Daily Mortgage Rates LIVE - 10/03/2024 - One-Time Close Construction Loans

In this episode of Daily Mortgage Rates LIVE!, we’re uncovering the ins and outs of one-time close construction loans. If you’re dreaming of building your own home or embarking on a new construction project, this episode is designed for you. Join us as we explore how one-time close loans streamline the financing process by combining both the construction and permanent financing into a single loan.

We’ll discuss the advantages of this approach, such as reduced closing costs and simplified paperwork, as well as potential challenges to be aware of.

Whether you’re a first-time builder or a seasoned developer, this episode is packed with essential information and practical advice to help you navigate the construction loan landscape. Tune in to learn how one-time close construction loans can make your building dreams a reality without the headaches!

For more episodes visit: https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

About The Mortgage Calculator:

The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as over 5,000 Non-QM mortgage loan programs using alternative income documentation! 

Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes!

Our team of over 350 licensed Mortgage Loan Originators can assist our customers with Conventional, FHA, VA and USDA mortgages as well as access thousands of mortgage programs using Alternative Income Documentation such as Bank Statement Mortgages, P&L Mortgages,

Catch all the episodes of Daily Mortgage Rates LIVE at https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

Check out all episodes of Daily Mortgage Rates LIVE at https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA and USDA Programs, as well as over 5,000 Non-QM mortgage loan programs using alternative income documentation! Non QM Loans include Bank Statement Mortgages, P&L Mortgages, Asset Based Mortgage Programs, No Ratio CDFI Loan Programs, DSCR Investor Mortgages, Commercial Mortgages, Fix and Flip Mortgages and thousands more!

To apply for a mortgage please visit our Quick Mortgage Quote Page at https://themortgagecalculator.com/Mortgage/QuickQuote

The Mortgage Calculator is a registered DBA of Mortgage Calculator Company LLC. NMLS ID #2377459. Programs and rates are subject to change without notice. Mortgage Calculator Company LLC is licensed in the following states that require specific licensing disclosures: AZ (#1040352), CA CFL (60DBO-171188), GA Georgia Residential Mortgage Licensee (#2377459), IL MB.6761755 Illinois Department of Financial and Professional Regulation, Division of Banking, 100 West Randolph, 9th Floor, Chicago, IL 60601 1-888-473-4858. Not licensed or conducting business in New York.

For more info visit https://themortgagecalculator.com...

