How to Buy a House From the Builder
Buying a new home is both challenging and exciting. If you are searching for a brand new home that does not have the past owner written all over it, consider a home being sold by the builder. Once you find homes that are workable, and you have narrowed down the style you really like, there are some steps to take that will help protect you in the offer process.
Other People Are Reading
Things You'll Need
- Real estate agent
- Mortgage pre-qualifying letter from lender
- Check
- 30 days of pay stubs
- W2 Forms from two years
- Banking statements (two months) or proof of assets
Instructions
-
-
1
Get your credit and finances in order. Go to annualcreditreport.com and get a copy of your credit reports for free. Order credit score (there will be a small cost). Credit is crucial in getting approved for a mortgage, and the scores should be at least 640 or higher. Look over the reports when you receive them. Check for errors and duplications. If you find any, dispute them by calling the customer service number listed on page one of each credit report. Also, check your credit card balances. If they are higher than 30 percent of your maximum credit lines, paying them down will increase your credit scores. For score and credit help, go to myfico.com. Gather your income documents (two years of W2s, pay stubs covering 30 days, banking or asset information proving down payment money).
-
2
Make an appointment with a mortgage company. Get pre-qualified and a letter proving that you are in the process of gaining loan approval. The lender will assess your liquid assets and let you know the amount of mortgage you can afford and a close figure of down payment and closing costs based on an estimated sale price.
-
-
3
Consider hiring a buyers agent to represent you in the buying process. The builder will have agents, so it may help to have your own representative. The builder, or seller, will pay real estate processing fees, half of which would go to your agents' company, so it generally will not cost the seller anything extra. A buyers agent will show you all the positives as well as the negatives involved in your home selection, and assist you in your contract presentation, adding clauses that will protect you, and making a reasonable offer that can save you money.
-
4
Select the home that suites you best. Talk with the builder about colors of carpet and lighting (if they are not installed already), and see if the budget allows for upgrades of flooring or other items that may not yet be installed. Your buyers agent can add upgrades to the contract, and will make your offer to the builders agent. Once the contract has been accepted, all details will be finalized. If there are any changes made to the contract, the agent will need to assist in renegotiations.
-
5
Give your finalized contract to the mortgage lender so that an appraisal can be ordered, and loan processing can be completed. Prior to closing, a walk-through should be done at the home to make sure all upgraded work is completed. Have your agent present, and take notes. Report uncompleted work to the builder. If the home wasn't completed when the appraiser took photos, a final inspection will need to be done and sent to the lender prior to closing the sale. The lender will schedule a closing date and time when all documents are cleared and the lender issues a "clear to close" message.
-
1
Tips & Warnings
If incomplete work is still remaining, and you schedule the closing anyway, have an addendum in the contract with the builder stating that the remaining items will "survive the closing" meaning that they remain outstanding (live) after everything else in the contract has been fulfilled and the contract is technically dead.
Closing dates often change since so many last-minute items can hold up closings. Ending leases can be troublesome when you do not know exact dates, yet somehow you have to remain flexible.
