Single loan for home purchase and construction reintroduced at AFR

American Financial Resources will return to offering a type of financing used by buyers of newly-built homes that it and some others like Nationwide Home Loans Group and Hyperion Bank had also suspended in some form due to disruption caused by the pandemic.

One form of these loan products, which covers both the construction costs and the property purchase for the homeowner, is returning just as the economy is showing some signs of gaining strength. The conventional one-time-close loans offered through government-related programs had been more challenging to fund in the last year due to uncertainties around how long it might take to build, according to an executive at the company.

The return by the nonbank, which is known for its expertise in this type of loan, suggests that increased lender interest in funding home-purchase mortgages could help expand the type of financing that addresses a shortage of housing supply in the market.

“We felt the marketplace has become more stable,” said Laura Brandao, president and partner at AFR, in an email, citing improvements in areas such as the issuance of permits, and relative improvement in access to supply chains over time as the economy has reopened.

While challenges like the high price of materials are still pushing out construction timelines, they’ve at least become more predictable, she noted.

“Although the length of time to construct is still longer than pre-Covid, it is more consistent, so we understand what to expect,” she added.

AFR’s reintroduction of conventional one-time-close products, which will officially occur on May 3, rounds out a suite of loans AFR and its mortgage-broker partners offer that are aimed at broadening access to home inventory. These include loans that finance manufactured or modular housing and those that offer access to lower down payments. The company offers many of these on a single-close basis.

Mortgage applications on newly-built homes have seen an uneven recovery following the slump when the coronavirus first arrived in the United States last year.