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Last updated on February 3rd, 2021 at 11:55 am
Buying new construction is a different process than buying your typical pre-built home.
Since you spend a lot of hard-earned money, it’s important to be prepared.
- Get pre-approval
If you’re buying new construction, expect to take pre-approval for a mortgage. Because it is proof that you’re qualified for a certain mortgage amount.
Getting pre-approved doesn’t guarantee home loan approval.
- Get conditional approval
Conditional approval is a step some builders may require.
This loan approval means that your mortgage application has gone through the underwriting process and that the loan is approved to close, provided certain conditions are met.
You’ll need to provide certain documentation to review, like bank statements, pay stubs, and copies of your recent tax returns, but you’d need to take that step to close on a mortgage anyway.
- Put down 20%
It’s possible to buy an existing home without making a 20% down payment but when you buy new construction, you may need to put down 20% or even more in spite of you may have excellent credit scores.
In some cases, you may be able to make a smaller down payment on a new construction home but check with your builder or real estate agent before getting your heart set on a property.
Buying new construction has its pros (features you can handpick yourself) and its cons (potential construction delays and related stress).
Talk to your builder so there are no unpleasant surprises along the way.
Whether you’re purchasing a new construction home for the first time, it’s important to understand the process and make sure all your questions are answered.
Reference Source: The Ascent
