Ohio Construction Loans and Construction Perm Loans

Ohio Construction Loans / Constructions Perm Loans at Cleveland Ohio Mortgage

Definition – There are two types of Ohio construction loans. There are normal construction loans and their are contruction perm loans. A conventional construction loan a loan used to build a new home in phases. You will need to refinance after the house is built into a long term loan. A construction to perm loan are new home loans that allow you to get approved for the construction of building a new home and close on the home at the same time. The process is that you would normally find a contractor and get some blueprints drawn up. The contractor usually must be approved by the lender. You would then have an appraiser do a “subject to” appraisal from the blueprints, meaning he will appraise it how it will be when it is done. Then you would fill out loan applications and follow the normal process of applying for a mortgage. Make sure to talk to a mortgage broker before talking to a contractor to make sure you are in the position to obtain this type of loan. (Some lenders even offer the builders a 10% advance on their money.)

Advantages - The construction-perm loan has an advantage over a normal contruction loan. You will only have to do one loan by using the construction perm loan. You can buy the land, finance the building, and have a long term loan in the end all in one loan.

Disadvantages - You must fit strict guidelines to qualify for a contruction perm loan. These loans are only intended for people with great credit, verfiable income, and a down payment.