New construction home loans are not normally necessary when buying a home directly from a builder. Builders often cover the building phase and enable you to close on a normal home loan after completion of the house. Although this makes your home loan process easier, there remain a few unique aspects of the home loan process when purchasing new construction. This article on an overview of new construction home loans discusses this in some detail.
Information Necessary for New Construction Home Loans
With any kind of home loan, you must provide some financial paperwork and a real estate contract for review. With new homes, you must also provide paperwork including the floor plan, construction specifications, and any changes. Since there is no finished property to view, the lender will use this paperwork to evaluate the property being purchased.
Appraisals for New Construction
An appraisal is a typical prerequisite for home loan approval. Normally, an independent appraiser will inspect a home to determine its value. Since this cannot be done for new construction, the appraisal is divided into two segments. Initially, the appraiser will rely on the building plans to estimate the value of the home. Just before closing, the appraiser will inspect the built property to confirm that it meets the requirements. Only after this will the home loan receive approval to close.
Other Home Loan Requirements
There are a few additional requirements for new homes in a subdivision. The most critical factor is the total number of construction phases and houses currently sold. Many home loan programs require a certain percentage. This is used as a sign that the complex is stable with a likelihood to be finished.
An Overview Of New Construction Home Loans
Upon closing, the home loan terms are the same as for any other kind of home. Although the up-front requirements are a bit different for new construction, avoiding the necessity for a costly construction mortgage is a good thing. For more on an overview of new construction home loans or related topics, contact Christopher Graves at Sierra Pacific Mortgage Company.