Transcript

Restream recording Oct 03, 2024 • 03:04:11 PM: 0:09

So welcome everyone. My name is Kyle Hiersche. I'm the CEO of the Mortgage Calculator joined here by our president Nick Hiersche and our CSO Jose Gonzalez. We are a lender that specializes in non QM loans and what we do every weekday at 11 a. m. Eastern on this show is go through our actual live mortgage rates for a few programs. Then we do a deep dive into a different loan type. And today's loan type is going to be one time closed construction loans. Amazing topic here. I'm sure Jose has some great options for us to check out, but first let's look at the rates. So Nick, if you're ready, let's pull up today's rates. them out. All right. So w rates for all of our stan october 3rd, just after 1 of our initial rate sheets and we will compare the A a full breakdown and item that breaks down all the the A. P. R. Please get w They'd be happy to send t For the demos, we'll always use a standard scenario so we can compare across all the programs. We'll set up a single family home, 500, 000 purchase, 400, 000 loan amount, corresponds to 80 percent loan to value, 20 percent down payment. We'll set an estimated 760 FICO credit score and an estimated 40 percent debt to income ratio. So with those settings, as we do every day, let's check out the rates. First up, our 30 year fixed conventional option, typically the most common option people think of when they're thinking of a mortgage. Rates as low as 5. 875 today. Final APR Again, these are about one year lows, about the same as it was yesterday. Now, if for any reason our customer doesn't qualify for a conventional option, we typically want to present an FHA option as well. FHA allows more leniency on credit issues and a higher debt to income ratio, but does require upfront and yearly mortgage insurance. FHA comes in today 4. 99. Final APR with all the fees and mortgage insurance, 5. 924. So we compare that to conventional. If our customer qualifies for both, they may want to consider FHA if they're willing to do the mortgage insurance. And our customers that need to use it, great option here. And our VA programs are only for eligible vets and active service members. If you are eligible, these programs are definitely amazing. Rates as low as 5. 125. Final APR with a standard funding fee, 5. 426. 5. 426. And notice if our customer qualifies for VA, definitely going to be a better option than FHA or conventional. So great option for our vets and service members. And the final standard option that every Baker lender has is USDA. USDA is only for USDA eligible properties, which is the rural areas of the country. The property's eligible and our borrower's eligible. These are great programs to compare. Today comes in at 4. 99 rate. Final APR, the fees included 5. 716. So as usual, if our customer is shopping in those areas and they're comparing to an FHA, USDA is going to be a touch cheaper typically. And same thing with conventional, going to be a touch cheaper than conventional. So great option for those properties in those rural areas. And that rounds out the standard options. If our customer doesn't qualify, many banks or lenders will have to deny them. But here at the mortgage calculator, we have 5, 000 additional options, starting with our non QM all doc options. So if the customer doesn't qualify using tax returns Uh, standard documentation for conventional FHA, et cetera. We can switch to alternative docs such as bank statements, 1099s, PNLs, all kinds of different options. And today, bank statements come in at 6. 125 rate, final ACR 6. 425 within about 0. 3 today of conventional. So great option for our borrowers, almost identical cost there to switch to alternative documentation. And we can use AltDocs for investment properties and all kinds of different options for investment. So first up is the AltDoc, again, bank statement or similar, 6. 625 rate today, final APR 6. 951. And we'll compare that to the other investment options. We have our conventional option. Remember, there are no government options, so no USDA, VA, or FHA, but conventional comes in today at 6. 375 for an investment property. LPR 6. 710. So as typical, it's a touch cheaper than a bank statement option. But uh, what is not typical and excites us here at the mortgage calculator, we have our DSCR options, no income, no employment needed that can beat our conventional options, which is amazing. So DSCR stands for debt service coverage ratio. We don't need any income or employment info. We simply use estimated rents from the appraisal to determine a DSCR ratio. The estimated rents can cover the estimated expenses. That's a positive DSCR ratio. Okay, the property will cash flow and this is our option with a three year prepayment penalty here. Rates as low as 6.25, final PR 6.578, so squeaking out conventional a touch and we can sweeten the deal even more with a five year prepayment penalty on some programs. Rates come down to as low as 6.000 today, final PR 6.297. Again, being conventional. That is amazing. And we have our no prepayment penalty option as some states don't allow it and some investors prefer not to have one. Rates as low as 6. 625 today, final APR 6. 951, which is a touch higher than conventional, which is typical, but I'd still say 100 percent of investors would choose a DSCR when the costs are very similar. And the final two options we go over every day, our second mortgage option. So many of our customers have a first mortgage that is lower than what we're seeing here. On the presentation and want to keep that first mortgage in place, but want to access their equity and get some cash out. Typically a HELOC is the only option, but we have our 30 year fixed second mortgages now, which are a little bit superior for most borrowers to a HELOC because they are fixed instead of adjustable and much lower rates. So for a primary home, we can get cash out rates as low as 8. 125. Final APR 8. 527. And for an investment property, we can use the same program to get cash out without touching that first mortgage. Rates as 25, final APR 9. 572. And these are both non QM programs, we can use bank statements, uh, P& Ls, and similar. Let's get into our topic for today. Again, Our deep dive topics are typically the types of quotes that we can't present on our live pricing demo here because they are very unique. So one time closed construction loans, definitely very unique. Jose talked about renovation loans yesterday. These are going to be, instead of renovating a property, we're going to build a property from scratch. Remember a renovation could be even a property burned all the way down, but there's still a foundation and there's still, you know, a registration with the city for a property that was there. We're going to rebuild, but when we're talking one time close, we're talking empty ground that then we build a new home on and a new foundation and issue a new certificate certificate of occupancy. So a little bit difference, a little bit of a difference there between a rehab, even if it's like complete rebuild, if there was a house there before that's still a rehab. If it's just bare land, now we're talking one time closed construction. So let's explain how this works here, Jose, and then check out some actual options. Yep. Good morning, everybody. Thank you for joining us for daily mortgage rates live with the mortgage calculator. So, uh, we previously discussed the renovation loans, which Nick was just mentioning. So now this one is the ultimate dream, right? So you can't find the, your dream