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Understanding Residential Constructionto-Permanent Loans Provided by Coastal States Mortgage
Building a custom home is a significant milestone. While the process can feel daunting, it doesn’t have to be – especially when it comes to managing the finances of your construction. Construction-topermanent loans remove the financing complexities by combining construction funding and long-term mortgage financing into one streamlined solution. A construction-to-permanent loan is a unique financing option that allows homeowners to fund the construction of their new home and automatically convert the loan into a permanent mortgage once construction is complete. This type of loan simplifies the borrowing process by combining two loans into one, saving homebuyers time and money.
How It Works: A Phase-byPhase Breakdown APPLICATION & LOAN APPROVAL When applying for a construction-topermanent loan, borrowers secure a single
loan that covers both the construction phase and the permanent mortgage. This means there is only one closing process, which saves homebuyers money on closing costs compared to obtaining separate loans for construction and the permanent mortgage. CONSTRUCTION DRAWS & PAYMENTS During construction, funds are disbursed in stages known as “draws” based on the progress of your home build. After each stage of construction, lenders provide funds to your builder to continue progress on your home. Lenders typically require inspections to ensure that work has been completed before releasing additional funds. This removes the hassle of managing builder payments and keeps your project moving seamlessly. During the building process, borrowers make interest-only payments on the amount disbursed so far during construction instead of paying towards both principal and interest. For example, if your total loan amount is $500,000 but only $200,000 has
been drawn for initial construction costs, interest payments are calculated based on the $200,000 draw until more funds are drawn. CONVERSION TO PERMANENT MORTGAGE Once construction is complete and all inspections are passed, the construction loan automatically transitions into a permanent mortgage. With no second closing, borrowers begin making monthly mortgage payments that include both principal and interest over a typical term of 15 to 30 years. A construction-to-permanent loan offers convenience and cost-efficiency—but choosing the right lending partner makes all the difference. Before breaking ground, contact a lender to see if a construction-topermanent loan is the right fit for you. Local lenders can be key players in removing the complexities, stress and added expenses from your project.
Find Your Way Home
WITH YOUR LOCAL MORTGAGE TEAM
Brad Ellis
Lisa Cornell Henry
Joey Ryan
Mortgage Loan Officer M / (843) 384-6339 bellis@coastalstatesbank.com NMLS# 780331
Construction Lending Specialist Mortgage Loan Officer M / (843) 422-7105 lhenry@coastalstatesbank.com NMLS# 918797
Mortgage Loan Officer M / (843) 295-1615 jryan@coastalstatesbank.com NMLS# 2149572
Kim Smith
Lisa Souls
Evan Faithfull
Mortgage Loan Officer M / (843) 422-4321 ksmith@coastalstatesbank.com NMLS# 780344
Mortgage Loan Officer M / (802) 779-2690 lsouls@coastalstatesbank.com NMLS# 293972
Mortgage Loan Officer M / (843) 422-1111 efaithfull@coastalstatesbank.com NMLS# 1201490
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Coastal States Mortgage NMLS# 154698. Loans subject to credit approval.