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When you’re planning to build your dream home, choosing the right construction loan can feel overwhelming. But selecting the right financing can make all the difference.
Building a home is an exciting journey, filled with possibilities! Let’s break down some construction loan options that can help you every step of the way.
5 Financing Options for New Home Builds:
12-, 15-, or 18-month rate locks
Best For: Those who want to lock in a rate while their builder finances the construction.
Scenario: You’re waiting for your new home to be built and want to secure a low rate now, even though you won’t close until the home is complete. This option is ideal if you’re looking for rate stability during the build process, allowing you to plan ahead with confidence (especially if the rate market is trending upwards).
Flex loans
Best For: Homeowners who want to avoid moving twice.
Scenario: You want to use equity from your current home to help with the down payment on your new build, but you don’t want to sell until the new home is ready. Flex loans give you up to 12 months to pay off the loan once your current home sells. It’s a great way to bridge the gap between selling your current home and moving into your new one without the additional stress of multiple moves.
A flex loan can ease the transition by providing extra funds for unplanned expenses (like buyer requests) while you wait to sell your home.
Lot loans
Best For: Buyers who are planning to build but aren’t quite ready to start construction.
Scenario: You’ve found the perfect lot to build on but aren’t ready to start construction just yet. A lot loan helps you secure the land now and gives you time to plan your build. Securing your lot sooner than later can set the stage for a smoother financing process when you’re ready to break ground.
Owning the lot outright can make it easier to secure financing when you’re ready to start building.
Construction-to-permanent loans
Best For: Those who want a single closing for both construction and permanent financing.
Scenario: You’re ready to manage the financing for both the construction and long-term loan in one step. With a one-time close, you’ll pay interest only during the build, and your rate and fees are locked in from the start. This streamlined approach saves you time and money by consolidating the financing steps, so you can focus on building your dream home.
Refinancing
Best For: Buyers who already have a construction loan.
Scenario: You’ve already closed on a loan to finance your new build or big renovation. But what happens when your construction is complete? With Gate City Bank, receive a $2,500 credit when you refinance a construction-to-permanent loan with us.1 That means you may be able to lock in a lower rate at a reduced cost, plus breathe easier with local service and support right down the street. Just ask a lender how it works!
Whether you’re looking to lock in a rate, leverage your home’s equity or secure your perfect lot, our experienced lenders can guide you through the best options for you. Connect with us today to learn more about Gate City Bank’s construction loans tailored to your unique needs.
We know you’ve been envisioning building your dream home for a while, which is why we’ve made our new home construction loan process easy and convenient. Enjoy interest rate locks, flexibility, knowledgeable lenders and more.
Nail down the necessary steps, requirements and loan types involved to bring your home project to life with some tips on how construction loans work.
Discover seven essential steps for building your dream home and turning your vision into a reality!
1 $2,500 credit applies to the refinance of a Gate City Bank construction-to-permanent loan and must be used within six months of the original construction loan. An appraisal at borrower’s expense may be required. Other terms, conditions and qualifications may apply. The credit will be applied to loan at closing.
