17
EZTHE WASHINGTON POST.
SATURDAY, SEPTEMBER 7, 2019RE AL ESTATEReal Estate Editor:
V. Dion Haynes,
[email protected]
Art Director:
Dwuan June
Advertising Manager:
Eric Martin,
[email protected]
To contact us:
[email protected]
Mail:
The Washington Post, Real Estate
Section
1301 K St. NW, Washington, D.C.
20071Town Square Real Estate News & Notes
BY MICHELE LERNERFinancing a newly built home
is typically similar to paying for
an existing home, as long as
you’re buying a home that’s part
of a community under construc-
tion and not a custom home. But
the cash you need for a deposit, a
down payment and closing costs
could be a little different when
you’re purchasing new construc-
tion.
We asked Karla Melgar, a sen-
ior loan officer with Embrace
Home Loans in Annapolis, for her
advice about cash needed for a
newly built home:
l Deposit: Builders require a
deposit when you write a con-
tract. It can be as little as $1,000
or as much as 5 percent of the
purchase price, depending on the
sales price and the type of loan.
Some builders may be willing to
work with you if you do not have
the full deposit when the contract
is written. Be honest with the
builder’s sales agent, so you can
negotiate the amount and the
timing of the deposit before the
contract is written. Builders may
allow you to make the deposit in
two installments, with the final
installment usually due before
the builder breaks ground. If that
is the case, you should make sure
the deposit dates and amounts
are spelled out clearly in the
contract.
l Paying for options: Depend-
ing on the sales contract, a build-
er may ask a buyer to pay for
options when they are selected,
and that payment may be nonre-
fundable.
Buyers should read their sales
contract carefully to have a clear
understanding of what the home
must appraise for to have the
mortgage approved. If the home
appraises for the base price, butnot the base price plus the cost of
options, the buyer would be pay-
ing for the options separately out
of pocket — the cost of options
could not be included in the
mortgage amount. But if the
home appraises for the base price
plus the cost of options, then the
cost of options could be included
in the mortgage.
For example, if the base price of
the home is $400,000 and the
buyer orders $50,000 in options,
the home would need to appraise
for $450,000 to have the options
included in the mortgage. If the
home appraises for $400,000,
then the buyer would need to pay
for the $50,000 in options out of
pocket.
l Down payment: Down pay-
ments vary based on the type of
loan program. Veterans may be
able to buy with no down pay-
ment. Others, including first-
time home buyers, may need aslittle as 3.5 percent down for an
FHA loan. Nongovernment or
conventional loan programs also
offer 3 percent and 5 percent
down payment options as well.
However, qualifying for them is a
bit more difficult, and often pri-
vate mortgage insurance is re-
quired.
l Closing costs: Closing costs
vary widely by county and state.
In the Maryland area around the
Beltway, for example, they typi-
cally are 4 percent to 6 percent of
the sales price and include the
prepaid items to set up escrow
accounts such as homeowner’s
insurance and property t axes. But
nationwide, closing costs that in-
clude prepaid items usually range
from 2.5 percent to 6 percent of
the sales price.
It’s important to get an esti-
mate of closing costs from a mort-
gage professional who is familiar
with new construction and theadded closing costs you may in-
cur. Also, some builders will even
offer to pay all or a portion of your
closing costs, but make sure this
is stated clearly in the sales con-
tract.Want a newly built home? Here’s what you need to know about financing.
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