Construction Loan Market Outlook Improving In 2023
Now is a very good time to consider your construction loan options, though with the caveat that we may experience a bumpy road back to lower rates and less of a seller’s market for real estate overall.
The Housing Market Will Take Time To Get Better
Home loan interest rates, including One-Time Close construction loan rates, may move higher or lower by external forces including investor reaction to economic news, federal policy changes, rate adjustments by the Fed, etc.
It’s too early in the new year at press time to predict whether the lower rates are to be a persistent trend or not, but many finance writers express cautious optimism about the future of construction loans and home loans in general.
If you have your documents gathered, and your credit is prepared, it may be smart to take advantage of the current lower rates rather than wait. Some might hold out hoping to find even lower rates for construction loans, and some will wait simply to get closer to a housing market’s “building season” where applicable.
Some believe the housing market may experience some difficulty over the course of 2023 even while trending more positively. What is the secret to getting through an unpredictable year in the housing market? Remembering that market conditions are often cyclical.
The Interest Rate You Are Offered Depends On Your Credit
Your FICO scores and repayment history are variables that may inform the mortgage loan rate you are offered.
Many realize they may be offered lower interest rates when they have strong credit, and a construction loan requires higher FICO scores to begin with so if you aren’t sure your credit is quite ready for a One-Time Close application, it’s smart to wait until you can command a potentially lower rate with better credit.
Higher interest rates are typically offered to those a lender may consider an elevated risk. That is an important factor to consider when applying in an era with higher rates than we saw in the last decade.
Want The Best Rates? Shop Around
Not all single-close lenders offer the same rates, terms, and conditions. Some will find a construction loan lender willing to offer rates lower than the competition. This is what you want to find in your research, but be sure to check whether the lender ups the price in another area to compensate for the lower rates.
Want More Information About One-Time Close Loans?
We have done extensive research on the FHA (Federal Housing Administration) and the VA (Department of Veterans Affairs) One-Time Close Construction loan programs.
We have spoken directly to licensed lenders that originate these residential loan types in most states and each company has supplied us with the guidelines for their products. We can connect you with mortgage loan officers who work for lenders that know the product well and have consistently provided quality service.
If you are interested in being contacted by a licensed lender in your area, please send responses to the questions below. All information is treated confidentially.
OneTimeClose.com provides information and connects consumers to qualified One-Time Close lenders to raise awareness about this loan product and to help consumers receive higher-quality service.
We are not paid for endorsing or recommending the lenders or loan originators and do not otherwise benefit from doing so. Consumers should shop for mortgage services and compare their options before agreeing to proceed.
Please note that investor guidelines for the FHA and VA One-Time Close Construction Program only allow for single-family dwellings (1 unit) – and NOT for multi-family units (no duplexes, triplexes or fourplexes).
In addition, the following homes/building styles are not allowed under these programs: Kit Homes, Barndominiums, Log Cabin Homes, Shipping Container Homes, Stilt Homes, Solar (only) or Wind Powered (only) Homes.
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Please send your email request to [email protected] which authorizes OneTimeClose.com to share your personal information with one mortgage lender licensed in your area to contact you.
1. Send your first and last name, e-mail address, and contact telephone number.
2. Tell us the city and state of the proposed property.
3. Tell us your and/or the Co-borrower’s credit profile: Excellent – (680+), Good - (640-679), Fair – (620-639), or Poor- (Below 620). 620 is the minimum qualifying credit score for this product.
4. Are you or your spouse (Co-borrower) eligible veterans? If either of you is an eligible veteran, down payments as low as $0 may be available up to the maximum amount your debt-to-income ratio per VA will allow – there are no maximum loan amounts as per VA guidelines.
Most VA lenders will go up to $1,500,000 and review higher loan amounts on a case-by-case basis. If not, the FHA down payment is 3.5% up to the maximum FHA lending limit for your county.
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