FAQs When Buying a New Home

The more information you have, the more informed your decision, so here are answers to some FAQs when buying a new home from Riverside Homebuilders.

What’s pre-approval and why do I need it?

Before you invest the time and energy into searching for a new home, make sure you know what you can borrow. A lender can easily determine how much you’re qualified to borrow and then provide you with a pre-approval letter that tells the seller you’re a bona fide buyer. With pre-approval, you have the confidence that you can purchase the home you fall in love with.

Do I need a construction loan if I’m going to build a home with you?

You don’t need a construction loan if you have contracted with Riverside Homebuilders to construct your new home in one of our communities. In this instance, you provide “earnest money”, a small deposit due when you sign the contract. Then, you have one closing when the home is completed.

When you build a home on land that you own, you will need to secure and close on a construction loan. Then, when the home is completed, you have a second loan closing to convert the construction loan to a home mortgage.

How much money should I budget for a down payment?

The amount of the down payment depends on the type of loan you plan to secure. Some loans, like USDA and Veterans Affairs (VA) home loans, require no money down, as long as the borrower and the home fit the loan requirements. An FHA loan is available with 3-5% down payment. For a conventional loan, a 20% down payment is desirable, but may not be required. According to the Zillow Group Consumer Housing Trends Report 2017, only 45% of homebuyers put down 20% or more when buying a new home.

If you provide less than 20% of the purchase price, you will probably need private mortgage insurance (PMI). This protects the lender if the loan is defaulted. The PMI is usually paid as part of your monthly mortgage until your equity reaches 20% of the home’s value. PMIs vary, depending on the loan program and the lender.

Should I work with a real estate agent?

A licensed Realtor acting as a buyer’s agent is a valuable partner who knows the local market—including good neighborhoods with quality schools—of available homes. A good agent will do their homework and save you time by finding homes that match your specific criteria, including location, size, budget, and features. We frequently work with Realtors, because we both have the client’s best interests in mind.

What is included in closing costs?

When you’re home is completed, you will finalize the transaction of purchasing it, which is called a “closing”. This process requires your signature for all the loan documentation. At closing, you will pay a variety of fees, like appraisal, title search, attorney fees, home inspection, loan origination, property taxes, homeowner’s association fee, and transfer taxes, to name a few. Some are rolled into the loan (e.g., property taxes, HOA fee), while others require payment at closing. Some builders and lenders will offer to pay a certain amount in closing costs as a homebuyer incentive.

Riverside Homebuilders builds communities of new homes for sale in Dallas-Fort Worth’s surrounding cities and towns. We have many neighborhoods with homesites of one acre or more! Take a look at our single-family homes, floor plans, and currently available move-in ready new construction homes. Then get in touch with us to find out what you need to know about buying a new home.