Construction to Permanent Loan


If you are planning to build a new home or to take on major renovations in Metairie, LA, you may be considering a construction loan to finance the project. However, traditional construction loans can be time-consuming and costly, requiring multiple closing costs and application processes. That’s where construction to permanent loans from Mutual Savings come in.


What Is a Construction-to-Permanent Loan?

A construction-to-permanent loan, also known as a single-close loan, combines the financing for the construction of a new home or renovations with a mortgage for permanent financing.


Advantages of a Construction-to-Permanent Loan:

Single Set of Closing Costs

With a construction-to-permanent loan, you only need to go through the closing process once rather than applying for a separate construction loan and mortgage, saving you time and money.

Interest Rate Lock

You can lock in your permanent mortgage interest rate at the time of closing, which can be beneficial if interest rates are expected to rise during the construction period.

Interest-Only Payments During Construction

During the construction phase, you will only be required to make interest-only payments on the disbursed funds, typically for 12 months. This setup can help lower your monthly payments during the construction process.

Reduced Appraisal Costs

A construction to permanent loan often only requires a final appraisal, rather than a full appraisal, once construction is complete, resulting in further cost savings.


A construction-to-permanent loan works like a line of credit, allowing you to draw the amount of money you require when you need it. The ability to withdraw a specified amount of money can be helpful if the construction takes longer than anticipated or unexpected expenses arise.


How to Determine if Your Property is Eligible

Before you apply for a construction to permanent loan, it’s important to determine whether your property is eligible. Here are some factors to consider:

  • The property’s location: Most lenders will only offer construction to permanent loans for properties located in stable, developed areas.
  • The type of property: Single-family homes are the most common property eligible for a construction to permanent loan. However, some lenders may also offer these loans for duplexes, triplexes, and fourplexes.
  • The value of the property: Lenders will typically only offer construction to permanent loans for properties with an estimated value that meets their lending guidelines.
  • The borrower’s credit score: A good credit score is typically required to qualify for a construction to permanent loan.


How to Draw on Your Loan

Once you have been approved for a construction to permanent loan and the construction process has begun, you will need to draw on the loan to fund the construction. This process is typically done in stages, with the lender releasing the funds as certain milestones are reached. A house and a stack of gold coins

To draw on the loan, you will need to submit a request to the lender, along with documentation such as a construction contract, plans and specifications, and a budget. The lender will review the request and, if approved, release the funds to the borrower or the contractor.


Moving Your Construction Loan to a Permanent Mortgage

Once the construction process is complete, you will need to move your construction loan to a permanent mortgage. This step is typically done through a process called “conversion,” where the lender converts the construction loan into a permanent mortgage.

The conversion process typically involves a final inspection of the property to ensure that it meets the lender’s standards, as well as a final appraisal to determine the property’s value. Once these steps are complete, the lender will convert the construction loan into a permanent mortgage, and you will begin making regular mortgage payments.


Mutual Savings & Loan Association Can Advise You on the Right Loan Type

If you’re considering obtaining a construction to permanent loan in the Metairie, LA area, Mutual Savings & Loan Association can help you make an informed decision. Our team of experienced mortgage professionals will work with you to assess your needs and help you choose the loan type that best fits your situation. We can guide you through the process from start to finish, ensuring that you have a smooth and stress-free experience.

In addition to construction to permanent loans, we offer a variety of mortgage and loan products to meet the diverse needs of our customers. Whether you’re looking to purchase a new home, refinance your existing mortgage, or finance a home renovation project, we can help.

Don’t navigate the complex world of construction to permanent loans on your own. Contact us today to learn more about our mortgage and loan products and to get started on your construction to permanent loan journey.


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