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How much cash needed....New Build - 1st time Homebuyer

Established Member

How much cash needed....New Build - 1st time Homebuyer

My husband and I are curious on how much cash we should have saved before starting the process.

 

Credit scores are all mid 600s to low 700s for both of us. We are considering doing a FHA or even a conventional (not sure yet) with Ryan homes.

 

So far we have 5k saved and are putting as much money in savings as possible every month.

 

How much did you all have to come up with? We are located in Maryland and looking at homes in the 400k-450k price range.

 

So far we like some of the models at Ryan and Beazer properties. I know that builders usually offer closing assistance which would be a great help to us.

Message 1 of 11
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Frequent Contributor

Re: How much cash needed....New Build - 1st time Homebuyer

I'm in Maryland too!

 

Most of the new builds in our area require a deposit of $1,000-1,500 at time of signing. Then you should plan for 3-3.5% for down payments. Another thing to consider is having money set aside for design costs. Some builders may give you a credit but if you go above that, you can either wrap it into your loan or pay the extra cost out of pocket. 

 

One good thing on your side is that most of the new builds in our area offering up to between $12-15K towards closing costs, which for us meant we only have to worry about the down payment. 

 

For our builder, we paid a $1,000 deposit at the time of signing the contract which goes toward our down payment as earnest money. We were then put on a payment plan where we had to pay about half the down payment within 4 months. The balance of our down payment is due at the closing table. 

FICO8 Scores - 625TU / 640EQ / 649EX
On Mortgage Journey
Starting Mortgage Scores (Feb 17) 523EQ / 547TU / 564EX
Mortgage Scores Aug 17 624EQ / 649TU / 650 EX
Message 2 of 11
Established Member

Re: How much cash needed....New Build - 1st time Homebuyer

Thanks for the response it really helps my anxiety....

That seems pretty reasonable and doable for us...We have a kid in college so its been hard trying to save but we are working on it.

Our lease on our rental is up August 2018 so we are ready to get this process started. I'm hoping to have at least 10-12k total saved with the next 6 months.

Did you do a detached or townhome?

Message 3 of 11
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Frequent Contributor

Re: How much cash needed....New Build - 1st time Homebuyer

We decided on a townhome. 

FICO8 Scores - 625TU / 640EQ / 649EX
On Mortgage Journey
Starting Mortgage Scores (Feb 17) 523EQ / 547TU / 564EX
Mortgage Scores Aug 17 624EQ / 649TU / 650 EX
Message 4 of 11
Established Member

Re: How much cash needed....New Build - 1st time Homebuyer

Hello,

 

 

I  dont mean to hijack the thread, but I dont want to bother asking a question on my own (I never recieve responses anyway, LOL)

 

So with a new build, how does it work as far as signing for the loan?

Do you pre qualify just like a previously built home?

What happens if the home isnt to be finished until months later?

Ex: If I get a pre-qual today and my home isn't finished until January, would my close date by January or as soon as my loan is underwritten? if it is the latter, does that mean my credit will be pulled again in January?

 

Can someone please explain the process? Thank you so much.

Message 5 of 11
Frequent Contributor

Re: How much cash needed....New Build - 1st time Homebuyer


Goodcreditsesame wrote:

Hello,

 

 

I  dont mean to hijack the thread, but I dont want to bother asking a question on my own (I never recieve responses anyway, LOL)

 

So with a new build, how does it work as far as signing for the loan?  Basically the same.  you sign once the house is finished, you have a walk through and a CTC.

Do you pre qualify just like a previously built home?  Yes

What happens if the home isnt to be finished until months later?  What do you mean?  I signed in Jan and my house was complete in May.  I closed in May.

Ex: If I get a pre-qual today and my home isn't finished until January, would my close date by January or as soon as my loan is underwritten? if it is the latter, does that mean my credit will be pulled again in January?  Oh, just saw the follow up question.  Yes it would be January.  Chances are it will go through initial UW and again once the appraisal is done (months later).  yes it will be pulled again.  reports are only good for 60-90 days.  I had mine pulled twice as a HP and then they did a SP couple of days before I closed (when they drew up the papers.

 

Can someone please explain the process? Thank you so much.


 

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In second year post 13 DC (12-28-15)
Entered garden 05-19-2017 CLOSED ON MY NEW HOUSE 5/17/17!!!!

