New construction home loans are not normally needed when purchasing a home owned by a builder. Builders usually support the building process and enable you to obtain a typical home loan after completion of the house. Although this makes your home loan process simpler, there remain some unique aspects of the home loan process when purchasing new construction. The information below on new construction home loans and what you should know includes the most common differences.
Information Required for New Construction Home Loans
You will always hand over personal information and a purchase and sales agreement for approval when applying for a home loan. With new homes, you must also include the floor plan, building specs, and all addendums. Because there is no completed property to physically view, your mortgage company will rely on this documentation to evaluate the home in question.
Appraisals are a standard step in home loan approval. Normally, an independent appraiser must visit a house to complete the report. Since this cannot be performed for new construction, the appraisal is performed in 2 steps. First, the appraiser will guestimate value using the building specifications. Just before closing, he/she will visit the completed house and verify that it meets the requirements. Only after this can a home loan be granted approval to close.
The Home Loan Approval Criteria
There are some additional requirements for new construction in a complex. The most important factor is the number of building phases and properties sold thus far. Many home loan programs require a minimum percentage. This is used as a sign that the development is stable and most likely to be finished.
New Construction Home Loans And What You Should Know
After closing, the home loan provisions are no different than any other kind of home. Although the initial requirements are a bit different for these homes, not having to deal with an actual construction home loan minimizes the complexity of the sale. For more on new construction home loans and what you should know or similar subjects, contact Sharyn Kelley at Suburban Realty Inc..