New Construction Home Loans Basics | California New Construction
When buying a home directly from a builder, a complicated construction loan is not normally required. Builders often support the construction stage so that you can use a conventional home loan after the home is finished. Although this makes the home loan process much easier, there remain some unique aspects of the home loan process for buying new construction. This article on new construction home loans basics provides some useful information.
Information Required for New Construction Home Loans
You will always submit personal information and a contract for approval when applying for a home loan. With new homes, you must furnish additional paperwork including the blueprint, building specifications, and all changes. Because the built property is typically not yet available for showing, your lender will use this paperwork to evaluate the property being purchased.
New Construction Appraisal
A sufficient appraisal a common step in home loan underwriting. Usually, an independent appraiser must visit a home to determine its value. Since this cannot be performed for new homes, the appraisal is completed in 2 segments. Up-front, the appraiser will assess value based on the building documents. Prior to settlement, the appraiser will then view the built home to confirm that it meets expectations. Only after this will the home loan be given full approval.
Obtaining Home Loan Approval
With new construction in a complex, there are specific facts about the development that are evaluated. The most critical consideration is the total number of construction phases and homes sold thus far. Most home loan rules set a percentage threshold. This is used to ensure that the development is solid and most likely to be completed in full.