When buying a home from a builder, a complicated construction loan is not normally necessary. Builders often finance the construction phase and enable you to use a regular home loan after completion of the home. Even though this makes your home loan process easier, there are still some unique aspects of the home loan process. The details below on what you need to know about new construction home loans offers some helpful information.
Paperwork Needed for New Construction Home Loans
You must always submit financial information and a contract for review when applying for a home loan. With new construction, you must provide other details such as the layout, construction specs, and any changes. Because the final home is typically not ready for viewing, they will rely on this material to evaluate the home being financed.
Slightly Different Appraisal Process
An appraisal is a typical prerequisite for mortgage approval. Typically, an third party appraiser must visit a house to assess its value. Since this may not be possible for new construction, the appraisal is completed in 2 steps. Up-front, the appraiser will estimate value using the building specs. Before closing, he/she will then visit the completed house to verify that it meets expectations. Only then can a home loan be granted a clear to close.
Other Home Loan Criteria
With new homes in a complex, there are specific facts about the development itself that are under scrutiny. One important consideration is the total number of building phases and units sold thus far. Most home loan rules require a specific percentage. This is used to ensure that the complex is solid and most likely to be completed.
What You Need To Know About New Construction Home Loans
After closing, the home loan terms are the same as for any other type of property. Even though the up-front process is somewhat different for these homes, avoiding the need for a costly construction mortgage has added value. For more on what you need to know about new construction home loans or related topics, contact Eric Stier at Brentwood Construction & Remodeling.
