Construction Loans are specialized and require a lender with knowledge of the process.
One Time Close Construction
When rates are low it’s the ideal time to take advantage of the One Time Close Construction Loan. Your rate will never change from the beginning of construction through the life of the loan. And, you pay only one set of closing costs.
Two Time Close Construction
When interest rates are on the rise, it’s usually better to do a Two Time Close Construction Loan because the initial loan covers only the cost of construction and can be configured as an “interest only” loan. 3/1 or 5/1 ARMs (Adjustable Rate Mortgages, fixed for 3 or 5 years), are usually recommended for this purpose because they traditionally carry a lower interest rate. Lower interest rates help to keep payments low during the construction process.