As with all home purchases, finding the right lender is just one piece of the puzzle. One of the most important pieces, of course, is finding the perfect home for your family. If you find that to be new construction, having the right lender just became even more important.
Lenders play an important role in ensuring the home buying process goes smoothly. From pre-approving the buyer for the right amount and doing their due diligence to ensure the buyer-provided information is accurate to keeping the file updated throughout the loan process and moving forward through underwriting lenders must work to stay on top of any issues that could come about. Moreover, truly valuable lenders will also foresee any potential problems before they arise.
One of the most basic, but most important aspects of preventing complications throughout the loan process is educating the buyer. Lenders should inform the buyer of the implications of opening new lines of credit, missing a payment or making a late payment, or the change or loss of a job before closing. All of these issues are easily avoidable and will likely have a negative effect on the buyer’s ability to remain qualified for the loan.
In addition to keeping the buyer well informed, lenders must also verify the accuracy of the information provided by the buyer. Most lenders have an online application process, but without reviewing the supporting documents, buyers could be pre-approved for more than they are qualified for. The accuracy of the information can also be affected by the aforementioned changes to the buyers’ income, debt, etc.
Lastly, and perhaps most unfortunately, there can be a low appraisal. Experienced lenders will know how to handle this situation and will have hopefully already educated the buyer to the possibility of this issue. There are a number of ways the buyers and sellers can come together to resolve a low appraisal, but the lender should also know the process for contesting the appraisal value. While it is difficult to do, if the appraiser truly did not value the home properly, the appraisal may be contested and potentially change the value. This can happen in new construction, especially a custom home, where the buyers add cost to the home that the appraiser may not see as added value. New developments also have their own set of difficulties as different builders in the same neighborhood may have vastly different building standards and specifications.
At Michael Lee, Inc., we encourage our clients to work with Adam Will at Tradition Mortgage. Adam has been in the mortgage industry for 10+ years and has a wealth of knowledge in new construction financing. Tradition offers a terrific ‘one time close’ product for new construction financing that many lenders do not offer. Adam is here to help clients interested in purchasing a home and has become a trusted partner of Michael Lee, Inc.!