If you are buying a house directly from a builder, you can usually avoid the need for a special construction loan. Builders often cover the building stage and allow you to obtain a typical loan when construction is finalized. Even though this makes your loan process simpler, there are a few unique aspects of the loan process. This blog on new construction loans and what you should know provides helpful information.
Information Requested for New Construction Loans
With all types of loans, you must submit your financial paperwork and a real estate contract for review. With new homes, you must also include a layout, construction specs, and all changes. Because the built structure is normally not completed for showing, the construction plans are what they will use for underwriting.
New Construction Appraisal
A satisfactory appraisal a standard step in loan processing. Typically, an third party appraiser must see a house to prepare the report. Since this may not be performed on new homes, the appraisal is divided into 2 segments. Initially, the appraiser will estimate value using the building specs. Before settlement, the appraiser will then visit the completed property and certify that it meets the specifications. Only then can a loan be given approval to close.
New Construction Loan Approval Criteria
With new homes in a development, there are certain aspects of the development that are reviewed. One critical consideration is the total number of building phases and houses sold to date. Some loan rules have a percentage threshold. This suggests that the development is solid and most likely to be completed.
New Construction Loans And What You Should Know
Upon closing, mortgage payments and other loan conditions are the same as that for older homes. Even though the up-front steps are somewhat different for new construction, avoiding the necessity for a complex construction loan minimizes the complexity of the sale. For more on new construction loans and what you should know or similar matters, contact Sonny Solomon at The Keyes Company.