New construction loans are not normally needed when buying a property directly from a builder. Builders typically support the building phase so that you may close on a normal loan after completion of the home. Although this makes your financing easier, there are some differences in the loan process. The details below on how new construction loans work offers useful information.
Paperwork Necessary for New Construction Loans
You must always hand over financial information and a purchase and sales agreement for review when applying for a loan. With new homes, you must provide other details such as the floor plan, building specifications, and any changes. Because the finished structure is normally not yet available for showing, they will use this material to evaluate the property being purchased.
Appraisals for New Construction
A sufficient appraisal a standard condition for loan approval. Normally, an independent appraiser will see a house to determine its value. Since this may not be performed for new construction, the appraisal is completed in two steps. Initially, the appraiser will use the building plans to estimate the value of the property. Before settlement, the appraiser will then view the completed house to verify that it matches the specifications. Only after this can a loan receive approval to close.
Other Loan Requirements
Additional criteria apply to new construction in a complex. One critical fact is the total number of building phases and units completed. Most loan programs set a certain percentage. This suggests that the complex is solid and most likely to be completed.
How New Construction Loans Work
After closing, recurring payments and other repayment conditions are the same as that for pre-existing houses. Although the initial steps are somewhat different for new homes, not having to obtain an actual construction loan saves you money and time. For more on how new construction loans work or related topics, contact Arina Hanciulesco at Realty PROS Las Vegas.