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One Time Close (OTC) Loans
A One-Time Close Loan, is a Mortgage Loan established in the homebuyer's name before ground is broken on a new home, from which the builder draws funds necessary to construct the home. It also provides for end loan financing for the home when the construction is complete, all in one easy loan.
The advantage of this type of loan is that there's only one loan application, one approval process and one loan closing which also means only one set of closing costs. The idea is that NCM finances the construction of your home and when it's ready for occupancy, the loan is converted from a construction loan to a permanent mortgage.
How does it work? Few builders, subcontractors or suppliers can afford to wait until a home is completed for payment for the labor, materials or products they've provided for the home. That's where the construction loan comes into the process. The OTC loan is used to pay the builders based on the contract and pre-approved draw schedule as the construction progresses.
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