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New Construction Process

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youbby
Established Member

New Construction Process

Hi,

We are thinking about going for new construction for 2 reasons

1- we will have the possibility to custumize the house the way we want

2- it will allow us to save more for the down payment

 

My question is about the second point: is my point valid ? will the LO take into consideration the fact that we are saving at least 3K per month, whick will bring our DT up by the time the house is ready ?

 

Thanks for your help

 

7 REPLIES 7
Anonymous
Not applicable

Re: New Construction Process

The LO will need to see that you have money saved up and a down payment of some sort ready when you go for your pre-approval. Whatever you have saved up now they will count towards it and any other money you save up during underwriting will just help you make a bigger down payment at closing.
Message 2 of 8
youbby
Established Member

Re: New Construction Process

We have saved 10K already, and since it will take 4 to 6 months to build the house, we should save another 15K in the next 4 months or so.

Do we need just pre-approval to sign the contract and have the builder apply for permit and start the work ?

Message 3 of 8
Anonymous
Not applicable

Re: New Construction Process

Are you going with a larger builder (national or regional)? If so they will want you to get preapproved through one of their preferred lenders. When we went through this process (we later backed out of the deal for other reasons) we did not have the full down payment saved they just pre approved me with the condition of saving up the remainder of the down payment needed.

Message 4 of 8
DallasLoanGuy
Super Contributor

Re: New Construction Process

i have seen people preapproved 'subject to' certain conditions. usually down payment.

shouldnt be a problem

 

Retired Lender
Message 5 of 8
youbby
Established Member

Re: New Construction Process

Thanks for sharing !! 

We will go with a local builder not national or regional one.

Message 6 of 8
youbby
Established Member

Re: New Construction Process

@DallasLoanGuy : Our DTI is about 7%, we only have a car payment of 542/month, total minimum CC payments of $250. However our CC usage is about 50%  !! Monthly gross income of $12500. My morgage credit scores are in 650's and in 710s for my partner. Currently we are saving 3 to 3.5k a month, we already have 10K. 

The home we are planning to build costs 310K and we are thinking to go with ARM 5/5. This will allow us to provide 3.5 to 5% DP, and may be refinance in 5 years based on the rates at that time.

What do you think ? 

 

Message 7 of 8
DallasLoanGuy
Super Contributor

Re: New Construction Process


@youbby wrote:

@DallasLoanGuy : Our DTI is about 7%, we only have a car payment of 542/month, total minimum CC payments of $250. However our CC usage is about 50%  !! Monthly gross income of $12500. My morgage credit scores are in 650's and in 710s for my partner. Currently we are saving 3 to 3.5k a month, we already have 10K. 

The home we are planning to build costs 310K and we are thinking to go with ARM 5/5. This will allow us to provide 3.5 to 5% DP, and may be refinance in 5 years based on the rates at that time.

What do you think ? 

 


depends on the spread between the arm and fixed rate. but i would just buy down a fixed rate and roll with that unless i wasnt planning on staying long.

 

i preapprove people all of the time even though they dont have all of the funds yet. it just goes on their conditional preapproval letter. no biggee

 

 

Retired Lender
Message 8 of 8
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