Financing a to-be-built home differs from financing a resale in one important way: there's a gap of several months between when you agree on a price and when you close. That gap is where most financing questions come from.
Pre-Qualification vs. Pre-Approval
Pre-qualification is an estimate based on what you report. Pre-approval involves documentation and a credit pull, and carries far more weight. Get pre-qualified to shop; get pre-approved before you sign.
Rate Locks on a Build Timeline
A standard 30- or 45-day lock may not cover the time it takes to build a home. HLX Mortgage can offer an interest rate lock through the duration of your build. If you use another lender, ask about the extended-lock products they offer for new construction and what each costs.
Points, Credits, and Buydowns
Discount points buy a permanently lower rate. A temporary buydown lowers your rate for the first year or two, then steps up. Which is better depends entirely on how long you plan to hold the loan — run both against your realistic time horizon rather than the 30-year term.
How Builder Incentives Work
Builder incentives vary by community and time of year. Compare the total cost of any incentive package against your outside lender's best offer, and ask for both in writing.
What Can Derail an Approval
- Opening new credit — a car loan or a store card — between approval and closing.
- Changing jobs, or moving from salaried to self-employed.
- Large unexplained deposits into your accounts.
- Paying off a collection right before closing without telling your lender.
