Expensive construction projects frequently require loans. Before you begin your endeavor, you must carefully consider which construction loan options best suit your needs. Typically, you have two options: use a single-closing loan, or two separate loans.
Each option has benefits and drawbacks. The one that is best for you will depend on the details of your construction project. Here, we will examine single-closing loans and multiple loans in greater depth.
Understanding these choices
If you choose a single-close loan, your construction loan will become a permanent loan upon completion of your project. This is a convenient option for obtaining your construction loan and your permanent loan at the same time. This way, you only have to go through the loan application process and the closing process one time. Otherwise, you may select a multiple-closing loan. This would require more than one loan application, and multiple closings. While these processes are inconvenient, multiple-closing loans often have lower rates and more flexibility.
How should I choose between these loans?
When deciding whether to apply for a single-close loan or multiple loans, weigh the tradeoff between the convenience of a single application and closing with the benefits of lower interest rates and flexibility. Neither option is necessarily better—sometimes, it is a matter of your personal preferences.
Ideally, you could focus solely on your construction project without having to worry about finances and legal fiascos. Unfortunately, this is simply not possible for most people. Many people seek outside counsel to advise them in these matters. Having guidance in these matters can lessen the time that you spend thinking about loans, so that you can focus more of your energy on your construction project.