New Homebuyer Questions

New Homebuyer Questions

This portion of our site has been designed to assist new buyers during and after the purchase of your home.

The information presented here will answer many questions and prepare you for each step of the new home experience, making this exciting time easier.

Purchasing a new home is an exciting experience. The process is also complex, with many details to be decided and arranged. The chronological list that follows outlines the events that typically take place leading up to and shortly after the purchase of a new home.

Applying for Your Loan
Once you have signed the purchase agreement, finalizing the details for financing is next. To assist you, your Builder or Realtor may suggest lenders appropriate for your specific financial situation.

The first item you’ll need to take care of is the selection of a lender and completion of a mortgage application. Plan to accomplish this within five business days of signing your purchase agreement. Take the completed purchase agreement with you when you first visit your lender. Your lender’s job is to understand your particular financial circumstances completely. You will review all information on the application at your meeting with the loan officer. A situation rarely arises that your loan officer has not encountered in the past. Do not hesitate to discuss any questions you have regarding your assets, income, or credit. By providing complete information, you prevent delays or extra trips to deliver documents.

Loan Application Checklist
The amount of documentation and information required for a mortgage can seem overwhelming. You can facilitate the application process by collecting as much of the needed information as you can before your appointment. The checklist that follows is a general guide to assist you with the loan application. Some of the items listed may not apply to you and your lender will probably request some items that we have not mentioned, but this list will get you off to a good start:

Property Information: The purchase agreement will include the legal description of the property and the price.
Personal Information: Social Security number and driver’s license for each borrower.
Home addresses for the last two years.
Divorce decree and separation agreements: if applicable.
Trust agreement: if applicable.
Income: Most recent pay stubs.
Documentation on any supplemental income such as bonuses or commissions.
Names, addresses, and phone numbers of all employers for last two years.
W-2s for last two years.
If you are self-employed or earn income from commissioned sales, copies of last two years of tax returns with all schedules
and year-to-date profit and loss for current year, signed by an accountant.
Documentation of alimony or child support, if this income is considered for the loan.
Real Estate Owned: Names, addresses, phone numbers, and account numbers of all mortgage lenders for the last seven years.
Copies of leases and two years of tax returns for any rental property.
Market value estimate.
Liquid Assets: Complete names, addresses, phone numbers, and account numbers for all bank, credit union, 401K, and investment
accounts.
Copies of the last three months statements for all bank accounts.
Copies of any notes receivable.
Value of other assets such as auto, households goods, and collectibles.
Cash value of life insurance policies.
Vested interest in retirement funds or IRAs. Liabilities
Names, account numbers, balances, and current monthly payment amounts for all revolving charge cards. Names, addresses, phone
numbers,
and account numbers for all installment debt and approximate balances and monthly payments for such items as auto loans and mortgages.
Alimony or child support payments.
Names, addresses, phone numbers, and account numbers of accounts recently paid off, if used to establish credit.

NOTE: You will be asked to pay for a credit report and an appraisal upon signing the application.
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Loan Processing
Once you have given all preliminary information to your loan officer, your lender sends verification forms to your employers, banks, and current mortgage company or landlord and also orders a credit report and appraisal. You must first sign a release to authorize these steps. Your lender will provide you with a Good Faith Estimate and a Truth-in-Lending Disclosure.

The Good Faith Estimate lists the costs you will incur at closing. Some of the numbers listed on this form are prorations, subject to change based
on the actual date of the closing. Others are set fees that should remain the same.
The Truth-in-Lending Disclosure shows the total cost to you, over the term of the loan, for your specific financing. The calculation is based on
the assumption that you own the home and make regular payments throughout the term of the loan.
The lender sends Verification of Employment (VOE) forms to all employers for the last two years. The employers complete, sign, and return the
forms to the lender. The forms show the dates of employment, the amount of money you earned last year, and how much you have earned so far
this year. The VOE documents bonuses and overtime you earned.
Verification of Deposit (VOD) forms go to each banking institution listed on your application. The institutions indicate the date you opened
each account, average balances for the last three months, and the amount of money you have in each account on the day they complete the
form. Any loans or overdraft accounts you have with the bank will also be shown.
Mortgage companies and landlords complete Verification of Mortgage (VOM) forms.These show the lender how much you owe, the amount of
your monthly payment, and whether you make your payments by the due date.
Your credit report shows the amounts of money you owe to each of your creditors, minimum monthly payments, and your payment history.
The appraisal confirms the value of the home you are purchasing for you and your lender.

