Can I purchase and close on my new property at the same time as the construction loan? The answer is yes. However, depending on how much time you have, there can be some variables and time constraints.
When you enter into a contract to buy a home or property, you have a contractual closing date. If you don’t close on that date, you run the risk of losing the property or another outcome. Meanwhile, to obtain a construction loan for the property, you need to develop plans and a cost breakdown/budget to submit for the appraisal of the home based on your completed project. This takes time and should be completed no later than 30 days prior to closing. This is necessary so that the appraiser has adequate time to complete it and for the bank to approve it. You should conservatively estimate how long it will take to finalize the plans and budget and add 30 days to determine how much time you will need in order to close.
If you don’t think you will have enough time to accomplish getting the plans and budget finalized, you can purchase the property first and then close on a construction loan later. Any down payment spent on the purchase closing would apply to the construction loan. This two-step process can also reduce your stress level tremendously.
