All mortgage lenders are not the same. The builder may have a preferred lender, and that’s a good place to start — but it’s important to get preapproved with more than one lender to see who is offering the best terms for your particular circumstances.
In Del Real’s experience “you should always shop around and get a different opinion, but if the builder is willing to give you a credit to buy down your rate and can get you better terms, I would lean on the credit from the builder.” Essentially, he says “trust, but verify and get a secondary opinion just in case.”
Preapproval can take as little as one business day once you’ve submitted all of your documentation. Once you’re preapproved, you can compare each lender’s rates, terms, and closing costs.
The mortgage company will pull your credit score, which could lower it temporarily, but depending on the credit-scoring model the lender uses, multiple credit checks within a short time frame may only be counted as one inquiry.
3. Research the builder
Be sure to do your research on prospective builders. Look at their previous developments and find reviews about the neighborhoods and the building process itself. You can also do some general Google searches to see if you can uncover any lawsuits or bigger issues that could affect the work they do on their homes.
Some things to look for include:
- The experience of past clients. Were they happy with the process?
- Are there issues that keep popping up in different reviews?
- Can you find information about their process and the materials they use?
- How many homes and developments have they built?
4. Research the neighborhood
Once you’ve narrowed down your builder and neighborhood options, do some digging into what your potential neighborhood has to offer. If the neighborhood is brand new and still being developed, look into what amenities you will have access to — a pool, parks, walking trails — and take a drive through the area to see what’s nearby. Walk through the grocery store, stop at a coffee shop, and check out the nightlife (or daylife).
If the neighborhood is already well established, get in there! Take a walk, take your kids to the park, chat with potential neighbors, and drive to your work from the area to see what the commute time will be. You can also use social media to dig even further into what neighborhood life is like. Check to see if the neighborhood is on Nextdoor or if there’s a Facebook page — though you may not be able to join either until you actually live in the neighborhood.
Another aspect to look into is the neighborhood’s homeowners association (HOA). The HOA may have a website that you can refer to, or you can contact the HOA directly, to find out what the monthly fees are. Be sure to also take a look at the covenants, conditions, and restrictions (CC&Rs) to see what is allowed and what isn’t. Some HOAs are stricter than others, so you want to be sure you know what you’re getting into and what advantages they offer you as a potential homeowner.
