Home Buying in Chandler>Question Details

Roblesman86, Renter in Chandler, AZ

When buying a new built home(i.e. Fulton, Shea) in Chandler/Gilbert, do you pay mortgage on the house while it is still being built?

Asked by Roblesman86, Chandler, AZ Tue Jan 1, 2013

Help the community by answering this question:


Usually not. In most communities, you are asked to pay a deposit and then you sign the mortgage papers once the house is built. This is what I have seen in most new developments. Depending on the timeframe to build and the builder, they may ask you to make one or two payments during construction. All the money you pay before getting the house goes towards the down payment.

If you decide to build a custom home and hire the builder yourself, you may be required to get a construction loan, which you will then substitute for a regular mortgage when the house is built.

Good luck!

Jose Dias, REALTOR | (623) 418-5700 | Jose@MyFirstHouseAZ.com | http://www.MyFirstHouseAZ.com
0 votes Thank Flag Link Fri Jan 18, 2013
It is always a good idea to have an experienced Realtor represent you when you first visit a new home community. Would you enter the courtroom without an attorney? It is possible, but great Realtors will be on your side 100% of the time, while builder sales agents are only concerned with selling homes for the builder.
0 votes Thank Flag Link Thu Jan 17, 2013
Your mortgage is not created until you actually close because you can't mortgage something you don't yet own. Upon signing the contract, you put up an earnest money deposit.
0 votes Thank Flag Link Thu Jan 3, 2013
It is always good practice to visit a New Community with your very own Realtor. That way you have someone on your side to negotiate terms and conditions like that.

John C Johnson "JJ"
Solutions Real Estate
Valley Solutions Team
REALTOR®, Buyer's Consultant
Direct (480) 606-2027
eFax 1-(888) 958-2554
0 votes Thank Flag Link Thu Jan 3, 2013
Depending on the builder and the deal your agent is able to negotiate, a lot reservation or earnest deposit on top of the signed contract might be all that you are required to complete before you sign the loan documents. Since builders like to change their rules and deposit amounts often, it can be confusing to a unsuspecting buyer. Over the last year, the common deposit I've seen is a $1000 earnest deposit which may be refundable up to a month before the home completion. There are several ways a buyer has the right to cancel a new home build without being penalized, so make sure you have representation for yourself and an agent working to give you the best advantage; the builder's agent is not obligated to go over those options with you in detail.

Build times have increased from 3 months this last year to 5 or 6 months and prices are expected to increase by more than 10% in 2013.
0 votes Thank Flag Link Wed Jan 2, 2013
Hi Roblesman86:

Since you are asking about the mortgage, another good point to make is do not fall into the trap of using the Builder's lender, in case that is brought up. They may or may not have one, depending on the size of the builder, etc.,

Yes, they may offer some incentives to do so, even though that is not suppose to happen. I have seen many times where the upfront incentives are far-out weighed by the money lost over time due to the higher interest rates offered by the builder's lender. Exercise your rights as a consumer under RESPA (Real Estate Settlement Procedures Act) and work with a lender whom has YOUR best interests in mind, just as the realtors below are urging you to do with an independent realtor.

Good luck.

Bill Parker, Loan Officer
AZ Lic# 09011570
NMLS #223607
CPA--Licensed, no longer practicing

GenCor Mortgage Inc.
15730 N. 83rd Way, Suite 103
Scottsdale, AZ 85260
(O) 480-525-8496, EXT 743; (M) 602-565-3646; (F) 480-436-5226
EM: BParker@GenCorMortgage.com
Website: http://www.GenCorMortgage.com
LinkedIn: http://www.linkedin.com/in/billparkercpa

MISSION STATEMENT: To create an unbelievably enjoyable experience for my clients, while guiding them through the most important financial transactions of their personal lives. My clients know me as their Mortgage Lender for Life. I truly appreciate your referrals.

If you think it's expensive to hire a professional to do the job, wait until you hire an amateur.
Red Adair, Oil well firefighter
0 votes Thank Flag Link Wed Jan 2, 2013
I agree that you separate agent represent you and can negotiate upgrades or discounts. But I also recommend that you do a home inspection. Just because it is a brand new home does not guarantee it doesn't have problems. You will know this if an independent inspection is done and you may have to negotiate some more to get things repaired or credits.

good luck
Tony Warfield
0 votes Thank Flag Link Wed Jan 2, 2013
You start paying the mortgage on the home after the house has closed and you own it.
0 votes Thank Flag Link Wed Jan 2, 2013
Absolutely not- Until you have done your final walk thru, signed escrow and put your money into escrow and it has funded the property can not be recorded with the county. Until it is recorded it is not your property.

If you are looking at a new build you may want to talk with a real estate professional. Do not fall into the trap of having the Builder represent you and the themselves. Trust me they are not looking out for you.

As a Real Estate Professional I have represented buyers on a number of new builds and being able to negotiate additional discounts for them that they would not normally have gotten.

If you would like to discuss your options, please call me at 602-799-5239 or email me directly at diverdebi@cox.net

Debbie Nieman
Keller Williams Sonoran Living

0 votes Thank Flag Link Wed Jan 2, 2013
Hi Roblesman86,

Christy Crouse is correct. Your new home is the collateral for the loan, & will not qualify for a new home loan until the home has a Certificate of Occupancy. You can pre-qualify for the loan which is what the Builder will want to see, a "Pre-Qualification Form" from a lender.

Many unknowing buyers make a big mistake when buying from a Builder by using the Builder's Real Estate Agent to buy their home. Be sure you find a good, knowledgeable Real Estate Agent to represent & protect your interests, not the Builder's interests. Someone like Christy Crouse who answered your question, below, who will review the Builder's language in the Purchase Contract to protect your interests when negotiating your offer for your new home. I have worked with Christy for years & know her to be one of the best Realtor's out there, very familiar with the Chandler market.

Please feel free to contact me directly if you have any further questions, I'd be glad to help.

All the best,

Roswell Moore, CMPS
Certified Mortgage Planner
480-422-5095 direct

We are a Direct Lender, Mortgage Bank where we originate, process, underwrite, fund, AND SERVICE our loans, in-house, with FHA (starting at a 580 score AND still only 3.5% down), FHA Streamline refinance loans (NO minimum credit score, NO appraisal required) Go Green rehab loans, HomePath, Investor Friendly (10 financed properties), VA, VA Refinance loans (NO appraisal required on IRRRL loans), USDA loans, Jumbo loans, Conventional loans, plus, we allow Escrow Hold-Backs!
Web Reference: http://www.ezAZloan.com
0 votes Thank Flag Link Wed Jan 2, 2013
No, you don't pay mortgage while you are waiting for the home to be built. You start paying when you close the loan.
0 votes Thank Flag Link Wed Jan 2, 2013
No - you'll need to put down a deposit - typically $10,000 to 3% while the home is being built. The mortgage starts when you close on the home.
0 votes Thank Flag Link Tue Jan 1, 2013
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