home, but you found that parcel of land in the neighborhood that you would really love to live in. So this is the, the option that makes your dream. A reality. This is the one where you can buy the land, build the home. All with one loan and then that loan, that's what they call it a one time close because the loan once the construction phase is completed, then that loan transitions to the end loan, the permanent loan on the property. That's why they call this loan construction to permanent loan. Starts off as a construction loan and then transitions to the permanent loan when the construction phase is complete. Now maximum construction phase on this is 12 months. So you do have to have all of your variables in order. The plans need to be completed, uh, and probably approved already because it could take six months to a year in some cases for plans to be approved. And if they're not even created yet by the architect, that could take some more time if it's a custom made home. So plans need to be approved. You definitely need to have your contractor already lined up. Because in a one time closed loan, just like in a renovation loan, uh, we have to approve the contractor. We have to approve the construction. In other words, the budget and everything that's being done. And we have to approve the borrower's credit and income as well. So three components need to be approved. So you can't just say, Let me apply for a one time closed loan. Let me get the loan and then let me put all those variables in order because then your 12 month build period would expire by the time you have your plans in order and then you're ready to apply for the loan. And then now your 12 month time is up. So definitely everything has to be completed up front. And that's usually the biggest challenge is not the credit and income, Of the borrower, but the contractor and the logistics of having all the paperwork, including the plans and what are the going to be the permits and all those items lined up. So let's go and get into the examples we have for today. Now, though, the one time close is possible for a purchase for all agency loans, and then it is possible for a rate and term refinance, which is a very interesting option for a conventional loan. So I'm going to share all of those with you now. First option we have here. The USDA one time close, which this one is especially attractive because not only is it 100 percent financing here, but great rates as you can see, not much of a loan level price adjustment when you are, um, using the one time close option combined with a purchase. So here, uh, the other thing to consider on the USDA one time close. that it does allow for double wide manufactured homes to be purchased and attached permanently to the land. So it has to be a new manufactured home, can't be a used one, has to have never been attached anywhere. And then, you know, you buy it from the manufacturer, they transport it to the site. And they put it together and attach it to the foundation. That's the construction phase of it. So very good option there at, at a 6. 75 lowest cost option at par and 5. 5 percent being our lowest rate option for USDA. One time close, a hundred percent LTV purchase option. Now VA also 100 percent LTV on the one time close, uh, rates equally as good. And great news, you can also purchase a brand new manufactured home, uh, under the one time closed loan and have it also put together on site and permanently attached to land. So this is probably good news for a lot of borrowers out there. I get this question every now and then. So now everyone that's watching here, you are empowered to know that this is the most amazing deal out there. Uh, so we're looking at 7. 125 lowest cost option, almost at par, and you can buy that down all the way to 5. 25 percent interest rate at a cost of 2. 449. FHA one time closed loan also allows purchasing a manufactured home and attaching it to the land, uh, via the one time closed option. Also imagine this a one unit or a two to four unit property also. So a lot of options here with FHA and your one time closed loan. Uh, now you will notice, uh, rates are a little bit higher, obviously in the one time closed than in the regular financing, because essentially when you, uh, when you borrow with the one time closed loan, they essentially, if it's a 12 month construction phase, they are locking in your rate. For 12 months. That's a very long extended rate lock. Hence pricing is a little bit higher. So 8 percent is your lowest cost option at a cost of 0. 875. And you can buy that down to 7 percent at a cost of two and a quarter points. And now for our last purchase option, before we're showing you the refi option is our conventional one time close purchase, 95 percent LTV. 8. 75 lowest cost option, 8. 25 lowest rate option. Now for this particular one time close option for a conventional loans, uh, manufactured home purchase is not possible with the conventional option. So USDA, uh, VA, uh, and FHA, Yes. Manufactured home with the construction loan. Conventional. No. For whatever reason, the conventional, um, one time closed option was pretty restricted, uh, when we started having issues, uh, with the pricing. So it is a little bit less liquid in pricing than the GSEs that are government related like VA, FHA, and USDA. They go through Ginnie Mae. They're a little bit more liquid and secondary. So they were able. to maintain, uh, their more options in the one time close loan conventional, not as much, but we can still do it, uh, 95 percent LTV and you're looking at 8. 75 lowest cost option and 8. 25 lowest rate options but just do be on the lookout when you are structuring your one time closed loans for conventional properties because they do have also in some of the cases restrictions on site built homes right where they may accept only other types of homes but not a site built home so do look for that restriction and our last option here is the one time closed rate in term refinance up to 95 percent LTV. Conventional is the only option. That offers a rate in turn refi for the one time closed loan. The, uh, the GST, uh, other agency options do not offer it conventional does. Uh, so it's great because if you got that piece of land, just sitting around. Already paid off. And now you want to build a home. That's where you do the limited cash out, refi rate and term conventional, and you can get the home built 8. 75 lowest cost option at a cost of 1. 75 points and 8. 25 is your lowest cost. great option at a cost of 2. 5 points. So again, be the dream maker, uh, for your borrowers out there and let them know this is possible. Also let all of your realtor partners know that, uh, all of these possibilities with the one time closed construction, the permanent loan, as I'm sure they're out there struggling, trying to find properties for their borrowers or trying to find ready built homes for their, for their buyers. Whereas they may be able to find some, some nice, beautiful lots in the area where they want to actually live. And then you can facilitate that with the one time closed loan. All right. Perfect. Okay. I don't see any questions, so we'll go ahead and wrap it up. Absolutely amazing program there. So. Remember that we do this show at 11 a. m. Eastern every weekday where we go through our live rates and then do a deep dive into different loan types. We'll be back tomorrow with a new loan type. We appreciate everybody tuning in. We'll see you tomorrow at 11 a. m. Eastern for the next episode of Daily Rates Live with the Mortgage Calculator.