cancel
Showing results for 
Search instead for 
Did you mean: 

New Home Builder Question

tag
SteveUrkel
Frequent Contributor

New Home Builder Question

Hi,

Before I begin, I want to clarify I am no expert in how the mortgage process works and thats why Im here. Smiley Happy

 

 

Im planning on getting my first home within the next couple of months. I am interested in getting a new home built. The builder I am looking at offers financing and lots.

 

1) What does a loan officer do and do I need one?

2) Can I deal directly with the builder? It it recommended?

3) Does an agent handle all paperwork with builder?

4) Do new homes have closing cost?

 

Unrelated question

 

4)Can I use my 401k as a down payment?

 

 

 

I will post more questions as they come to me.

Thanks


*22 Years Old* Started my credit at age 19
Chase Sapphire Preferred Visa Signature- $9,200 II TFCU - $2,500 II Amex BCE - $2,400 II Paypal Extras Mastercard - $7,600 II American Eagle VISA - $3300 II Best Buy Visa - $3,000 II Chase Slate - $500
Message 1 of 11
10 REPLIES 10
Anonymous
Not applicable

Re: New Home Builder Question


@SteveUrkel wrote:

Hi,

Before I begin, I want to clarify I am no expert in how the mortgage process works and thats why Im here. Smiley Happy

 

 

Im planning on getting my first home within the next couple of months. I am interested in getting a new home built. The builder I am looking at offers financing and lots.

 

1) What does a loan officer do and do I need one? Loan officers act as the intermediary between the lending institution and the applicant, and will seek to find a loan arrangement that is in the best interests of both parties. You only need a loan officer if you plan to finance your purchase. You do not choose the LO necessarily. You choose the lending institution and from there you may be able to choose from one of the loan officers they employ.

2) Can I deal directly with the builder? It it recommended? By deal directly with the builder, I am assuming you mean use the builder's lender. Yes you can. It is recommended to shop around for the best mortgage for you and/or your family as the builder may not have the best deal available.

3) Does an agent handle all paperwork with builder? I am not an agent or expert but I am currently having a home built and can say that there is a ton of paperwork involved and you will be responsible for things like tax returns and W2's and bank statements, but you can have your agent or real estate lawyer (if you choose to employ one) go over contracts

4) Do new homes have closing cost? Yes. Someone has to pay for all of the work that has been done such as title search, recording costs, lawyer fees, appraisal, etc. The closing costs can be paid by either the seller or the buyer or a combination of the two.

 

Unrelated question

 

4)Can I use my 401k as a down payment? Yes.

 

 

 

I will post more questions as they come to me.

Thanks


 

Message 2 of 11
SteveUrkel
Frequent Contributor

Re: New Home Builder Question


@Anonymous wrote:

@SteveUrkel wrote:

Hi,

Before I begin, I want to clarify I am no expert in how the mortgage process works and thats why Im here. Smiley Happy

 

 

Im planning on getting my first home within the next couple of months. I am interested in getting a new home built. The builder I am looking at offers financing and lots.

 

1) What does a loan officer do and do I need one? Loan officers act as the intermediary between the lending institution and the applicant, and will seek to find a loan arrangement that is in the best interests of both parties. You only need a loan officer if you plan to finance your purchase. You do not choose the LO necessarily. You choose the lending institution and from there you may be able to choose from one of the loan officers they employ.

2) Can I deal directly with the builder? It it recommended? By deal directly with the builder, I am assuming you mean use the builder's lender. Yes you can. It is recommended to shop around for the best mortgage for you and/or your family as the builder may not have the best deal available.

3) Does an agent handle all paperwork with builder? I am not an agent or expert but I am currently having a home built and can say that there is a ton of paperwork involved and you will be responsible for things like tax returns and W2's and bank statements, but you can have your agent or real estate lawyer (if you choose to employ one) go over contracts

4) Do new homes have closing cost? Yes. Someone has to pay for all of the work that has been done such as title search, recording costs, lawyer fees, appraisal, etc. The closing costs can be paid by either the seller or the buyer or a combination of the two.

 

Unrelated question

 

4)Can I use my 401k as a down payment? Yes.

 

 

 

I will post more questions as they come to me.

Thanks


 


Thanks!! I saw your post on your house being built. Looks awesome so far! 

 

So lets say that I try a pre-approval with Chase, and i get approved. Do I just take that to the builder? 


*22 Years Old* Started my credit at age 19
Chase Sapphire Preferred Visa Signature- $9,200 II TFCU - $2,500 II Amex BCE - $2,400 II Paypal Extras Mastercard - $7,600 II American Eagle VISA - $3300 II Best Buy Visa - $3,000 II Chase Slate - $500
Message 3 of 11
Anonymous
Not applicable

Re: New Home Builder Question

Thanks, the house is coming along nicely. Me and the Mrs. are really looking forward to it being done and us moving in.  As for your question about preapproval, I'm not sure how builders in your area do things, but more than likely they will make you get pre-approved with them in order to start the build. You can get a 2nd pre-approval with Chase if you choose to do so but it probably won't be necessary if you've already been pre approved with your builder.

