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Wayne Pharries
Sr. Loan Officer
NMLS# 710461
940-687-3146 Office
940-867-9955 Cell
940-696-7967 Fax
Sr. Loan Officer
NMLS# 710461
940-687-3146 Office
940-867-9955 Cell
940-696-7967 Fax
New Construction
Buying a Completed New Home
Buying a completed new home is pretty much the same as buying a previously occupied home. You will go through the same process of securing financing and then making a bid, only to the builder instead of a homeowner. The nice thing about dealing with a builder is that the builder is often willing to negotiate for upgrades such as landscaping or sprinkler systems, whereas an individual homeowner is generally not. That is not to say you will get them for free, but you can probably get a better price than if you were having them added yourself after the sale. Also, the Builder will usually provide a ten year warranty on the structure, and pretty much everything that can malfunction will be under manufacturer’s warranty to boot.
Having a New Home Built
There are a couple of options to choose from when building a new home. The most common scenario is having a builder build a home to your specifications on the builder’s lot. In this scenario, the negotiating process is much like purchasing a new or pre-existing home, only you get to choose the colors! After securing financing you will sit down with the builder and decide on a floor plan and the features you are looking for. Then you will negotiate a price. You will not actually purchase the home until it is complete. For this reason the builder will generally want a pretty nice security deposit along with the signed contract.
The second option is to hire a builder to build the home on a lot you own. In this case you will be required to get the construction or "interim" financing in your name. This means you will own the home from start to finish. The loan qualification process is much like any purchase or refinance, but in addition to qualifying you for the loan, you will also have to get the project and the builder approved. We will require a copy of the floor plan, specifications as to the type and cost of materials, and signed construction agreement with your builder. We will also want basic information and references from your builder. Next, we will hire an independent appraiser to review the plans and determine the “as completed” value of the project. This along with the costs of the lot and the construction project will be the basis for your construction loan. When everything is approved you will go to closing, usually at a title company and then you can get down to the business of actually building a home! The construction loan is like a line of credit and as the project progresses, you will request draws on the construction loan to pay the builder. We will schedule regular inspections to make sure the project is on track. When your home is finished most lenders will require you to pay off the construction loan, which generally means refinancing to a long-term or “permanent” mortgage. At First National Bank, however, we offer you the choice of refinancing or “modifying” your construction loan to a permanent mortgage. Learn more about this product on my One Time Close page.
CAUTION: Because building a new home can take anywhere from three months to a year or more, it is your responsibility to make sure that your personal financial situation does not change during this period, particularly if you plan to refinance. You don’t want to build your dream home only to find that you can no longer qualify for the loan when it is complete. Immediately alert your lender as to any changes in your income or personal debt. At First National Bank we are always here to give helpful advice when needed. Of course with the One Time Close option at First National Bank, you will not have to qualify all over again when the home is complete!