Typically, several weeks pass as these reports and forms are returned to the lender. If any delays are encountered, the loan officer may contact you for assistance. The credit reporting agency may call you to verify that the information they have gathered is correct.

Once the loan processor has collected this standard documentation, you may be asked to write letters describing your assets, income, or credit. Few loans are finalized without requests for additional information just before the package is submitted to the underwriter for final approval. At this point you may become frustrated with the loan process. Please remember that your lender requests these letters to assist you in obtaining your financing. Do not hesitate to discuss your concerns with your loan officer. Perhaps he or she can provide some additional insight on what may seem to be redundant requests.

Before the processor submits your file to the underwriters for final approval, he or she will verify the final sales price. Make sure that copies of all addenda such as change orders signed after the original purchase agreement was completed have been sent to the lender. This assists the lender in determining the exact loan amount. If change orders affect the total price after this point, you may have to resubmit your loan application for the higher amount or the lender may ask you to pay for the additional items in cash.
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Loan Approval
During your first meeting, you and your lender determine the timing to obtain prequalification. This allows your chosen Builder to start the home even though final approval is still pending. You will discuss additional items that you may need to obtain final loan approval. Several weeks after your first meeting with the lender, you should receive loan approval. If any of the documents requested have not been returned to the lender in a timely manner, approval may take longer.
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Contingencies
Loan approvals often carry conditions of approval. The sale of a previous home or proof of funds are two examples. Discuss any concern you may have about such conditions with your loan officer and obtain any requested documentation as soon as possible. Once all contingencies are met, the final loan can be approved.
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Loan Lock
The only thing anyone knows for certain about interest rates is that they will change. Do not rely on anyone’s predictions regarding rates. Locking your rate prematurely can result in extra expense if your new home is not complete in time to close within the lock period. Your Builder should always update you throughout the process of construction on the expected delivery date, unless they reach a point in construction where factors outside thier control can no longer affect the delivery date, the decision to lock your loan is at best a gamble.
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Limited Warranty
The Limited Warranty standards should be outlined for your review. Please take careful note of the procedures for obtaining service.
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Some Names You Should Know
Two-way communication is vital to a mutually satisfactory relationship. Understanding what is happening and knowing who to contact can smooth the home-buying process. We believe that it is a joint effort of the Buyer and Builder to establish and maintain clear lines of communication. The professionals listed below are glad to assist you or find the answers to your questions.

Builder’s Sales Consultant
Lender
Interior Designer
Title Company
Real Estate Agent

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Purchasing Your Home
You will use several standard forms when you buy your new home. These include the purchase agreement and several addenda. All parties must sign all forms and attachments before the purchase agreement becomes binding.

1) Purchase Agreement and Addenda The purchase agreement is the legal document that represents your decision to purchase a home. It describes your home (both a legal description and the street address), financing information, homeowners association information, if applicable, and additional legal provisions. Several exhibits are typically attached to the purchase agreement. The features of the community determine the specific items. Please take the time to read all documents related to your new home purchase carefully. Your sales consultant should assist you with any questions you may have.

2) Selection Hints Your Builder should provide you with selection sheets that list the choices you need to make. Schedule plenty of time to visit suppliers’ showrooms to make your selections as soon as possible. Plan to finalize your selections within 30 days of signing your purchase agreement. Your prompt completion of these selections helps prevent the delays caused by backorders. Please be thorough. Costly errors arise from assumptions and incomplete selection sheets. Decorating choices that exceed the specified allowances, such as those for floor coverings, countertops, or light fixtures, will require additional payment. Although such amounts can be credited to you at closing and subsequently added to your mortgage, they are not refundable. You are welcome to bring cushions or swatches to showrooms to coordinate colors. View color samples in both natural and artificial light to get an accurate impression of the color. Variations between samples and actual material installed can occur. This is due to the manufacturer’s coloring process (dye lots) and to the fact that over time, sunlight and other environmental factors affect the samples. Your homeowners association and selections your future neighbors have already made may limit some of your choices for exterior finish materials. The sooner you can make your selections, the greater the number of choices you have. Driving through the area to view existing homes is one way to select exterior colors. Selections often look different on a full-size home. Some Builder’s reserve the right to place a hold on your selections until your lender has approved your loan and all contingencies are released. If suppliers have discontinued any of your selections, you should be contacted and asked to make an alternate selection within five days. Occasionally, a home is already under construction so your Builder should have some or all of these choices on record. Please retain your selection sheets for future reference. They are useful for matching paint colors, tile grout, and replacement items in your home.

