When you buy a new construction home, there are basically two financing options available for you: a one-time close or a two-time close. Each option comes with advantages and disadvantages.
A one-time close finances the purchase and the construction of the home at the same time. The advantage of doing that is you only have to worry about one set of closing costs. Also, if something affects your ability to qualify for a loan down the line, such as job loss or a job change, you won’t have to worry about your home purchase because you have already closed.
The downside of a one-time close is it comes with a higher interest rate because you have to finance the construction and the home all in one fell swoop. The longer you plan to be in the home, the less advantageous this financing is.
A two-time close allows you to take out a construction loan to purchase the property and then refinance the loan into permanent financing once construction is complete. This option gives you a much lower interest rate, which is great. However, you will have to take care of two sets of closing costs. The other issue is that interest rates may change while the property is being constructed..
Ultimately, there are pros and cons to each financing option. If you are buying a new construction house and would like to learn more, my team and I would be happy to answer any questions you may have. Just give us a call or send us an email. We would be happy to help you!