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  • Kenisha Natividad

Single Finance Closing

What is Single-Close Financing and Why You Should Consider It When Building New

Although some builders are finding it easier to come up with financing needed to erect houses, others have clients take out construction loans instead.

This type of single-close financing is called a construction-to-permanent loan because once the house is finished, the loan automatically switches to permanent financing.

There’s nothing inherently dangerous with construction-to-perm, or C2P, financing. After all, the best custom builders in the country use the tactic to fund their clients. And absent a few extra risks buyers have to consider, these loans are fairly benign. Indeed, they can be beneficial.

The Benefits

One obvious benefit is that you may be able to obtain C2P funding at a lower cost than the builder can, meaning

your house can probably be built for less money. And since there is only one closing involved (at the outset of the mortgage), there’s only a single set of expensive settlement fees.

Sometimes known as “single-close,” “one time close” or even “all-in-one” loans, C2P mortgages are all over the ballpark, meaning that there is little standardization. One lender might want to review the builder’s banking references, another may not. One lender might want to document a builder’s licenses and lien release and payment schedules. Another lender might only want to sneak a peek at a builder’s gross sales.

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