Purchasing A New Construction Home
At Whitecap Mortgage, we understand new construction financing and what goes into buying a new home. The timeline is different from purchasing an existing home and it is important to work with a lender experienced in the process. While the typical new home takes about 6 months to complete, there are many benefits you reap from purchasing new.
Tailored to You
With new construction, you get to pick every aspect of your new home from the ground up – from the layout, to the cabinets and flooring, to sinks, lighting, faucets, etc. Some builders will allow more customization than others, so it is important to know that upfront when choosing a builder if you know you have a specific aspect in mind for your new home.
When purchasing a new home, you will have fewer repairs than with purchasing existing, and much lower maintenance since the entire home is brand new. New Homes also typically come with a 1- or 10-year builder warranty to cover any defects in workmanship and most of the elements in the home such as the roof, windows, and major systems carry their own manufacturer warranties.
New homes are more efficient because they are built to current building codes which tend to make them better insulated and more tightly sealed than an existing home. Newly-constructed homes also often include green systems and appliances—like high efficiency stoves, refrigerators, washing machines, water heaters, furnaces, or air conditioning units that bring added efficiency and savings.
Understanding the New Construction Process
1. Pre-Qualification & Pre-Approval
During this first consult, we will discuss your financial information to evaluate your credit, income and assets. At this point everything will be done verbally (meaning no documents will be required yet) unless you are self-employed or have multiple investment homes. Based on this information, we can pre-approve you for a home loan and start discussing options.
2. Mortgage Application
Once you find a home and are under contract, an application will be sent to you for signatures. You will also need to provide documentation that supports your pre-approval information such as:
- Paystubs or Retirement Awards Letter(s)
- W-2ʼs and/or 1099ʼs
- Bank Statements and/or Retirement Statements
- Photo ID
- Documents on other homes owned, etc.
3. Loan Approval and Appraisal
Congratulations! This approval means the underwriter has reviewed your loan file and documents and has issued a commitment letter. In most cases, once you receive this document, the builder will start to construct your home. This is also called a conditional loan approval because there are always conditions to the loan we must meet before closing. We will gather some of these items at this time, and some will be gathered closer to closing. Some examples of documents that may be required at this time:
- Bank statements showing your earnest money deposit checks to the builder have cleared
- Providing the source of any large deposits or transfers from your bank statements
4. Updating Credit, Income & Assets
5. Initial Closing Disclosure (ICD)
This document will be the initial collaboration with your title company or attorney before closing and will show your interest rate, closing costs and your total cash needed for closing.
This is REQUIRED to be acknowledged and signed 3 business days prior to closing by law.
6. Final Inspection
Once the builder has fully completed your new home, we will order a final inspection to your appraisal. This is done to confirm that the home was completed to the specifications that were given value when your home was appraised. This usually occurs just a few days prior to closing.
Sign the final mortgage documents and get the keys to your new home!
Not sure if a new construction home purchase is right for you or have questions on the loan process?
Visit our Knowledge Center to learn more or give us a call at 484-485-2630 and one of our experienced loan specialists can answer your questions and help you get pre-qualified for a home today!
All loans are subject to credit and property approval. Programs, rates, terms and conditions are subject to change without notice. Other restrictions apply. Whitecap Mortgage LLC, 119 E. Linden Street, Kennett Square, PA 19348. Phone 484-656-7773. Corporate NMLS#1847550 (nmlsconsumeraccess.com). Licensed by the Pennsylvania Department of Banking and Securities, Delaware State Banking Commission, and Maryland Department of Labor.