When you are ready to purchase a home, you have a plethora of options. From condos to single family residences and from older properties to new construction. If the idea of selecting your own finishes, paint colors and flooring options is appealing, new construction is probably the way to go. Here are 5 things you need to understand if you want to use your VA loan on new construction
Builders come in all shapes and sizes, from national companies to smaller local operations. Review and talk with several builders before deciding who you want to work with. Weigh their responsiveness, and personality in addition to their home options. You'll be working with this builder for what could be several months; you want to make sure they are a good fit.
Have a particular neighborhood in mind? You may not have to use the builder developing the subdivision. If you have a different builder you'd prefer talk with them about the neighborhood and see if there's potential for them to obtain a lot.
Some builders already have them, others don't. A builder who already has a VA Builder ID could be a good sign, because they have been proactive in obtaining the Builder ID and completing the paperwork. And those who already have their Builder ID may have closed one or more VA Loans already. But if you've found a builder you love and they don't have a VA Builder ID, don't worry. Your Veterans United loan officer can walk them through the paperwork to register with the VA. It's not typically a lengthy process; in most cases and ID number can be issued in just a couple days.
Some builders like you to use one of their "preferred" lenders. Some of these preferred lenders may have significant VA loan expertise and fantastic customer service. Others may not. Understand that you don't have to use one of the builder's preferred lenders. Weigh your options in regards to interest rate, VA loan expertise and overall customer service experience. Again, you'll be working with your loan officer for as long as you are working with your builder. You want to find one that's a good fit and meets your needs.
The process of building a new home can take months. During the home build it's important to stay in contact with your loan officer and follow their advice regarding credit and income. Now is not the time to switch jobs or apply for new credit lines. Keep your income and employment stable. If something unexpected arises, talk it over with your loan officer right away. Avoid making large purchases or opening new lines of credit for things like vehicles, furniture and appliances. Many consumers apply for store credit cards without realizing their mortgage company will be notified. Keeping your credit stable or even improving it is key when building a new home.
Some buyers are tempted to try to gain early occupancy and move in before the home is complete. Things like no sod, uncapped electrical outlets or an unfinished deck can be safety or structural hazards for you and your family. Your builder will have to obtain a certificate of occupancy and provide it to your lender as well as receive final sign-off from the VA appraiser prior to closing.
Building a home from scratch can be pretty exciting and the anticipation really builds up as you prepare for your big move. Keep these facts in mind and you'll be set for a smooth closing.
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