Construction Financing - www.visionmortgageco.com

Interim money refers to all funds used for the purpose of constructing your new home. Here are some of the significant features that Vision Mortgage Company, Ltd. offer which you will want to consider:

As little as 0% down payment.
No mortgage insurance is charged during construction.
Minimal construction management fee or fee for interim.
Supervised and inspected construction draws.
Loans to $1,000,000.
Free float down option.

In many cases and especially when you are considering a tract home, the home builder has made arrangements for the financing of the construction of the home you are considering. Typically this loan in the builder's name with the bank or financial institution. Generally speaking, these builders will borrow at some function of Prime rate, i.e. Prime + 1%, Prime + 2% and more. The amount of interim interest that the builder is paying is factored into the ultimate sales price, but is generally capped by by the appraisal on the property. In other words, no matter how much the interim interest turns out to be, the builder will typically not be able to charge more for the home than the market or appraisal will bear.

The interim interest can also be paid directly by you. With the loan in your name at the bank, you will get the benefit of the "write off" for that interest to be paid. You will also be asked to sign/approve draw request and thus be more closely involve in the disbursement process. In most cases you will pay interest only during the construction process and billings will be made monthly.

Basically there are two types of loans in the borrower's name. The generic names for the two processes that apply are the "Two-Time Close" and the "One-Time Close" programs.

The Two-Time Close programs are what most builders and borrowers have become accustomed to over the years. The process goes something like this:

The future home owner (FHO) decides to build on their land or on land provided by the builder.
The FHO applies with a mortgage company and is approved for the permanent loan. This is the loan that will be in place when the home is completed.
The FHO is issued a "take-out" commitment letter that essentially tells the interim lender that when the home is completed, the permanent lender will "take out" the interim lender with a final term mortgage.
During construction, the FHO is either billed monthly for interest as it accrued on the amount borrowed to-date by the builder, or interest is allowed to accumulate and will be billed at the end of the process.
When the home is near completion, the permanent lender is responsible for updating the FHO file therein making similar requirements as was necessary the first time the loan was approved.

As is evident, there is a certain degree of duplicity of effort. With this comes duplicity of cost, i.e. the appraisal and credit report may need to be updated, legal fees are redundant, and generally the bank will charge a fee for setting up the interim loan (the construction loan fee). The bank fee is typically the largest number on the up front balance sheet. This fee will range from ½% to 1% o the intended loan amount.

There are some situations when the Two-Time Close procedure is appropriate. Depending on the special needs of the FHO, you may want to use the Two-Time Close programs when:

you need a No Doc program--showing no source of income to qualify;
you need a VA or FHA mortgage, as these loans lend themselves to this form of financing;
you wish to incorporate a "B&C" product for your permanent home loan.

Many will consider the alternative to the Two-Time Close loan program, namely the One-Time Close. The One-Time Close is as the name suggests, a single close transaction.

Currently, Vision Mortgage Company, Ltd. offers over six different variations of the One-Time Close programs. Each is designed to meet your specialty needs. We offer programs that combine certain No Doc features that until recently have been available only for Two-Time Close programs. Our One-time Close programs allow for the popular 80/10/10 feature wherein a FHO can place 10% down, have 10% second lien, and have an 80% first lien with no mortgage insurance involved. Finally our One-Time Close programs can combine a free bi-weekly mortgage feature which allows for early loan pay off via making ½ the mortgage payment every two weeks. The most popular of our programs is called our Capped Rate One-Time Close (CROTC) program.

The CROTC gets its name from the fact that the interest rate is capped for the life of the loan from the onset. This means that a ceiling is set, from the start of construction, on the final interest rate. This is one area of concern when building a custom home. The question becomes, "What happens if the rates increase during the construction period?" Until now, the unfortunate answer was that you must close at the prevailing rates, even though they may have risen.

The CROTC guarantees that if rates should rise, they will not rise beyond the pre-negotiated rate. This is accomplished by a free rate float-down option that caps the permanent rate but allows you to "float down" to the prevailing rates when your home is near completion. This feature eliminates the worry of run-away interest rates during construction.

In addition, one of our financial sources was very creative in the use of the program. When the program was introduced by Armando Barbosa to their Board of Directors, the first thing they did after reviewing the basic information on the program was to cut many of the associated fees! You will want your Vision Mortgage Company, Ltd. representative to explain all of the details and demonstrate the computer models that support the Capped Rate, One-Time Close programs.

Vision Mortgage Company, Ltd. has produced the best construction permanent loan program available in the San Antonio marketplace! Our

"Capped Rate, One-Time Close"

program features an interest only, fixed rate construction loan priced below Prime rate. This construction loan can be locked into a permanent fixed loan prior to the end of the construction of your new home.

The differences between this loan and other one-time close programs are that the associated loan fees are significantly lower with this program, the maximum loan rate is guaranteed, and that you are offered a free "float down" option. We are sure that you will want to learn more about this unmatched financing program.

Please let our staff demonstrate for you the savings associated with the "Capped Rate, One-Time Close" program.