Message 6 of 11
Frequent Contributor

Re: How much cash needed....New Build - 1st time Homebuyer


Goodcreditsesame wrote:

Hello,

 

 

I  dont mean to hijack the thread, but I dont want to bother asking a question on my own (I never recieve responses anyway, LOL)

 

So with a new build, how does it work as far as signing for the loan?

Do you pre qualify just like a previously built home?

What happens if the home isnt to be finished until months later?

Ex: If I get a pre-qual today and my home isn't finished until January, would my close date by January or as soon as my loan is underwritten? if it is the latter, does that mean my credit will be pulled again in January?

 

Can someone please explain the process? Thank you so much.


Here's how our process went: 

 

February 2017, we signed our contract. At this time we picked the model floorplan/elevation we wanted and also discussed overall structural design of the home. Our builder gives us the option to modify the floorplan at no additional cost. We also had to pay a $1,000 deposit at the time of signing the contract. Because we went into the process thinking we would do FHA, it was agreed that we would have to contribute the 3.5% downpayment. We also were put on a payment plan with the builder to contribute 60% of the downpayment by June 2017. Of course if we wanted to pay extra, then we could. Regardless, the other 40% of the downpayment is due at the closing table. 

 

Under the terms of the contract, we had two weeks to find financing. We used one of their preferred lenders because the deal at that time was we would get $15K towards closing costs by using one of them. Our lender did a pre-qualification and submitted a loan commitment letter to the builder. Three days after my husband and I signed the contract, we received the official ratified contract from the builder. Within that paperwork was the loan commitment letter from the lender and the information about the title company that we were to use. 

 

As of now, our scheduled closing date is November 3rd. Because we signed the contract in February, we have to re-submit new copies of everything as it is now time for us to finalize our loan and lock in our rate. And yes, they did pull our credit again. We've also been told by the lender that they will do a soft pull of our credit 7 days before closing to make sure we haven't opened any accounts or maxed out credit credit cards.

 

Our builder is saying that our home will be finished by October 27. For us, that gives a full 7 days before our closing. For our builder the process is that we would have a walk through where we will go over how the home looks, warranties, etc. At that time we will also do what's known as a "blue tape inspection". This is where we will walk through the home and look for any chipped paint, damages to appliances or flooring, etc and mark it with blue painters tape. The builder then has a couple of days to go in and make the corrections. We will then do a final walk-through the day before closing and then head to the closing table. 

FICO8 Scores - 625TU / 640EQ / 649EX
On Mortgage Journey
Starting Mortgage Scores (Feb 17) 523EQ / 547TU / 564EX
Mortgage Scores Aug 17 624EQ / 649TU / 650 EX
Message 7 of 11
Moderator

Re: How much cash needed....New Build - 1st time Homebuyer

I need to mention to those of you that are buying from a builder and relying on the builder contribution to cover all of your closing costs - make sure you get a breakdown from your LO where the contribution is going.

 

Usually, the builder closing costs contribution goes to closing costs normally paid by the seller first and then what is left over after seller costs goes toward buyer closing costs. In your contract you will see the closing costs listed. Builders push many of the standard closing costs normally paid by the seller over to the buyer side in the contract. This is SOP.  It affects the amount of the contribution toward your closing costs. Instead of $15k toward your costs, it may only be $7k (just giving an example).   You may or may not have enough to cover all of your costs.  Take a look at your contract and get a detailed breakdown from your loan officer. I see it regularly where the builders contribution covers most of the costs, but not all. You really want to know now so you can prepare appropriately. 

 

In any event, it is safe to keep adding to your savings as much as you can until closing so you don't have any surprises. 

Message 8 of 11
Frequent Contributor

Re: How much cash needed....New Build - 1st time Homebuyer

I was nervous about that StartingOver. We've reviewed our contract and loan estimate a number of times, and the only money that we are having to come up with is the downpayment and administrative fees($125) toward the HOA. I think I may be in contact with our lender a little too much but we don't want any surprises. 

FICO8 Scores - 625TU / 640EQ / 649EX
On Mortgage Journey
Starting Mortgage Scores (Feb 17) 523EQ / 547TU / 564EX
Mortgage Scores Aug 17 624EQ / 649TU / 650 EX
Message 9 of 11
Moderator

Re: How much cash needed....New Build - 1st time Homebuyer

I'm glad you have reviewed it already. It is better to make sure than to have a surprise. I see it too often with new construction and the builders prefered lender where the buyer has to come up with an extra $5k at the last minute. Better to have the money sitting in your account than to be scrambling at the time of closing. 

Message 10 of 11