New construction mortgages are not typically required if buying a property owned by a builder. Builders usually finance the building process so that you may use a regular mortgage when construction is completed. Even though this makes the financing simpler, there remain some differences in the mortgage process for purchasing new construction. This article on what you need to know about new construction mortgages provides useful information.
Information Necessary for New Construction Mortgages
With any kind of mortgage, you must submit your personal financial documents and a purchase contract for review. With new construction, you must also include details such as a blueprint, building specs, and any changes. Since there is no completed structure to physically see, the building plans are what they must use for underwriting.
New Construction Appraisal
A property appraisal is necessary for all mortgages. Usually, an third party appraiser will inspect a property in order to prepare the report that estimates its market value. Since this may not be possible for new construction, the appraisal is divided into two segments. Up-front, the appraiser will use the blue print and building specs to estimate the value of the property. Before closing, the appraiser will see the constructed home and certify that it matches the requirements. Only after this can a mortgage be given complete approval.
Obtaining Mortgage Approval
With new homes in a development, there are specific facts about the development that are evaluated. One significant consideration is the number of building phases and houses sold. Most mortgage programs require a specific percentage. This suggests that the complex is stable and likely to be completed in full.
What You Need To Know About New Construction Mortgages
Upon closing, mortgage payments and other repayment terms are no different than for pre-existing properties. Even though the up-front requirements are a bit different for these homes, not having to obtain an actual construction mortgage has great value. For more on what you need to know about new construction mortgages or related matters, contact Diana Escobar-Wachter at Access Abstract Corporation.