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How to Finance Home Construction or Rehab

A special program offered by Dedham Savings allows customers to fund the construction of their new home, or the remodeling of an existing home, and then roll that loan into a permanent Mortgage. This is called a Construction-to-Permanent loan, which is a loan that brings you through the entire process of buying and completing construction with a single loan.

When the construction is done, the loan converts to a traditional mortgage without having to go through another closing. A Construction-to-Permanent loan can lower the confusion, paperwork and headache associated with getting several different loans and financing options.

To be eligible for a Construction-to-Permanent loan, the home you’re building or remodeling must be owner-occupied and serve as your primary residence or second home. The property is typically a one-unit, single-family, detached home. And, you must choose a licensed General Contractor to build the home.

When you’re ready to start building, simply contact a Mortgage Expert at Dedham Savings, who will walk you through the program details. The loan process is similar to a standard home loan regarding required documentation, although you’ll need to provide a few extra items, including:

  • A copy of the construction agreement with your builder, which will specify the cost of your home, including options and upgrades
  • The land contract for the lot on which your house will be built, if applicable
  • A copy of the floorplans and elevations of the house
  • For homeowners putting on additions; the most recent mortgage statement, if applicable

As with a standard mortgage, you’ll need to have the appropriate down payment and funds to cover your closing costs. Best of all, the Construction-to-Permanent program means there is only one closing for both the construction loan and the permanent mortgage, and only one set of closing costs. This saves you both time and money!

During the construction of your new home, you’ll make interest-only payments on the funds drawn to pay for building costs. You’ll also be required to have periodic inspections so funds can be disbursed as needed to pay building costs. At the end of the construction period, you’ll be able to automatically change the construction loan into a permanent loan at no cost.

If you’ve been thinking about building your own home, give us a call – we’d be happy to review your options with you!

Offer is subject to credit approval.

Member FDIC. Member DIF. Equal Housing Lender. Bank NMLS #473990

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