A new construction home is a property where you live after the construction company has completed the process. However, it happens in different ways. For instance, you may purchase an empty land from the developer and choose from a different home design option. After choosing the design, the builder will start constructing the home.
Purchasing a new home is an exciting time for buyers but a stressful process for many buyers. It is crucial to set your expectations from your home builder. Whether you are a first-time buyer or want to move into a newly constructed house, you need to understand the closing process of new construction home.
The closing process, also known as settlement or escrow, involves the buyer and seller. It is an essential process when you purchase a newly constructed home. In today’s article, we will discuss some important things you need to know before closing on a new construction home.
Develop a Solid Plan
Closing on a new construction home requires careful planning and preparation. The closing process occurs two months after the contractor installs your countertops. However, it also depends on your home size and the surrounding community. Your home consultant will schedule the closing date and provide you with detail on the walkthrough.
We recommend checking with your lender if you want to finance your home, especially after you receive the closing schedule. The purpose is to ensure the bank or lending company receives enough information or documents to process the loan.
Remember, it is essential to perform an appraisal for the type of arranged financing. At the same time, you need to make efforts to secure your homeowner’s insurance policy. Consult your insurance agent to help you throughout the process.
Check the Details One Month before Closing
Checking the details 30 days before the closing process can help you avoid complications. Keep an eye on your email inbox for a confirmation letter that includes essential information on the title company to carry out the closing process.
Because a title company requires funds 24 hours before the closing process, the staff will send you an email with all the wiring instructions. The letter will also include a list of utilities, and you can also set up or transfer these services to your new construction home.
Schedule Third-Party Inspection
A new home contract consists of general conditions addendum with a home inspection option. You can hire a licensed, experienced, and skilled property inspector to inspect your new construction home before closing.
Bear in mind that you will have to pay for the third-party inspection because the builder does not schedule it. Therefore, contact a home inspector to get information on the home inspection process. You can also talk to the builder about details on scheduling the inspection. Continue reading!
Analyze the Closing Disclosure
Analyzing and reviewing the closing disclosure is necessary when you plan to buy a new construction home with a mortgage loan. Contact your bank, lending company, or creditor to provide you with all the necessary documentation.
On the other hand, if you want to purchase the home by paying cash, ask the title company to provide you with the disclosure. The closing disclosure is an important document that highlights the down payment, the money you have already paid, and the closing costs.
Make sure you compare fees mentioned in the closing disclosure and analyze the loan you received from the bank or lending company. The purpose is to avoid complications, discrepancies, and correct errors before the closing process completes.
Decide on the Payment Method
The law prohibits buyers from using personal checks for new construction home closing. Therefore, you have to decide the payment method. For instance, you can use the wire transfer method or bank cashier’s check.
It is crucial to make arrangements a few days before the closing process if you want to use the wire transfer option. Work with your bank and the title company to make preparations before the closing process.
On the other hand, if you want to use the cashier’s check option, work with your bank to make arrangements. You can request your bank to provide you with the cashier’s check. Make sure you check the amount mentioned in the closing disclosure.
Many people find it challenging to streamline the closing process on a new construction home. However, if you make a solid plan, prepare well, and follow a step-by-step approach, you can achieve your goals. We recommend consulting a qualified professional or company to know all the necessary information and prepare yourself for the closing process.