Obtaining New Home Mortgage Loan Should be Quicker
There may be a few differences in obtaining a new home mortgage loan rather than obtaining a loan for an existing home, primarily in the inspection process. However, additional time may be needed for a first-time home buyer with a limited credit history. The amount of money usually involved in home mortgages makes many lenders nervous especially if the loan is to purchase an existing home. Lenders are normally more comfortable with a new home mortgage loan because they can guarantee the quality of the house.
When a loan is applied for on an existing house, there are several inspections that should be done to protect both the buyer as well as the lending institution. Financially, the title has to be researched to determine if any past due liens have been placed against the deed. This could include mechanic's liens from construction crews that were never paid and may have gone unnoticed. If the home has been in the same family for a long time, some liens could be decades old. Until they are cleared from the deed, the home should not be sold.
There are also inspections for things like termites and mold that should be conducted before transferring a deed. Most buyers should insist on some sort of warranty on major appliances such as the furnace, hot water heater and even an inspection of the chimney to be sure the house isn't going to fall apart the day after the deed is transferred.
New Homes Need Fewer Inspections
On a new home mortgage loan, some of the inspections can be overlooked such as an appliance warranty as since the home is new, all appliance should have a manufacturer's warranty as well as a warranty from the contractor on major components of the house. The deed should be clear, but verifying a clean title to the property should be conducted to insure someone from the past will not file an ownership claim.
The tough part of a new home mortgage loan will be the buyer's finances and their ability to meet the loan payments as well as the cost of insurance and basic maintenance. Their job history also becomes part of the loan application process and in many cases, even with a blemish or two on their credit history, they should qualify for a new home mortgage loan provided they show a willingness to meet their financial obligations.
Between having a brand new home with everything that can go wrong under warranty for the first few years, costs should be minimal. Meeting the payments and having a decent credit history a new home mortgage loan should pass the process easily.