3) Custom Changes The possibilities for your new home far exceed the popular ideas suggested on any option and upgrade lists. In addition to the available options, you may have custom features you want to incorporate into your new home. Think, dream, imagine…the sky is the limit! Please keep in mind that your new neighbors have this same opportunity and may request still other features. Your Builder will be able to provide you with pricing on duplicating such items in your home. In order to deliver your home as close as possible to the target date, many items are ordered well in advance of installation. Once a particular item is ordered, making further changes may involve an adjustment in the planned delivery date and additional costs. By working within the boundaries of the change order schedule, you can usually avoid both.

4) Construction of Your Home The construction of a new home differs from other manufacturing processes in several ways. By keeping these differences in mind, you can enjoy participating in the construction process and assist in building your new home.

As a consumer, you rarely have the opportunity to watch as the products you purchase are created. Your new home is created in front of you. You have more opportunity for input into the design and finish details of a new home than for most other products. Success in personalizing your home depends on effective communication. Because of the time required for construction, you have many opportunities to view your home as it is built, ask questions, and discuss details. You have the opportunity to meet with your Builder at several points in this process. The first of these is usually a preconstruction conference, where you’ll review your home plans, selections, and the changes you have requested. At that time, your Builder may provide an overview of the construction process and answer your questions.

At K.C. Building Co., Inc. we also invite you to schedule routine construction reviews; however, we cannot speak for other Builders regarding this matter. At these meetings, you will have our undivided attention. We discuss questions you have, review the target delivery date, and confirm that we have correctly installed your selections or change orders. Please bring your Homeowner’s Manual to all scheduled meetings. Understandably, you will want to visit your new home between these construction reviews. Whether you are on site for a routine meeting or a casual visit, keep the following points in mind.

1) Safety A new home construction site is exciting, but it can also be dangerous. Your safety is of prime importance. Therefore, we suggest that you contact the sales office before visiting your site. K.C. Building Co., Inc. reserves the right to require that you wear a hard hat and that a member of our staff accompany you during your visit. Visits are discouraged while work is in progress. Please observe common-sense safety procedures at all times when visiting. Keep older children within view and younger children within reach, or make arrangements to leave them elsewhere when visiting the site. Do not walk backward, even one step. Look in the direction you are moving at all times. Watch for boards, cords, tools, nails, or construction materials that might cause tripping, puncture wounds, or other injury. Do not enter any level of a home that is not equipped with stairs and rails. Stay a minimum of six feet from all excavations. Give large, noisy grading equipment or delivery vehicles plenty of room. Assume that the driver can neither see nor hear you.

2) Plans and Specifications The building department of the city or county where your home is to be located must review and approve the plans and specifications for your home. We construct each home to comply with the plans and specifications approved by the applicable building department. Your specifications become part of our agreements with trade contractors and suppliers. Only written instructions from your Builder can change these contracts.

3) Regulatory Changes From time to time, city or county agencies adopt new codes or regulations that can affect your home. Such changes are usually adopted in the interest of safety and are legal requirements with which all Builder’s must comply. The codes and requirements in effect for each area can vary. Therefore, builders may construct the same floor plan slightly differently in two different jurisdictions or at two different times within the same jurisdiction.

4) Individual Foundation Designs Another area where variations among homes can appear is in the foundation system. The foundation design is specific to each lot. Based on the results of a soil test, an engineer determines which foundation system to use. Because of variations in soil conditions among lots, your foundation may differ from your neighbors’ foundation or that of the same home in another neighborhood.

5) Changes in Materials, Products, and Methods The new-home industry, building trades, and product manufacturers are continually working to improve methods and products. In addition, manufacturers sometimes make model changes that can impact the final product. As a result, methods or materials in your home may differ from those in our other homes. In all instances, any substitution of method or product should have equal or better quality than that shown in our other homes. Since such substitutions or changes may become necessary due to matters outside your Builder’s control, they usually reserve the right to make them without notification.

6) Natural Variations Dozens of trade contractors have assembled your home. The same individuals rarely work on every home in the same way and, even if they did, each one would still be unique. The exact placement of switches, outlets, registers, and so on will vary slightly from the model and other homes of the same floor plan.

