FHA/VA ONE-TIME CLOSE CONSTRUCTION LOANS

A row of homes that are under construction

*Temporary Suspension* FHA/VA One-Time Close Construction to Perm

March 30, 2020

 

Unfortunately, we regret to inform you that Security First Financial, a division of Primary Residential Mortgage, Inc. (PRMI) is having to place our FHA/VA One-Time Close Construction to Perm products on hold. Due to the volatility in the GNMA markets and the increased rate risk PRMI holds on these products thru construction, it is nearly impossible for our capital markets team to analyze and hedge for potential rate risks at this time.

 

There are two underlying concerns prompting the industry response to government loans in particular. First, the appetite for lower FICO scores has eroded daily, with many investors changing guidelines/pricing policy, or simply being unwilling to bid on these higher risk loans. Second, the number of claims for forbearance and/or default will drastically increase, creating massive liquidity constraints on mortgage servicers which must still deliver the yield to the bondholder. 

 

As America goes back to work following the containment of this pandemic, many economists are predicting a “V-shaped” recession and recovery, with the economy bouncing back nearly as quickly as it fell into this crisis. We are cautiously optimistic that with this recovery, the GNMA lending on which we have always relied will quickly return.

 

Thank you for your understanding!

Please feel free to contact us with any questions.

OTC PROGRAM BENEFITS FOR BORROWERS

NO or LOW DOWN PAYMENT

  • 3.5% FHA Down Payment

  • 0% VA Down Payment

NO RE-QUALIFYING

  • Borrowers do not have to re-qualify once the construction phase is complete

FIXED RATES

  • The fixed rates on FHA/VA OTC loans will not be subject to change during the construction phase or at any other time

OUR APPLICATION PROCESS IS QUICK AND SECURE!

READY TO APPLY?

A row of homes that are under construction

*Temporary Suspension* FHA/VA One-Time Close Construction to Perm

March 30, 2020

 

Unfortunately, we regret to inform you that Security First Financial, a division of Primary Residential Mortgage, Inc. (PRMI) is having to place our FHA/VA One-Time Close Construction to Perm products on hold. Due to the volatility in the GNMA markets and the increased rate risk PRMI holds on these products thru construction, it is nearly impossible for our capital markets team to analyze and hedge for potential rate risks at this time.

 

There are two underlying concerns prompting the industry response to government loans in particular. First, the appetite for lower FICO scores has eroded daily, with many investors changing guidelines/pricing policy, or simply being unwilling to bid on these higher risk loans. Second, the number of claims for forbearance and/or default will drastically increase, creating massive liquidity constraints on mortgage servicers which must still deliver the yield to the bondholder. 

 

As America goes back to work following the containment of this pandemic, many economists are predicting a “V-shaped” recession and recovery, with the economy bouncing back nearly as quickly as it fell into this crisis. We are cautiously optimistic that with this recovery, the GNMA lending on which we have always relied will quickly return.

 

Thank you for your understanding!

Please feel free to contact us with any questions.

OTC PROGRAM INFORMATION

FHA OTC LOAN

  • Insured by the Federal Housing Administration (FHA), which helps keep rates low

  • 3.5% Down Payment

  • Interest rate protected during construction

  • Closing occurs before construction begins

  • No payments due during the construction phase

  • No re-qualification once construction is complete

  • 96.5% maximum loan-to-value (LTV) ratio

  • Closing costs may be financed

  • 15 and 30 year fixed rates available

  • Single closing reduces closing costs and paperwork for borrowers

  • Primary residence only

 

Qualifications

  • Minimum 620 Credit Score

  • The borrower must have contracted with a builder (must be a licensed general contractor) to construct the improvements

  • The borrower may act as the general contractor, only if the borrower is also a licensed general contractor

  • The borrower must be purchasing the land at the closing of the construction loan, or have owned the land for six months or less at the date of case number assignment

  • At closing, after funds are disbursed to cover the purchase of the land, the balance of the mortgage proceeds must be placed in an escrow account to be disbursed as construction progresses

  • Amortization of the permanent mortgage must begin no later than the first of the month following 60 days from the date of the final inspection or issuance of the Certificate of Occupancy

  • Maximum loan amounts will vary by location

VA OTC LOAN

  • 100% financing through VA (funding fee may be financed into the loan)

  • 0% Down Payment

  • Interest rate protected during construction

  • Closing occurs before construction begins

  • No payments during the construction phase

  • No re-qualification once the construction is complete

  • 15 and 30 year fixed rates available

  • Single closing reduces closing costs and paperwork for borrowers

  • Primary residence only

 

Qualifications

As with any VA loan, the borrower must be a qualifying active duty member of the U.S. military, veteran, or surviving spouse. A Certificate of Eligibility (COE) is required. 

