the home during construction, but these payments are interest-only, based on the used monthly funds, and are tax deductible. These interest-only payments extend up to 12 months, which can be, give or take, the total construction time.
Let Ameri-Star Homes Build Your New Custom Home!
Ameri-Star Homes was built on the idea that a home is not complete until the homeowner is 100% satisfied. That’s right, completely satisfied homeowners. Whether you want a home built on one of our home sites or on your own land, count on the same high quality from Ameri-Star. We have set out to exceed all your expectations of integrity, affordability, and customer satisfaction. Build lasting memories for years to come with Ameri-Star Homes.