Building Your Dream Home With An Oregon Construction Home Loan

Most Oregon construction home loans are completed through what is called a One Time Close or OTC for short. What the OTC does for a borrower is save them a ton of money. The lot loan, construction loan, and permanent financing are all rolled up into one loan, one application, and one set of fees.

The lot loan and construction home loan interest rates are typically based off of the prime interest rate. The payments during the construction process are normally interest only and many times you have the option of rolling these payments into the loan so you have no monthly payments during the construction process.

Another really cool feature of the construction home loan is that you are able to choose what ever permanent financing you want. 30 year fixed, 15 year fixed, ARM, Balloon payment, etc.

You can also lock in your interest rate for the permanent financing before or after the loan has been funded. Normally it is always a better idea to wait until the loan is funded. Many lenders will charge a 1% fee to lock the permanent financing before the construction home loan is funded.

Some lenders will offer a float down option. For instance if you receive an interest rate of 7% you rate can actually lower but it can not go above the 7% interest rate. For example we'll use the 7% interest rate. Let's assume 30 days before construction is complete the interest rate is now at 6.5%. That is what you would get if you locked it in at that time.

Most lenders offer a 12 month construction period. As well as a variety of draw schedules. If the construction is not completed with in the time limits extensions are typically available. Usually at a cost.

Besides the normal documents needed to process your loan you will also need the following:

Set of “Plans and Specifications”
C.C. & R’s (if applicable)
Contract between borrower and builder/contractor
Cost Break Down

One of the main benefits of getting an Oregon construction home loan is the fact that the costs and interest are tax deductible.(consult with you tax adviser) Second is the fact that the builder is not shouldering the costs of a loan for the construction. This reduces the overall costs of the home, thus reducing the purchase price.

I personally do not know of any construction home loans that do not require a down payment. But the majority of construction loans can be done with as little as 10% down.

One thing to keep in mind is that if you put less than 20% down you may be required to purchase mortgage insurance. Mortgage insurance can add significantly to your monthly housing payments. If you do not qualify for a construction loan but have a large down payment or own your property free and clear. A Oregon Private Money Loan may be the answer. It's not the cheapest way to go. But for some it is the only option available.

Oregon residents click here to apply for an Oregon construction home loan