subject: Taking Care of the Details Involved in Financing a New Home Purchase [print this page] Taking Care of the Details Involved in Financing a New Home Purchase
As you may expect with a transaction this large, financing a new home purchase involves its fair share of complicated details. With the correct amount of preparation and organisation you can easily get through these details and find yourself living in your dream home quickly and with relatively little stress.
Valuation Surveys Are Essential
One of the essential steps in obtaining a mortgage is the valuation survey. Your lender will require this process to be done in order to properly assess their own level of risk involved.
Many potential homeowners misunderstand the process of valuation. The survey is done to give the lender an accurate figure of the value your new home has. This figure may not be equal to the purchase price of your house, especially when the survey is being done on a newly constructed home.
This is because sometimes additional add-ons or extras that are included in the purchase price may not be factored in when the survey is done. There is little chance that this will affect your mortgage, but it may confuse you and seem strange at the time. Discuss the details with your lender and be prepared to accept the figure in the survey.
Buildings and Content Insurance
Owning a home involves obtaining insurance, both for the contents and the building itself. When you are purchasing a new home the building is most often covered under the builder's insurance until the point of legal transfer. Any damage or accidents that happen on the property up until that time are the responsibility of the builder's insurance.
This is one reason why none of your possessions should be stored on the property until the handover date. Because the property does not belong to you beforehand and you do not have insurance coverage for contents or buildings, it's best to store your possessions offsite until the date arrives.
Often a lender will require proof of insurance that is active on the transfer date before the funds are released. This can be arranged ahead of time for both buildings and content. You may need to provide the details of the real estate deal as well as a list of possessions that will be making the move with you (or delivered to the new house), and by getting this set up beforehand and provided to the lender it means you should have a smooth turnover.
Both valuation surveys and insurance coverage are essential to the financing of a new home purchase. Discuss the details with your lender and the builder to understand what is required of you and what will be taken care of ahead of time. With some communication and organisation even these details can be smoothed over and moved through quickly.
