Q. My husband and I are trying to get a loan to build a house. We are scared to death about these interest rates going up.  What about these all in one loans? They combine the construction loan and the long-term loan so that you only have to pay closing costs once and you can go ahead and lock in an interest rate?  It sounds very good but I've heard that it's not because they charge a lot of other fees.

A. As with any loan, you’ve got to shop to be sure you’re getting the best deal with a “single-close” construction loan. Your interest rate on the mortgage should be comparable to the going rate on a traditional purchase, and the construction loan is generally an interest-only loan with the interest rate tied to the prime rate.

With regard to fees, most lenders claim that their fees are comparable to those charged for a traditional loan, but this is where you have to do the fine tuning. Get quotes from at least three lenders that include all fees and charges and make comparisons. And don’t be afraid to ask questions.

We recommend that you talk with lenders that have a loan officer who specializes in this type of loan. And remember that even if the fees are a little higher, the cost may still be less than getting two (or three) separate loans that would each have their own sets of fees and costs.

Have a question about your finances? Ask us at editors@interest.com.

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