7) Quality K.C. Building Co., Inc. will build your new home to the quality standards demonstrated in our model homes. Each new home is a handcrafted product-combining art, science, and raw labor. The efforts of many people with varying degrees of knowledge, experience, and skill come together. We coordinate and supervise these contributions to produce your new home. From time to time during a process that takes several months and involves dozens of people, an error or omission may occur. We have systems and procedures for inspecting our homes to ensure that the level of quality meets our requirements. We inspect every step of construction and are responsible for quality control. In addition, the county, city, or an engineer conducts a number of inspections at different stages of construction. Your home must pass each inspection before construction continues. During the construction process, every home being built experiences some days when it is not at its best. Homes under construction endure wind, rain, snow, foot traffic, and activities that generate noise, dust, and trash. Material scraps are a by-product of the process. Although your new home is cleaned by each trade upon completion of their portion of the work, during your visits you will encounter some messy moments. Keep in mind that the completed homes you toured also once endured these “ugly duckling” stages.

8) Trade Contractors Your home is built through the combined efforts of specialists in many trades-from excavation and foundation, through framing, mechanical, and insulation, to drywall, trim, and finish work. In order to ensure you the highest possible standard of construction, only authorized suppliers, trade contractors, and K.C. Building Co., Inc. employees are permitted to perform work in your home. Suppliers and trade contractors have no authority to enter into agreements for K.C. Building Co., Inc.. For your protection and theirs, the terms of our trade contractor agreements prohibit alterations without written authorization from K.C. Building Co., Inc. or any builder you may choose. Their failure to comply with this procedure can result in termination of their contract. See your builder if there are alterations or changes you wish to initiate.

9) Schedules The delivery date for your new home begins as an estimate. Until the roof is on and the structure is enclosed, weather can dramatically affect the delivery date. Even after the home itself is past the potential for weather-related delays, weather can severely impact installation of utility services, final grading, and concrete flatwork, to mention a few examples. Extended periods of wet weather or freezing temperatures bring work to a stop in the entire region. When favorable conditions return, the tradespeople go back to work, picking up where they left off. Please understand that they are as eager as you are to get caught up and to see progress on your home.

10) Delivery Date Updates You will be updated on the estimated delivery date at each construction meeting. You are also welcome to check with your Builder for the most current target date. As completion nears, more factors come under our control and we can be more precise about that date. Expect a firm closing date no later than 30 days before delivery. We suggest that, until you receive this commitment, you avoid finalizing arrangements for your move. Until then, flexibility is the key to comfort, sanity, and convenience. We want you to enjoy this process and avoid unnecessary stress caused by uncertainty that cannot be avoided.

11) “Nothing’s Happening” Expect several days during construction of your home when it appears that nothing is happening. This can occur for a number of reasons. Each trade is scheduled days or weeks in advance of the actual work. This period is referred to as “lead time.” Time is allotted for completion of each trade’s work on your home. Sometimes, one trade completes its work a bit ahead of schedule. The next trade already has an assigned time slot, which usually cannot be changed on short notice. Progress pauses while the home awaits building department inspections. This is also part of the normal sequence of the construction schedule and occurs at several points in every home. If you have questions about the pace of work, please contact our office.
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Homeowner Orientation
The homeowner orientation has two purposes. The first is to demonstrate the features of your home and discuss maintenance and the limited warranty program. Equally important, your Builder wants to confirm that they have delivered your new home at the quality level shown in their model homes and with all your selections correctly installed.

Think of it as an introduction to your new home and its many features-a meeting that goes beyond the traditional walk-through to include a detailed demonstration of your home and review of information on its maintenance.

1) Scheduling The orientation occurs a few days before closing.

2) Preparation Allow enough time. We expect the orientation to take an hour to an hour an a half. By arranging your schedule so you can use the full amount of time allotted, you will derive maximum benefit from the orientation. If you have questions about home maintenance or the limited warranty coverage, make note of them to bring up at the orientation. Past experience has shown that the orientation is most beneficial when buyers are able to focus all their attention on their new home and the information being presented. Although we appreciate that friends and relatives are eager to see your new home, it would be best if they visit at another time. Similarly, we suggest that, if possible, children and pets not accompany you at this time.

