Although many people in California purchase pre-built homes, there is certainly a market for those who are willing to wait a little longer to build a brand-new home. New construction homes allow home buyers to dictate the ultimate layout of the home. If you’re a first-time buyer of this type of home, you may not know how different it is from the more traditional approach. The following includes three additional steps you may need to take when purchasing a new construction home.
Pre-approval mortgage
When going through the traditional route of purchasing a home, real estate law doesn’t force you to be pre-approved for a loan. However, when seeking a new construction home, obtaining this letter may place you in a much better position. The reason behind this is mainly due to the number of issues that may arise during the construction period. It should be noted that simply receiving a pre-approved letter from your lender does not mean you are guaranteed a loan. However, if nothing changes in terms of your finances, then you should be in the clear.
Conditional approval
Although not all buyers are going to need conditional approval, it can help ease the entire process. What exactly is conditional approval? It involves your mortgage loan going through the underwriting process, which states that your loan is ready for close if you accept and complete certain conditions. Some of these conditions may include not quitting or changing jobs or agreeing to have your home’s property value confirmed once everything is built.
Place a bigger down payment
Because anything can go wrong during a construction project, builders will need additional confidence that the deal won’t fall through. This can be done by placing at least 20% on your down payment.
As you can see from the information above, buying a new construction home can be a daunting experience to tackle on your own. It may be beneficial to have an attorney at the ready in the event that negative situations arise.
