New Construction vs. Existing Homes: What Experienced Buyers Should Know About Financing a New Build

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You’ve been through the homebuying process before, maybe even more than once. You know how to get pre-approved, you’re familiar with the closing process and you’ve learned what to expect when buying a resale home. However, if you’re considering purchasing a new construction home for the first time, there are a few key differences you’ll want to be aware of.

Longer Timelines for To-Be-Built Homes

While a resale home might close within 30-45 days on average, a new construction home is often built from the ground up. Depending on the building stage when you sign the purchase agreement, your home’s closing could be months away. This longer timeline will affect several parts of the mortgage process, from rate lock strategies to the documentation you’ll likely need to resubmit throughout the building process.

However, these longer timelines are worth it to many homebuyers who want a home tailored to their family’s needs. With a clean slate, you can also choose from various countertops, cabinet finishes, fixtures and even add in some smart home upgrades! With these personalized touches, it will truly feel like home from the moment you walk in.

Locking in Interest Rates

With an existing home, you might lock in your interest rate soon after signing since your closing date would be just around the corner. However, with new construction homes, your closing date could be months away. Many lenders offer extended rate lock options or programs like builder forward commitments that can help you strategize locking in your rate while your home is being built. These features are subject to eligibility and may not be available in all areas. Speak to your Loan Team to learn more!

Resubmitting Documentation

One surprise that many experienced buyers may notice when buying a new construction home is that your Loan Team may request similar documents throughout the loan process. This is common for longer homebuying timelines as documentation may need to be re-verified as you are near the end of the loan process. It is important for lenders to verify that the information provided in the early stages of your loan is still accurate.  

It’s completely normal to be asked for updated documents throughout the new construction financing process. Here are some reasons why:

  • Documents expire. Unlike buying an existing home, building a new home takes more time and certain documents, like bank statements and pay stubs, are only valid for a certain period of time. These documents may need to be refreshed during the duration of your new home build.
  • To verify nothing has changed. Lenders will want to confirm that your financial situation has remained consistent leading up to your home’s closing.
  • Regulatory requirements. Mortgage lending is heavily regulated, so lenders are often required to be very thorough throughout the lending process.

We know it can feel repetitive, but every request helps ensure your loan can be finalized smoothly and on time!

Don’t Want to Wait? Consider a Quick Move-In Home!

Want the benefits of a new construction home, but not the wait? Many builders offer quick move-in homes that are already built or nearing completion. These homes come with all the perks of a new build – new systems, modern layouts, builder warranties, all with a faster timeline! Note that these quick move-in homes may not be available in all areas. Speak to your Sales Team to learn more!

Thinking of buying a new construction home? Learn more about how our financing process works!

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