New Construction - What Causes Deals to Fall Through?

[Anne1208]

I am already stressing so much at the idea of dragging out the homebuying process seven months, but nonetheless, my husband and I plan to build a house next year.

Obviously, the first part is pre-approval, earnest deposit and contract....then when we get to the latter part of the 7 month process we have to get reapproved, and close. 

I get so freaked out at the idea that we may get preapproved and start building a house and it somehow fall through. I guess a lot of my fear is - what exactly happens with people when this happens??  What gets in the way of people who contract for a new build w/ a preapproval and then don't get to see it through??

I feel like if i understood that part it would make me feel a little better.....

[DallasLoanGuy]

poor pre-approval from LO

if they dont get pay stubs, w-2 and tax returns as well as bank statements.... they were not thorough

[mynameainttracy]

That was our fear, especially since we had to put about $15k down with the builder. We had the lender put us through full underwriting for approval upfront. It took about a week and then I was able to feel good about things. Between then and the end we just did everything possible not to screw things up. No credit apps, perfect payments, no new debt, kept credit cards down. By the time we closed our scores had actually increased quite a bit and we were able to get an awesome rate. A good LO is priceless and ours stayed in contact with us the whole time through the build to make sure we were ok. 

[Anne1208]

Thanks! Yeah we will have to give them about $20,000 in earnest money - the whole thing seems stressful!

[DallasLoanGuy]

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@Anne1208 wrote:

Thanks! Yeah we will have to give them about $20,000 in earnest money - the whole thing seems stressful!

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make sure you have an 'out' should the loan fall through.

i recommend you use a realtor especially for new construction

[mynameainttracy]

Our out in this neighborhood was limited to moving our down payment to a different lot and a much further out deadline to build. That was it though and because we didn't have a realtor with us on our first visit we would have had to pay them, because of this we represented ourselves. We didn't really mind because DH was a realtor in his past life. Do protect yourself though. Anything can happen.