Message 4 of 11
StartingOver10
Moderator Emerita

Re: New Home Builder Question

A little additional information for the OP when buying from a builder:

 

1) Yes, there are seller closing costs and buyer closing costs.  Most builders pass on their own closing costs to the buyer in the contract.  The builder also offers $X to pay closing costs and that $X generally, but not always, covers closing costs that normally would be paid by the seller plus some closing costs of the buyer.  $X is negotiable. Inventory homes usually have a much higher incentive than homes that need to be built. 

 

2) Buyer closing costs are usually directly related to the amount of financing you are getting for the property.  If you were paying cash, there would be few costs to close, but since you are financing there are all kinds of fees related to the mortgage and government.

 

3) Most builders have a lender partner they strongly prefer in order for you to take advantage of the closing cost incentives.  You still want to have a lender give you an approval that is not associated with the builder so you can compare rates and fees. 

 

4) Builders do not use the "standard" state contract that Realtors use. They have their own contract that is totally different. If you want contract review, have a real estate attorney review it on your behalf prior to signing. Realtors can not perform the review process unless they are also a licensed attorney. 

Message 5 of 11
SteveUrkel
Frequent Contributor

Re: New Home Builder Question

Thanks Guys, great info!

Im am located in Phoenix as well.

Little more questions,
So if i get pre approved, submit all my paperwork,etc, that doesnt mean I will get completely approved correct?

Whats underwriting?

*22 Years Old* Started my credit at age 19
Chase Sapphire Preferred Visa Signature- $9,200 II TFCU - $2,500 II Amex BCE - $2,400 II Paypal Extras Mastercard - $7,600 II American Eagle VISA - $3300 II Best Buy Visa - $3,000 II Chase Slate - $500
Message 6 of 11
Anonymous
Not applicable

Re: New Home Builder Question


@SteveUrkel wrote:
Thanks Guys, great info!

Im am located in Phoenix as well.

Little more questions,
So if i get pre approved, submit all my paperwork,etc, that doesnt mean I will get completely approved correct?

Whats underwriting?

Another Phoenecian huh? Awesome Smiley Happy Pre approval  will let you know how much that particular lender has approved you for, if they approve you at all. Final approval happens closer to closing and doesn't necessarily mean you will be approved again. During final approval they will again review bank statements and your credit and verify employment to make sure everything that was pre approved is still applicable. The mortgage underwriting process ensures your financial profile meets guidelines and loan criteria. The underwriter will review all of the documentation about your credit profile to make sure you are an acceptable risk.

Message 7 of 11
SteveUrkel
Frequent Contributor

Re: New Home Builder Question


@Anonymous wrote:

@SteveUrkel wrote:
Thanks Guys, great info!

Im am located in Phoenix as well.

Little more questions,
So if i get pre approved, submit all my paperwork,etc, that doesnt mean I will get completely approved correct?

Whats underwriting?

Another Phoenecian huh? Awesome Smiley Happy Pre approval  will let you know how much that particular lender has approved you for, if they approve you at all. Final approval happens closer to closing and doesn't necessarily mean you will be approved again. During final approval they will again review bank statements and your credit and verify employment to make sure everything that was pre approved is still applicable. The mortgage underwriting process ensures your financial profile meets guidelines and loan criteria. The underwriter will review all of the documentation about your credit profile to make sure you are an acceptable risk.


Gotcha! So in your case your not necessarily approved yet?




*22 Years Old* Started my credit at age 19
Chase Sapphire Preferred Visa Signature- $9,200 II TFCU - $2,500 II Amex BCE - $2,400 II Paypal Extras Mastercard - $7,600 II American Eagle VISA - $3300 II Best Buy Visa - $3,000 II Chase Slate - $500
Message 8 of 11
Anonymous
Not applicable

Re: New Home Builder Question

Nowhere close to final approval lol. LO said they'll get all the paperwork started around 60 days from completion and we'll do the old "submit every detail of your financial life" song and dance again and see where I stand at that point. Won't know about final approval until near the very end when they inform me of the "clear to close" message indicating that everything checked out and they're ready to take the down payment and sign the deed etc.

Message 9 of 11
ezdriver
Senior Contributor

Re: New Home Builder Question


@Anonymous wrote:

Nowhere close to final approval lol. LO said they'll get all the paperwork started around 60 days from completion and we'll do the old "submit every detail of your financial life" song and dance again and see where I stand at that point. Won't know about final approval until near the very end when they inform me of the "clear to close" message indicating that everything checked out and they're ready to take the down payment and sign the deed etc.


That is an odd process. As a national builder, we don't start construction until we have had a fully underwritten decision so we know what the remaining conditions are. That is usually accomplished by the time we receive a building permit. Within 60 days of signing a purchase agreement, we require "gold cert" status which essentially clear all conditions except standard stuff like appraisal, COO, and such.

Message 10 of 11
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.