Whether you’re purchasing a new construction home or an existing home, one of the first steps every homebuyer needs to consider is financing. Of course, it goes without saying that solid credit scores and large down payments are the two surest ways to secure better loan terms for your mortgage, no matter what your purchase plan. But what actually differentiates financing a new home in Canton, Michigan, versus an existing home? Let’s take a look.
The first step to financing your home is finding the right lender. Many homebuyers looking for lenders for an existing home will be on their own during this phase. Since most buyers don’t know the ins and outs of what to look for in a mortgage, searching on their own can be both stressful and confusing.
One advantage of working with a reputable new home builder is the many resources they bring to the table. One such resource is a stable of professional, experienced lenders. Evergreen Homes has assembled a list of preferred mortgage lenders who have successfully helped countless Evergreen Homes buyers obtain their new homes in Canton. Evergreen Homes' preferred lenders consistently earn top ratings from customers while making their dream home a reality. Working with a mortgage lender who understands the new construction process and the different options for financing a new construction home can save homebuyers money and stress throughout the process. Using reliable recommendations for lenders can take anxiety, pressure, and time out of trying to find the right lender and loan on your own.
The Payment Plan
The next major difference between financing an existing home versus a new construction home is the payment plan itself. For most existing homes, you’ll be expected to make a sizable down payment up front followed by regular monthly payments until your complete home cost (with interest) has been paid.
For new construction homes, on the other hand, that first sizable down payment will be broken into a series of draws during the first six to twelve months, which can afford favorable flexibility if you’re unable to make a single, large payment. (Of course, this applies to homes you are customizing while building, but keep in mind that your builder may have alternate payment plans for quick move-in homes, giving you the flexibility to choose the plan that works best for you.)
Since each of these draws goes toward financing specific stages of your home construction, you’ll be able to see your money directly at work in your new home. After construction, you will then follow a regular monthly payment plan to finance any outstanding construction expenses.
The final financial decision you’ll make pertains to warranties. When purchasing an existing home, you may have the option to purchase a warranty plan, but usually the go-to option is homeowners insurance alone. Builders of new construction homes, on the other hand, offer 1-year warranties, 2-year warranties, and 10-year warranties (depending on the items) as a standard benefit with all of their new homes. These warranties cover more extensive issues than insurance policies can.
Flexibility and Security
While buying a new home in Canton and buying an existing home both require comparable payments and rates in the long run, buying a new home often affords more comfort in selecting a lender, more flexibility in making your payments, and more financial security after the purchase.