The first step in the home construction process is to get pre-qualified for your loan with a lender before you do anything else. Most people will choose to either visit their bank to apply for their loan or fill out their loan application online, where numerous lenders will compete for their business. After verifying your employment, credit and a variety of other items, the lender will send you a formidable package of paperwork to sign, which is the actual loan package.
Once approved, the lender will issue a commitment letter with a cap amount for your loan. In addition, you will know your approximate interest rate, the terms of the loan, and your monthly payment. This letter will come in very handy as you move through the other parts of the home construction process.
An important thing to remember is that lending standards are much more rigorous than they were several years ago. It is critical that your financial position, including the amount of debt that you are carrying, does not change. Prior to closing on your loan, your lender is going to re-verify everything in your loan package to make sure you are still qualified for the loan. If you are not, then you will not be able to close on your new home.
The reason it is important to get qualified first is that when you move thru the next steps you will be able to show potential land sellers or builders that you are a serious buyer. In today’s economy, qualified buyers are what all builders are fighting for! Although tedious, remember to be patient through this process, because it will pay off later.
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