The below article by colleague and one of my preferred lenders Nevin Williams, couldn't have been timed any better!
As some buyers set their eyes on the new and beautiful Lennar Homes, Aubry at Alamitos Ridge homes for sale in Long Beach, buyers need to be made aware of some of the possible pitfalls of obtaining a certain type of loan when it comes to buying newly constructed homes. First and foremost, buyers need to make sure they obtain unbias representation for themselves by using a good Realtor® before registering or signing any contracts with the builder! It is a free service to buyers and a cost to seller alone. REMEMBER BUYERS, THE SALES CONSULTANT IN THE AIR-CONDITIONED OFFICE NEXT TO THE MODEL HOMES WORKS FOR THE SELLER AND BUILDER! When using their lender to get a few thousands towards closing costs, make sure you have someone on your side who has access to those who can read the fine print, ensuring that you are getting the best possible rate and that you aren't going to pay for the house over and over again.
Some home builders are including in their contracts a 1% fee to be paid to them every time the house is sold for up to 99 years. The money is nothing more than profit for the builder and is not used for up keep or any type of property improvements. Lenders are getting keen to this and reviewing contracts very carefully looking for this clause.
If the lender sees this clause in the contract they will likely deny the buyers home loan. Lenders will be on the hook to try to sell a home with an additional 1% fee everytime the property is sold making it harder to sell in a case of default. Anything that adds a layer of risk will either cause the lender to adjust the interest rate to reflect that risk or they will simply deny the loan altogether.
Just when a Realtor thought their job was hard enough. Now you will want to comb through these builder contracts very carefully before assisting your buyer through the process. I would even recommend a full underwriting approval on all new construction homes to protect your buyer form a possible loan denial. If the underwriter reviews the contract and the buyers qualifications and approves the file then you would have significantly reduced the likelihood of problems.
If you are in the states of WA, OR, CA or NC we will gladly package a loan without a property address and submit it for underwriting allowing you the peace of mind that the loan shouldn't become an issue. E MAIL or (888) 206-5781 Otherwise ask your favorite trusted lender to do the same. Of course one could take the simpler approach and focus mainly on existing homes.
North County
*1902 Wright St 2nd floor Carlsbad CA 92008
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2990 Jamacha Road #136 El Cajon CA 92019
Nevin Williams NMLS #69651
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Andi - Thank you for the re blog! I just posted today one about buyers trying to buy new homes without an agent.
Good stuff Nevin and thanks for offering to package a loan without a property address and submit it for underwriting, to see what's in the loan that could possibly be an issue. Keep it coming!