When it comes to new home construction, some mortgage lenders will work better for you than others. A lender experienced with new construction homes will help ensure a seamless lending process. It’s important to do your research upfront to make sure the lender you choose will work for you – it could save you money in the long run! Here are 5 things to consider when choosing a mortgage lender.
1. Rate Lock Options
A mortgage rate lock is an offer by a lender to guarantee the interest rate of your loan for a specified period. Some lenders offer longer rate lock timelines than others. In most cases, you’re going to want as long of a rate lock period as you can find. If the rate lock period expires, lenders may charge steep penalty fees. Unexpected delays can happen in new construction, so be sure to know the lender’s rate lock penalty fees or forgo a rate lock altogether.
2. Paper Appraisal
Most builders require a paper appraisal based on floor plans and specifications upfront before construction begins. Some lenders, such as national banks or online lenders, are less likely to allow paper appraisals, which could jeopardize your contract.
3. Appraisal Fee
If a paper appraisal is required by the builder, you will likely be paying two appraisal fees: one for the paper appraisal and another for a final inspection when the house is complete. Find out what your lender charges for appraisal and final inspection fees, and see if you can negotiate them.
4. Appraisal Certification Timeline
Appraisals can expire, and depending on your lender, that date of expiration can vary. If the appraisal expires before the closing date, the lender will require recertification on the appraisal, which may cost you more money in appraisal fees.
5. Certificate of Occupancy Timing
In most cases, the builder will obtain the Certificate of Occupancy (CO) just a few days before the closing. Some lenders require a copy of the CO before the closing, but others require it prior to sending the Closing Disclosure documents, which must be sent a minimum of 3 business days before the closing. Depending on the lender’s requirements, this could delay the closing date as most builders don’t build in extra time for lender requirements.
An experienced REALTOR® can give recommendations and help you choose the best mortgage lender for your needs. Visit our agent page or contact us today to speak with one of our knowledgeable agents!
