Definition
A type of construction financing that automatically converts from a construction loan into a permanent mortgage upon completion of building. This single-close approach saves on closing costs compared to getting two separate loans (construction and permanent). You lock in your permanent rate at the start, and during construction you pay interest only on disbursed funds. Also known as a single-close construction loan.
Related Mortgage Terms
- Closing Costs
Fees and expenses paid at the finalization of a real estate transaction, typical...
- Interest Rate
The cost of borrowing money, expressed as a percentage of the loan amount charge...
- Refinance
The process of replacing an existing mortgage with a new one, typically to secur...
- Amortization
The process of paying off a mortgage through regular monthly payments of princip...
- Annual Percentage Rate (APR)
The total annual cost of a mortgage expressed as a percentage, including the int...
Understanding mortgage terminology helps you compare loan offers and make informed decisions. Use our mortgage calculator to see how these terms affect your monthly payment.