3) Acceptance In addition to introducing you to your new home, the orientation is also an opportunity for you and your Builder to confirm that the home meets the quality standards shown in a similar model home and that all selections and changes have been completed. We note details that need attention on the orientation forms. Cosmetic surface damage caused during construction is readily noticeable during the orientation. Such damage can also occur during the move-in process or through daily activities. Therefore, after we correct any items noted during the orientation, repair of cosmetic surface damage is your responsibility. This includes paint touch-up.
Most limited warranties exclude cosmetic damage to items such as: Sinks, tubs, and plumbing fixtures, countertops, cabinet doors, light fixtures, mirrors, glass windows and screens, tile, carpet, hardwood, resilient flooring, doors (including garage doors), trim, hardware, paint, drywall and finish on all appliances.
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Closing on Your Home
K.C. Building Co., Inc. recognizes that timing is vitally important in planning your move and locking in your loan. We can specify an exact delivery date when construction reaches a point at which weather and other factors are unlikely to affect completion of your home. This occurs 30 days before closing. Until then, many factors can influence the schedule.

Weather can delay getting the foundation in and can affect framing, roofing, and exterior finish. Material shortages and labor strikes may also affect the construction schedule. If you are delayed in responding to a request from your lender, this can affect work progress. Change orders signed after the original purchase agreement has been completed can add to the schedule.

1) Date of Closing The closing, or settlement, takes place shortly after your orientation. The exact date of closing will be determined by your lender and coordinated with the sales office and yourself. Typically, the closing process takes from 45 minutes to an hour.

2) Location of Closing The closing on your new home typically takes place at the title company, although it occasionally occurs at the lender’s office. The appointment for your closing will be set by the closing agent and the exact location will be confirmed with you at that time.

3) Closing Documents At closing, the documents necessary to convey your new home to you and to close the loan from the mortgage company will be executed and delivered. In addition to these standard items, the lender, the title company, and your Builder may require other documents to be signed. The principal documents typically include the following:

4) General Warranty Deed The general warranty deed conveys the home and lot to you, subject only to permitted exceptions. This does not apply if you already own the lot.

5) Title Commitment At or before closing, we will deliver to you a standard form for an Affiliated Land Title Association (ALTA) owner’s title insurance commitment to insure salable title of your home to you in the amount of the purchase price, subject to the permitted title exceptions that may be described in the purchase agreement. Review the title commitment carefully. Discuss any questions with your title company. Within 60 days after the closing, the title company mails a standard ALTA owner’s title insurance policy, insuring you the title to your home in accordance with the commitment you received at closing. Keep the title insurance policy with your other valuable papers.

6) Promissory Note The promissory note is from you, payable to the lender in the principal amount of the loan, plus interest. One-twelfth of your annual taxes and homeowner’s insurance will be added to the principal and interest payment to determine your total monthly payment.

7) Deed of Trust This encumbers your home as security for repayment of the promissory note. Closing Expenses Certain customary items in connection with the property will be prorated to the date of closing such as prepaid expenses, or reserves required by your lender and homeowners association, if applicable. Prorations of general real property taxes and assessments will be based on the current year’s taxes and assessments or, if they are unavailable, on the taxes and assessments for the prior year. “The Final Number” The final cost figure is available near to the actual closing. Although a reasonably close estimate may be determined before the date of closing, the proration of several items included is affected by the closing date and cannot be calculated until that date is known. Preparation Plan to bring cash or certified funds (made out to yourself, which you will endorse at the closing) to the closing table. In your planning, be sure to allow time to arrange for and obtain these funds. In addition, please keep the following items in mind: Documents-The Real Estate Settlement Procedures Act (RESPA) provides you with many protections. Under this law, you can review the settlement page that lists costs you are paying at closing one day before the closing appointment. Although these documents are not negotiable and thousands of homebuyers have signed them, you should read them.

8) Insurance You need to provide proof of a homeowner’s policy from your insurance company. Your insurance agent should know exactly what is needed. We suggest you arrange for this at least three weeks before the expected closing date.

9) Builder or Lender Issues The title company is not authorized to negotiate or make representations on behalf of any of the parties involved in the closing. Therefore, please discuss any questions, agreements, or other details directly with us or your lender in advance of the closing.

10) Utilities Your Builder should have utility service removed from its name the following day after closing. You will need to notify all applicable utility companies of your move so that service is provided in your name. We suggest that you contact these companies well ahead of time to avoid any interruption in service. We offer a link on our homepage guiding you to all utility companies and local attractions.
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We do hope that this page has provided you a little more insight into the process of building a new home.
If you have any questions, please do not hesitate to contact us via e-mail or see our CONTACT US page.

We wish everyone the best in building, and look forward to hearing from you!!!