We've recently observed a notable uptick in new construction mortgages. Are you also interested in new constructions? From assignment clauses to the practicalities of closing dates, here are some critical aspects Fraser Valley residents should be aware of.
Understanding Assignment Clauses
The assignment clause is one of the most crucial components of a new construction mortgage. This clause becomes vital if, for any reason, you find yourself unable to complete the purchase of the new property. An assignment clause allows you to transfer your purchase agreement to another buyer. However, it’s important to understand the financial implications and limitations of this clause.
Why It Matters
Negotiation Power: Understanding the details of your assignment clause can also give you leverage during negotiations, ensuring you’re not left in a precarious position.
The Role of Co-signers
Another critical strategy is negotiating the right to add co-signers to your mortgage agreement. This can be a lifesaver if you find that you do not qualify for the mortgage on your own. Adding a co-signer can significantly bolster your application, enhancing your chances of securing the necessary financing. One thing to consider is that adding a co-signer later can add unforeseen costs to add them onto the mortgage agreement if added later in the process. For example: The Builder can add on administration fees in the thousands of dollars just to add a cosigner or sell the contract to another buyer.
Key Points to Consider:
Eligibility: Ensure that your mortgage contract allows for the addition of co-signers.
Creditworthiness: The credit score and financial stability of your co-signer will directly impact your mortgage application.
Anticipate Construction Delays
When it comes to new constructions, it's almost a given that there will be delays. Rarely do construction projects meet their original closing dates. This can be due to a variety of factors such as weather conditions, supply chain issues, or unforeseen construction challenges.
Preparation Tips:
Flexibility: Build some flexibility into your plans and timeline. Being prepared for delays can reduce stress and allow for smoother transitions.
Communication: Stay in close contact with your builder and mortgage broker to get regular updates on the construction progress and any potential delays. Make sure that you research the builder to ensure that they are trustworthy.
The 10 Commandments of Mortgages
Finally, it’s crucial to adhere to the "10 Commandments of Mortgages," a set of guidelines designed to help you maintain your financial stability during the mortgage process. One key commandment is to avoid taking on new debt—such as new loans, cars, or properties—without consulting your mortgage broker first. Check out all commandments on THE 10 COMMANDMENTS AFTER SUBJECT REMOVAL.
Factor this in when negotiating your original purchase contract- during a slow market the builder will need your business and every clause and cost is negotiable!
Starting the exciting journey of a new construction mortgage in the Fraser Valley is filled with unique challenges. But don't worry, getting familiar with the mortgage agreement with help from a mortgage broker and lawyer can help you make this process much easier. Our team at Browne Mortgage is here to help you make well-informed decisions every step of the way.