Construction loans can have two closings (the construction loan and then the end/permanent/take out loan), or a single-close with two phases (the construction phase and the end loan).
There are several benefits to the single close program. First, you only have to qualify for the end loan once. With a two-time close the construction lender will want you to get pre-approved for your end loan but once your project is complete, you will have to update all of your information; employment, income, assets and credit. Even your appraisal may have to be redone.
There could be any number of reason why you might not qualify a 2nd time. If you have been laid off, are out on medical leave, or have changed jobs, you may no longer qualify for that end loan. One late payment on your credit report could also void your pre-approval. If your appraised value goes down you may find yourself having to make an additional down payment that you may or may not have.
A two-time close will also mean a second set of closing fees. Not so with a single close.
Without question the single close loan offer a level of certainty to the process. Our FHA Construction Loan program is a single close program. As always, give me a call and we can discuss your situation.