Congratulations on your decision to build a new Viking Custom Home. Because we want your entire building process to go as smoothly as possible, we recommend lenders who value their client relationships and have the best financing programs available.
Construction Permanent financing is the industry standard when constructing a custom home. There are various programs available with Construction Perm financing, such as Fixed Rate Fixed Term and numerous ARM options, which can modify to Fixed after the construction period. Extended rate locks, one-time settlement, and reduced fees* are just a few of the many benefits of CP loans. To learn more, feel free to contact our recommended Loan Officers:
Mike Schreibeis, VP/Branch Manager
p: 443.367.2422 | cell: 410.404.0670
Website: Visit Website
Jeffrey Starcher, Mortgage Banker
Sandy Spring Bank
p: 301.617.4204 | cell: 410.707.5651
Website: Visit Website
Viking Custom Homes does not require you to use one of our preferred lenders, but we can certainly speak to the experiences of our homeowners who have. *Please speak with a loan officer for more detailed information regarding areas of savings.
Q. What is a Construction to Permanent Loan?
A. This is an industry standard method to finance the construction of a custom primary residence providing both the construction financing and permanent loan. There are many available programs including 30-year fixed CP loans and Adjustable Rate options as well. The required down-payment may vary by bank and your preferred loan program. Some lenders provide a "One-time Close" CP loan, while others may offer separate construction and permanent loans to fit your needs.
One benefit of a Construction to Permanent Loan is you can lock in the permanent rate at closing, and have up to 12 months to complete your new home construction. During this period, interest is charged only on the funds that have been disbursed. When the construction is completed, the permanent loan period begins. For more information, please feel free to contact one of our recommended loan officers today.
Q. What is an "All-in-One" or a "Single Close" construction loan?
A. A "single close" construction loan is also your permanent financing so there is only one closing, at the beginning of the construction period. There are many different types of construction to permanent loan programs available. To find out which one is best for you, feel free to contact one of our preferred lenders.
Q. Do we need to sell our current home before building a new home?
A. That's a great question! To qualify to build a new home while staying in your current home will largely depend on your financial situation and/or the equity position in your existing home. We recommend you speak with a loan officer who can provide you with the most current and accurate information.
Q. When can I buy the lot using a construction loan?
A. A construction loan can only close with architectural plans, a signed contract, and a cost breakdown with a builder based on those plans. From a practical standpoint, if you enter into a contract to purchase a lot, and you haven't yet begun the process of developing plans with an architect, you're probably going to have to obtain a lot loan or pay cash for that lot. The situation where it is easiest to use a "single close" construction loan to purchase the lot is when you have selected a builder to build the home of your choosing and have found the right homesite - whether it be a lot the builder owns or not.
Q. What kind of deposits are required with Construction to Permanent Financing?
A. The answer to that question will depend on the lender you select. The world of mortgage lending is an ever changing one. Lenders are constantly adding to their portfolio of loan programs. The most prevalent type of CP loans look for a 20% down payment. There are several local banks with the flexibility to look at your unique financial situation and determine if you would qualify for a lower down payment program. We always recommend you seek advice based on your specific circumstances.
Q. What is a contingency, and should I have one?
A. A contingency is a line item in your cost breakdown that does not have a specific element of your build associated with it. If, during the course of construction, you decide you want some additional work done, or you decide you want to upgrade your materials (from granite tile to a slab of granite for example), you can used the money in your contingency item to do this. Without a contingency, you would have to pay "out of pocket" for these changes, since the loan amount on a construction loan cannot be increased during construction. A contingency is generally a good idea if there is room enough in your appraisal or total cost such that you are not already at the maximum loan to value percentage allowed at your loan amount. Naturally, you also have to be able to qualify for the higher loan amount necessitated by the inclusion of a contingency. You only pay interest on the amount borrowed, so you are not charged interest on unused contingency funds. By virtue of raising your loan amount, the inclusion of a contingency will slightly increase your closing costs, but it may give you greater peace of mind to know you have some funds in reserve.
Q. How competitive are the interest rates for the Construction to Permanent loans?
A. You might think that with the requirements being as simple and accommodating as they are that rates would be higher, however rates are extremely competitive and can be quoted once sufficient information has been gathered by your construction loan specialists.