When do we start the loan process for a new home construction home?

Question

My husband and I are buying a new home. The house is currently under construction but it won't be completely done until the Spring or Summer of next year. When should I start speaking with someone regarding a loan for the house?

Answer 1

My husband and I bought a newly constructed home out in Las Vegas, Nevada about a year ago. Before the home developer would even allow us to put an "earnest money deposit" down for the house, we had to get "prequalified" with a mortgage lender... this could be done anytime before your house is finished, with any mortgage lender/broker/bank.

Then about 3-6 months BEFORE the house was scheduled to be finished, we started to call around different mortgage lenders to shop around for best "interest rates and closing costs" terms ... We found "IndyMac Bank" out in California to be the best lender at the time we called... I had heard of this company through my parents who have a mortgage with them... when my parents had a hard time finding lenders who could give them a "very good / low interest rate term" for their mortgage, it was IndyMac Bank that stepped up... and when it came time for my husband and I to close, IndyMac Bank was there for us... it was easy to "close" with them because everything was done over the mail, phone, or fax with NO complications! Also, CountryWide Bank was another lender that was very helpful and provided fair terms.

I highly recommend checking out different mortgage lender rates and no matter who you eventually choose for your lender, I recommend you "rate lock" with NO ADDED FEES (aka: No Lock Fees) approximately 3-6 months before closing... so long as the rates are affordable for you at the time.

Also, please be aware that most lenders do not want to give long length "rate locks" out... example: more than 45 days before your house is scheduled to be completed ... when you get something that is around 3-6 months of a lock, they will want to impose some sort of crazy "rate lock fee"... don't fall for this! Always try to negotiate a Rate Lock with No Fees! Otherwise, keep calling around! Many, many lenders are out there, and they all want your business! But the main point for you in shopping around NOW is to "rate lock" at a very low interest rate as possible, while being able to afford the monthly mortgage payments and terms!

I would also recommend you check out www.BankRate.com ... this site can help you see what the going interest rates according to the mortgage terms you want (example: 30 year conventional fixed, 15 year conventional fixed, 5 year ARM, 3 year ARM, etc...), based upon your location ... since mortgage rates usually change daily.

www.BankRate.com also provides good financial advice, as well as providing you with useful "financial calculators" (for example: they have mortgage calculators that can figure out how much you would end up paying for your house per month, given how much you plan to borrow/mortgage and how long you plan to take out the mortgage for (mortgage term).

Based upon the fact that your house will be done around Spring or Summer of 2007, I would start calling around the end of this month... because it makes me believe you may get better rates now that this year is ending and lots of companies will be willing to make last minute good deals to make up "quota" or boost their "end-of-year profits", etc. For this same reason, it was also good to call at the end of the month, or the first week of the new month as opposed to the middle of a month to call for best rates... not always true, but from my personal experience, it seemed most likely.

Hope this helps... And I wish you a happy, speedy, and hassle-free closing!!!

Answer 2

I am wondering if you have a contract on this home. Most sellers that are using real estate agents wont sign with someone who hasnt secured financing. In any case, you should start looking for financing right away. It is important that you find out from the lender how much house you can afford, and what interest rate you will qualify for based on your credit scores.

You should take some time and go to numerous lenders to compare what they are offering in the way of costs, points, length of mortgage and so on. If this is your first home (and I have a feeling it is) you may also qualify for first time buyer financing, which also can save you some money. These types of loans are designed to help the buyer get into a home with less down payment, and lower mothly costs.

Since you are interested in this house that is under construction, find out what the property taxes are in that area. Find out if there is a problem with flooding too. WIll it be city water and sewer or well and septic? Is there a homeowners association with annual fees, or road maintenance?

These are just a few of the questions you need to ask about this house, becasue the lender is going to ask them of you.

Good luck with finding financing and getting your home. Its the best feeling. walking in for the first time!

Answer 3

In my experience, it is best to start the loan process far in advance of the actual time you will be applying for the loan. Having your credit pulled by an experience loan originator/consultant 6months to one year prior to the time when you need the loan to fund is a good idea because you will then have the time and hopefully the loan officer will have the knowledge to help you clear up any problems on your credit report, which will then put you in a position to get the best rates when you do decide it is time to do your loan, saving you much in interest over the life of the loan. You also need to be educated on which type of loan is best for you, since there are many different options. You do NOT want to have to shop around for a loan because the more times your credit report is pulled, the lower your credit score will go. There is so much involved in the total process and most consumers don't know a lot about it. I would be happy to answer any questions you might have... this is what I do and I often see people going in the wrong direction due to lack of knowledge, which can kill any chances they have of securing a loan. I've seen it happen many times over.

Answer 4

You need to go to a bank or a credit union bank. They have the best rates and cut out all the middle man fees associated with going thru a broker. They will usually give you a rate between 5 to 8 percent and you get to pay interest only. Depending on your credit scores, they require 5% to 15% down. This is the construction loan phase. After your home is complete you will be required to pay off the construction loan off COMPLETLY, which requires to refinance to pay off the construction loan. If you have good equity, which is common in new construction, then you qualify for a better loan. Congrats! And usually the builder requires you take out the construction loan BEFORE they start putting anything in your name.

Answer 5

I assume that you have given a deposit on a new home and are now trying to finance it. You can start now and get a rate "locked". The question is how far in advance would a bank give you the rate? During a normal process, buyers usually lock their rate for 30 or 45 days. It means their interest rate won't go up or down within this period of time, which also includes closing (escrow) period. It's up to an individual bank to set their policies. If you start now, you will have to make sure that your rate is locked until the time your house is built. There is usually a cost associated with the process of getting the rate locked.

Answer 6

If you have contracted to buy the house and the price is set.. the builder should already have the financing in place.. if not.. then just get youself pre-approved for a certain loan amount.. when the house is finished, it will be appraised. The appraised value with tell you how much you need to borrow and because you are pre-approved, it should'nt be hard to finish the financing.. do it yourself through a bank if you can..

Answer 7

Congratulations! I would suggest that you start now, but slowly. Here's what I mean... select a broker that you want to probably work with and have him/her pull your credit and do a strong pre-qual for you. This let's you know exactly where you currently stand and with the right advisor, helps to determine what steps to take between now and buying time to get you most prepared for the best possible terms.

Starting early can uncover an incorrect record on your report and give you adequate time to re-act and remove. Also, it may show that your debt ratio is higher than optimum and give you time to bring it back in line which could save you on your rate percentage. It can also uncover whether or not you should buy, on credit, any additional items (like new furniture) before closing on your new home.

Then, 45 days prior to closing (make sure your builder is on schedule first) do the actual application.

Answer 8

U should start ASAP.
I started to collect all the necessary documents before 2 years of actual movieng into my house.
My elite apartment will be ready in October, 2008 but my docs were ready already half a year ago, so I would be the first in a queque and reserve the best apartment.
Start quickly.

Answer 9

Before you even decide to speak with the bank people about getting a house loan, you need to make sure you or your husband has a credit card's FICO score is good, or else you might get turned down.

Answer 10

As soon as possible that way everything is set in place you don't have to sign anything until the construction is completed, but at least look into the different rates and figure out what is best for you.

Answer 11

We started the loan process before we even started looking at houses to make sure we had the loan before we put in offers. Made the process go alot faster knowing that all we had to do was sign the loan papers at closing then waiting to move in to the house to make sure we got the loan.