What are the three types of construction loans?

Instead, it is based on the projected value of the completed home.

• Construction-to-Permanent Loans. These are the top loan choice when there is a specific construction plan in and place and a timeline has been established.
• Construction-Only Loans.
• Renovation Construction Loans.

What is a construction loan modification?

Modifications of Single-Closing Construction-to-Permanent Mortgages. If the terms of the permanent financing change after the original closing date of the construction loan, the loan may be modified to reflect the new terms if it meets all of the following criteria: loan amount, loan term, and. amortization type.

Can you modify a construction loan?

✓ The loan cannot be modified and requires a new permanent loan to pay-off the construction loan. ✓ The originating lender is responsible for managing all requirements during construction.

How many types of construction loans are there?

Different Types of Home Construction Loans There are two main types of construction loans: a stand-alone construction loan and a construction-to-permanent loan. While both types of construction loans often include the cost of the land, this isn’t always the case.

How to convert a construction loan to permanent financing?

Option 2: A separate modification agreement must be used to convert the construction loan into permanent financing. This agreement must be executed and recorded in the applicable jurisdiction before the permanent mortgage is delivered to Fannie Mae. The lender must include the applicable conversion document in its loan submission package.

When is conversion of construction loan eligible for delivery?

Single-closing transactions with credit and appraisal documents dated more than 4 months but not exceeding 18 months old at the time of the conversion to permanent financing are eligible for delivery if all of the following conditions were met at the time of the original closing of the construction loan:

When does a construction loan become a long term mortgage?

Because the loan documents specify the terms of the permanent financing, the construction loan will automatically convert to a permanent long-term mortgage upon completion of the construction.

Can a construction loan be delivered to Fannie Mae?

Loans that combine construction and permanent financing into a single transaction cannot be pooled or delivered to Fannie Mae until the construction is completed and the terms of the construction loan have converted to the permanent financing.