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What You Need to Know About New Construction Homes – Home Loan

The iServe Blog


Whether you’re looking at a promising new subdivision in a great school district or want to build your dream retirement home, there are differences in purchasing a new construction home that you won’t often run into with an existing home. Some of these issues will take more time, while others will impact your residential lending options. But what are these issues, and what difference do they make in the process? Here’s a short summary of some of the major differences.

Buy It New: What You Need to Know About New Construction Homes

  • It takes time to build. Though this may seem obvious, you’ll want to get some idea from the developer or builder of how long it will take and then add some time for things that go wrong, bad weather and other circumstances beyond your control. In general, a home will take five to six months to build, though that time may vary depending on the size of the home and the options you’ve purchased.
  • The basic model will look — and cost — much different from the model. Model homes in a development are amazing because they have options that will drive up the price. Ask what options have been added to the model home and how that impacts the final price. Make sure you know the cost of the options you want to add to your home.
  • Is there a warranty on the house itself as well as components? Most new constructions will have a home warranty, but if it’s by the developer, you’ll want to check their history to ensure they’ll be able to back it up when the foundation settles in five years. The components in the house will also often have a warranty, such as the shingles, flooring, HVAC system and appliances. This can make a big difference to your home loan company or bank.
  • You’ll need a Certificate of Occupancy prior to moving in. Unlike existing homes that are often ready to move in shortly after closing, new construction will require a Certificate of Occupancy before you can move in. Many residential lending companies require that this certificate be issued prior to closing before they’ll issue a home loan.
  • During construction, you’ll need to stay engaged in the process. It’s easy to get caught up in life’s other demands while thinking the developer will watch over the process. If the wrong cabinets come in, it’ll be too late to fix the problem without serious expense once they’re installed.

By keeping these factors in mind, your new home may come much closer to your dream home than would otherwise be possible. Whether you’re working with a subdivision developer or a custom builder, you’ll still need to fill out a residential mortgage application and provide additional documentation in order to determine if you qualify for a home loan. At iServe Residential Lending, LLC we know that the home loan process can be a very stressful time and are here to help. Our online residential mortgage application helps make the process easier. Please feel free to contact us today to get started.

 

 

 

iServe Residential Lending, LLC is not affiliated with or acting on behalf of or at the direction of the VA or the Federal Government.

Programs, terms and guidelines subject to change without notice. Not all applicants may qualify. All loans subject to underwriter and investor approval. Arizona Mortgage Banking License BK-0920658; Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, CRML License  413-0646; Colorado Supervised Lender #988552; Georgia Residential Mortgage Licensee License #19613; Licensed by the New Jersey Department of Banking and Insurance License # 512567; Licensed Mortgage Banker—New York State Department of Financial Services License # B501014; (www.nmlsconsumeraccess.org). iServe Residential Lending, LLC, NMLS #2914-15015 Avenue of Science Suite 250, San Diego, CA 92128 Phone: (858) 486-4169