If you are interested in buying new construction, know that the process differs somewhat from buying a pre-owned home. Our Farmers Bank & Trust Mortgage Team can still help you through the financing process!
1. Decide on Your Builder & Homesite
If you are looking at a particular neighborhood, find out if there is one builder or if the developer allows you to bring in your own builder. If you are looking at building on a lot that is not restricted to a particular builder, it’s important to research builders in your area to find one that is reputable and stands by their work. Meet with builders before you make your selection. It’s important that they are organized and communicate well.
2. Obtain Pre-Approval
Builders sometimes work with particular mortgage companies and will offer discounts on closing costs for using their “preferred” lender. No matter what lender you choose, you will need to get pre-approved for fixed-rate financing once your construction is complete. Farmers Bank & Trust can finance up to 90% of your construction loan and considers land equity as part of your money down.
3. Sign a Contract with Your Builder
Builders use their own contracts that are similar to a regular sales contract but include additional terms specific to the building process, such as at what points during building the contractor gets paid, and what options you have to choose from. Your agent can help you interpret the terms of the builder’s contract before you sign.
4. Secure a Loan
Once you sign your contract, the lender will need to get started on your loan application. It’s important that you provide them any information they ask for in a timely manner.
5. Select Your Options
There will be a lot of decisions to be made throughout your build. Being prepared with your choices at each stage will help keep the build on schedule. Most builders have someone who will work with you to let you know what stage they are on and which decisions are coming due and when they need to be made. If your build is custom, you will need to do a lot of research into finishes, fixtures, colors, hardware, and appliances so you know what you want and what you can afford.
6. Home Walk-Throughs Throughout the Building Process
You will need to check on every phase of construction to double-check that everything is done according to plan. Even the best builders have miscommunications, mix-ups on orders, or problems with installations. Plan on visiting the home daily once it gets dried-in.
7. Optional Inspection
Even though your home is brand-new, you might still want to have a home inspection done. Sometimes an inspector will catch something that slipped past the contractor and code enforcement.
8. Closing day!
Closing day on new construction differs slightly from a pre-owned home in that there is often a “punch list” of items the builder is responsible for finishing up either on closing day or shortly afterward. This may include cleaning, touch-up painting, installing landscaping, or changing out locks. You should have the opportunity to go through the house with the builder shortly before closing to add items you notice to the punch list.
Ready to build the home of your dreams and need help with financing? Apply for a true cost home loan quote HERE.
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