You’re shopping around on the new home market, but did you know the loan process can vary between a new construction and a resale? To help you understand the key differences, Senior VP of Shea Mortgage, Scott Pocock (NMLS #262159), shares answers to the top six questions about new home mortgages and financing through a homebuilder.
Q1. What are the main differences between home loans for resale and new construction home loans?
Scott: Almost everything is fixed at the time of writing the resale home contract such as price, interest rate, mortgage amount and closing date. New construction home circumstances evolve over the time it takes to build your home, as you still can put down additional deposits and select options and upgrades, thus changing your sales price, loan amount, and your interest rate can change over time.
Q2. How are down payments different for a new construction home?
Scott: Shea homebuyers have the flexibility to make changes to your home’s features and upgrades, which may change the overall price of your home, potentially altering the amount of the down payment required. You are also able to continue to contribute deposits to your down payment throughout the construction process, potentially changing your loan amount and interest rate. Shea Mortgage tracks all of these moving parts you, so you know that your final sales price is accurate and up-to-date.
Q3. If someone is looking to obtain a loan for a new construction home, what are some of the questions they should ask a potential lender?
Scott: New construction financing can be very different. Understand your lender’s process for:
- Keeping up with the many changes that occur over the entire transaction
- Updating your file to coincide with the construction completion date
- Obtaining all the required documents from the homebuilder (addendums to the purchase contract, final inspection, project approval info, etc.)
Q4. What is the process for obtaining a home loan for new construction?
Scott: Typically, the mortgage financing is as follows:
- Prequalify with the lender up front, before writing a purchase agreement
- Apply for and get your loan approved within 30 days
- Provide ongoing documentation on any contract addendums and change orders, multiple deposit checks, and different disclosures as the loan amount changes
- Update your loan profile with the most current information 60-75 days prior to home completion
- Coordinate the construction process, sales process, design process, and title process to coincide with the mortgage timing and closing
Q5. How is obtaining a loan through the builder’s affiliated lender potentially an easier solution than working with a third-party lender?
Scott: Generally, the affiliated lender and homebuilder are in constant communication. Any changes to your contract, deposit, and rates are streamlined. Also, because the lender is part of the builder’s “team”, they can coordinate all of the different financing processes, so you can stay up-to-date with your construction progress and move-in timeline.
Q6. Why use Shea Mortgage?
Scott: If you are buying a Shea home, Shea Mortgage ensures that your loan process is as smooth as possible. We take the time to walk with you through every step, from the initial pre-qualification to the final closing costs. We take the time to provide clarity of all the mortgage financing steps. Additionally, other lenders may not have as much experience with the unique process of a new construction home financing. Shea Mortgage has access to more accurate information on things like HOAs, taxes, Mello-Roos, and construction timelines. Lastly, working with Shea Mortgage when buying a Shea Homes will save your countless hours of work and potential frustration, as we coordinate all the activities with Sales, Construction, Design, and Closing.
Ready to find the home of your dreams? Explore our new homes available, then contact Shea Mortgage for more information on loans and to get the new construction home loan process started.
BUYERS ARE NOT REQUIRED TO USE SHEA MORTGAGE, ARE FREE TO USE ANY LENDER OF THEIR CHOOSING, AND ARE FREE TO DECLINE ANY INCENTIVES TIED TO THE USE OF SHEA MORTGAGE. SHEA MORTGAGE IS AN INDEPENDENT MEMBER OF THE J.F. SHEA FAMILY OF COMPANIES. LENDING IN: ARIZONA: ARIZONA DEPARTMENT OF FINANCIAL INSTITUTIONS LICENSE #0904079, NMLS #40397. CALIFORNIA: NMLS ID #40397, CA BUREAU OF REAL ESTATE LICENSE #01197403. COLORADO: COLORADO UNIFORM CONSUMER CREDIT CODE SUPERVISED LENDER LICENSE #988132. FLORIDA: FLORIDA OFFICE OF FINANCIAL REGULATION LICENSE MLD111, NMLS #40397. NEVADA: STATE OF NEVADA DEPARTMENT OF BUSINESS AND INDUSTRY DIVISION OF MORTGAGE LENDING LICENSE NUMBER 4111. NORTH CAROLINA: NORTH CAROLINA COMMISSIONER OF BANKS MORTGAGE LENDER LICENSE #L-106078, NMLS #40397. TEXAS: SML MORTGAGE BANKER REGISTRATION – MLS – 40397. VIRGINIA: STATE CORPORATION COMMISSION BUREAU OF FINANCIAL INSTITUTIONS LICENSE NUMBER MC-5849. WASHINGTON: WASHINGTON DEPARTMENT OF FINANCIAL INSTITUTIONS CONSUMER LOAN LICENSE #CL-40397