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Chris Salese

It’s not a secret that a lot of counties throughout our beautiful state of California suffer from an incredible shortage of affordable housing and also just a plain lack of available inventory at numerous price levels.

But fortunately, the dust is being cleared from the marketing shelves of many lenders as they search for solutions.

Lenders are not inventing new products; they are simply pulling old ones out of storage and making them relevant again.

For example, if you are a highly discouraged yet qualified buyer, there’s a way to possibly tackle this inventory problem via the use of a true one-time close, construction-to-permanent loan program.

It’s an all-in-one financing solution for your construction, lot purchase and permanent mortgage funding.

Because the permanent loan can be closed before your construction begins, there is no need for a re-qualification or re-appraisal when your home is complete. This greatly simplifies your construction and purchase process.

The single one-time loan saves you time and money as it helps to avoid additional closing cost expenses.

Plus, there are typically no payments due during your construction period since your first payment begins once your construction is complete.

Not to mention, you should have a much lower interest rate risk as you are not subject to a loan conversion process when your home is finished.

As for loan program criteria, there’s plenty of flexibility. The program works with Federal Housing Administration, VA and Conventional lending products.

If you have a minimum 660 qualifying credit score, that should be good enough to get you up to 95 percent conventional financing while FHA financing can go up to a 96.5 percent loan-to-value with a 640 score. Assuming you have certain VA eligibility, then you might be able to hit 100 percent financing!

The loan terms for the program include various fixed-rate lengths available to you. Depending on your goals, there are the standard 30-year and 15-year fixed-rate loans for the FHA and VA products. Then there are the 30-, 25-, 20- and 10-year fixed rate loans available for conventional products.

You can even use this program on eligible 1-unit and 2-unit properties. Furthermore, second homes are allowed with the Conventional product up to an 85 percent loan to value.

The one-time construction loan can be used for single family homes, modular homes and multi-wide manufactured homes too.

Lastly, if you need any help with closing costs, you can factor seller closing cost contributions into your analysis because those are allowed as well. The maximum amount will be based on final loan to value.

As always, please contact your lender to learn more about how this program might work for your purchase plans.

There are several different layers of qualification that you must go through to make sure that you are properly aligning your goals with the parameters of the program.

Most importantly, you will need the consultation of a strong Realtor to help guide you through the current and prospective valuations of your project.

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Chris Salese can be reached at chris@delsurmortgage.com or 707-363-4439. He is a licensed California mortgage lender (LO NMLS #254469 — State License #CA-DBO 254469 — Corp License #4170013 Corp NMLS #3113) and equal housing lender.

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