  • Minimum 620 Credit Score

  • The borrower cannot perform any of the work

  • The builder must provide a one-year VA Builder's warranty

  • General Contractor must be registered with the VA

  • General Contractor must carry sufficient insurance through a current general insurance liability policy

  • VA regulations require periodic inspections of properties under construction.

A construction to permanent mortgage combines the features of a construction loan (a short-term interim loan for financing the cost of construction) and the traditional long-term permanent residential mortgage with a single mortgage closing prior to the start of construction. These mortgage programs are available for one-unit stick-built primary residences, new manufactured housing for primary residences (no singlewides), and modular homes. They allow borrowers to finance for the construction, lot purchase (if necessary) and permanent loan into one loan and a single closing all at once.

A row of homes that are under construction

*Temporary Suspension* FHA/VA One-Time Close Construction to Perm

March 30, 2020

 

Unfortunately, we regret to inform you that Security First Financial, a division of Primary Residential Mortgage, Inc. (PRMI) is having to place our FHA/VA One-Time Close Construction to Perm products on hold. Due to the volatility in the GNMA markets and the increased rate risk PRMI holds on these products thru construction, it is nearly impossible for our capital markets team to analyze and hedge for potential rate risks at this time.

 

There are two underlying concerns prompting the industry response to government loans in particular. First, the appetite for lower FICO scores has eroded daily, with many investors changing guidelines/pricing policy, or simply being unwilling to bid on these higher risk loans. Second, the number of claims for forbearance and/or default will drastically increase, creating massive liquidity constraints on mortgage servicers which must still deliver the yield to the bondholder. 

 

As America goes back to work following the containment of this pandemic, many economists are predicting a “V-shaped” recession and recovery, with the economy bouncing back nearly as quickly as it fell into this crisis. We are cautiously optimistic that with this recovery, the GNMA lending on which we have always relied will quickly return.

 

Thank you for your understanding!

Please feel free to contact us with any questions.

OTC PROGRAM BENEFITS FOR BUILDERS

BUILDER BENEFITS

  • Reduce Builder required investment

  • No risk of the borrower not qualifying once the home is complete

  • Line item percentage of completion draw schedule

  • As much as 90% construction funding

  • No need for builder financing

 

If you are a builder, please CONTACT US to discuss the amazing benefits and opportunities that One-Time Close Construction to Permanent Loans offer.

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Security First Financial is a division of Primary Residential Mortgage, Inc. PRMI NMLS 3094. Branch NMLS ID# 385589. PRMI is an Equal Housing Lender. Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. Programs, rates, terms, and conditions are subject to change and are subject to borrower(s) qualification. This is not a commitment to lend. Colorado – Regulated by the Division of Real Estate, UCCC #987701-016. Arizona – Arizona Department of Financial Institutions 0902614. Massachusetts – Licensed by the Massachusetts Division of Banks as a Broker and Lender as #MC3094. Florida - Florida Office of Financial Regulation MLD646. Texas - This office is licensed and examined by the Office of Consumer Credit Commissioner of the State of Texas. 

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Primary Residential Mortgage, Inc. is licensed under the State of Texas and by state law is subject to regulatory oversight by the Texas Department of Banking through one of the means indicated below: In Person or U.S mail: 2601 North Lamar Boulevard, Suite 300, Austin, Texas 78705-4294, Telephone No. (877) 276-5554, Fax No: (512)475-1313 Email: consumer.complaints@dob.texas.gov Website: www.dob.texas.gov

Consumers wishing to file a complaint against a mortgage banker or licensed mortgage banker residential loan originator should complete and send a complaint form to the TX department of savings and mortgage lending, 2601 North Lamar Suite 201, Austin, Texas 78705. Complaint forms and instructions may be obtained from the department’s website at www.sml.texas.gov. A toll-free consumer hotline is available at 1-877-276-5550. The department maintains a recovery fund to make payments of certain actual out of pocket damages sustained by borrowers caused by acts of licensed mortgage banker residential mortgage loan originators. A written application for reimbursement from the recovery find must be filed with and investigated by the department prior to the payment of a claim. For more information about the recovery fund, please consult the department’s website at www.sml.texas.gov.

 

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