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May 9, 2018

What You Need To Know About Home Mortgages

Not long ago, we saw historically low interest rates for home mortgages, which prompted many prospective homebuyers to take action. The interest rates have risen—and will likely continue to do so—but you can still get a good rate. The path to homeownership can be confusing for some people, particularly the financing process. Before you listen to the naysayers, learn what’s really involved in securing financing for a new home. Alvarez Construction Company can tell you what you need to know about home mortgages, and here’s a start.

You can still be approved for a mortgage with a credit score less than 720. This is the first myth we hear about the homebuying process. You could qualify for a conventional home loan with a minimum credit score of 620. With programs like government-guaranteed Federal Housing Administration (FHA) home loans, you might qualify to buy a new home even with a credit rating of below 600. However, if you are pre-approved for an FHA mortgage, the lower your credit score, the higher the down payment you must provide. For example, if your credit score is 580 or above, you could qualify for a 3.5% down payment. If your credit rating falls between 500 and 579, you’ll be required to submit a 10% down payment. When you work with a knowledgeable lender, you can explore a wide variety of options for your mortgage.

Your mortgage includes more than the cost of the home. Prior to closing on your home, you will receive a HUD Settlement Statement from your loan officer. This document outlines all of the costs associated with purchasing your home, including property taxes, homeowner’s insurance, and HOA fees (if applicable). It could include closing costs, such as points, appraisal fee, credit report, survey, title search, legal fees, and a wide array of other charges. In some cases, a seller will agree to cover some of your closing costs. Alvarez Construction will roll your closing costs into the mortgage, so you don’t have to come to the closing with that cash on hand.

You can purchase a new construction home without a construction loan. When you choose to build a new home rather than purchase a resale, you don’t to secure a construction loan and then convert it to a mortgage when the home is completed. That requires two closings and additional closing costs. You only need pre-approval for your home loan to get the process started with Alvarez Construction.

Pre-approval is the first step. Before you search for a new home, you should choose a lender and obtain pre-approval for a mortgage. While this is not a guarantee that you will secure a home mortgage, it’s a good indicator of your success or any potential obstacles. When you are pre-qualified for a mortgage, you know how much you can expect to borrow, so you can shop with confidence. A pre-approval letter from the lender also shows the seller that you’re a serious buyer with the means to purchase a home. Mortgage pre-approval is a simple process. You’ll need to provide your name, address, and Social Security number so the lender can pull your credit report. You’ll also provide proof of employment (e.g., pay stubs), recent bank statements, and the past two years’ income tax returns.If you’re curious to see what your monthly mortgage payment would be, use our mortgage calculator.

Buying a new construction home allows you to choose the details so you buy the home that reflects your lifestyle. You also buy a home that is 100% move-in ready and fully warrantied. There’s nothing to do but unpack and relax. In the Baton Rouge area, Alvarez Construction Company offers a variety of exceptional communities and distinctive floor plans, with many options to personalize. We currently have a selection of quick move-in homes that are ready for purchase right now. Take a look at where you could be living, and talk to us about turning your dream of owning a new home into reality.

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I've never had a brand new home before. I enjoyed watching the development of my home by stopping by regularly from start to finish. It was great watching the selections I made come together. I love my new home.

Becky Robin
Cella Gardens
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