New construction home loans are not often necessary when purchasing a home owned by a builder. Builders usually cover the building process so that you can close on a typical home loan after completion of the house. Even though this makes your home loan process easier, there are still a few unique aspects of the home loan process. This article on new construction home loans basics offers useful information.
Paperwork Required for New Construction Home Loans
You will always provide personal paperwork and a purchase and sales agreement for approval when applying for a home loan. With new homes, you must also provide the layout, building specifications, and any changes. Because there is no completed home to see, they will use this documentation to evaluate the property being financed.
A property appraisal is mandatory for all home loans. Normally, an third party appraiser must inspect a house prior to generating the analysis that determines the value. Since this cannot be possible on new construction, the appraisal is divided into 2 segments. First, the appraiser will use the building plans to forecast the value of the home. Just before settlement, he/she will inspect the completed property and certify that it matches expectations. Only then can a home loan be given complete approval.
New Construction Home Loan Approval Criteria
With new construction in a complex, there are certain aspects of the development itself that are evaluated. One significant factor is the number of building phases and homes sold so far. Many home loan programs have a minimum percentage. This is used to ensure that the development is stable and most likely to be completed in full.
New Construction Home Loans Basics
After closing, recurring payments and other repayment conditions are no different than for older homes. Although the initial requirements are somewhat different for new homes, avoiding the necessity for a complex construction mortgage minimizes the complexity of the purchase. For more on new construction home loans basics or related topics, contact Peter DaMore at Law Offices of Peter T. DaMore Jr..