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Mortgage Loans and Home Insurance: A New Home Buyers Go-To Guide

Aug 10, 2022

Congratulations! You’ve decided to embark on the homebuying journey, and it’s time to get your ducks in a row. As a first-time home buyer, you may be tempted to start hitting open houses, but there are a few things you should attend to first. As a potential homeowner at Painted Prairie, it’s important to understand the ins and outs of mortgage loans and homeowners insurance. These aren’t topics that get most buyers really excited and dreaming, but they are crucial to the process!

Mortgage Loans

When considering a mortgage lender for a new construction home, it’s important to do your research. We reached out to Valerie Cameron, the Senior Loan Originator at Prime Lending to get her expert advice.

Much like finding a realtor that you can work well with, Valerie recommends talking to three different mortgage lenders to start — it is important to choose someone who you communicate well with. Do they talk more, or do they listen more? If they listen more, are they truly hearing what you’re asking? 

In addition to great communication, it’s important your lender has significant experience in financing new construction homes. There are many nuances to new construction that are not found in a resale home. Construction schedules can fluctuate, and if your lender is not familiar with the process, it can create unwanted delays. 

During your lender interviews, make sure to ask them about rates, loan terms, down payments, and mortgage insurance and compare them. Each lender likely uses different forms, allocating fees in different categories. Valerie shares, “Be sure to ask your potential lender whether or not you’ll be working directly with them or if you will be passed over to an assistant. If they pass you over, are you okay with that?”

As a new construction home buyer, you’ll want to understand that mortgage loan rates can be locked long-term. The larger your loan, the longer you can lock the rate. “I recommend talking to someone who understands and regularly executes long-term locks,” says Valerie. 

Remember that there is a fee to lock a long-term loan; however, if you don’t cancel the loan, the fee is then credited to your closing costs. Because of the variables with new construction, you’ll probably not know your closing date until you’re close to it. Make sure to lock your loan in longer than you think you’ll need it — it’s much cheaper to take this route than to extend the lock on your loan.

If you’re considering buying down to a lower interest rate, you’ll want to consider how long you plan to stay in your home. In an ever-changing market, rates can change multiple times each day. Take a look at the math. Here’s an example: If it costs you $2,500 to buy down the rate to save you $30 a month, it will take you 7 years to break even. If you don’t plan on sticking around for that long, it won’t be worth taking this step.

Homeowners Insurance

Another crucial part of the home buying process is homeowners insurance. We spoke to Kelly Stewart from Farmers Insurance to lend a little insight.

When choosing an agent, Kelly recommends considering someone with at least 3 years of experience in the industry. Be sure to check their website and social media reviews. Are they personable, knowledgeable, and listen to your concerns? Are they responsive and professional? These are important questions as your agent plays a crucial role in helping protect your assets. 

You should engage an insurance agent about 14 – 30 days before closing, Kelly shares. Loan officers like to have the insurance address early in the process and finalized at least 7-10 days before the closing date. 

Once you’ve picked your agent and are buying a new home, there are ways to lower your cost on your homeowner’s policy! Kelly helped us understand the risks and benefits to consider:

  • Get a pre-quote on a home you are considering purchasing. It does not take long, and you would be surprised at the swing in premiums based on brush zones, hail-prone zip codes, etc. can impact pricing. 
  • Discounts may include military, occupational, monitored alarms, replaced major components (HVAC & Furnace, Windows, Plumbing, Etc. on aging homes). 
  • Higher deductibles = lower premium and lower deductibles = higher premium. Consider a higher deductible, but be sure to have a savings account or HELOC you can draw from if repairs/replacements are needed. 
  • Ensure that you have enough coverage to rebuild. A good rule of thumb is Market Value less Land, but it is not always 100% accurate. Your agent should evaluate the rebuild costs and be able to explain why it is accurate.  Could you rebuild based on the $$ per square foot with today’s materials? 
  • Bundle with other lines of coverage such as auto. Add a Life policy for mortgage protection. Consider an Umbrella policy to protect your assets. 
  • Key coverages that are add-ons: Sewer & drain (back up of water from drains and sump pumps), Service Line (main line from home to street for deterioration/collapse, especially in aging homes). 
  • Tile roofs and UL class 3 & class 4 (hail-resistant asphalt shingles) will save you money on premiums. 
  • If you are purchasing a home with an older roof (10+ years), know that some carriers do not offer replacement costs coverage, only depreciated value/scheduled replacement/ACV.

In the future, be sure to check in with your agent anytime you:

  • Complete any updates/upgrades ie: finishing the basement, upgrading bathrooms, kitchens, flooring, adding a deck, etc. 
  • 60 days before your renewal (they should be reaching out to you to do a review).
  • New purchases, ie: jewelry, collectibles, etc. 

Are you looking for more information about mortgage loans and homeowners insurance? Join us on Saturday, August 13th from 9am – 1pm at the Painted Prairie Home Tours with a Twist event, in partnership with 5280. Valerie Cameron and Kelly Stewart will be there in person to answer your questions on Mortgage Loans and Homeowners Insurance, plus you’ll find experts in other housing industries such as interior design. No RSVP is needed — we can’t wait to see you there!

Resident Testimonials

Johann Duran

Once we heard of Painted Prairie in 2021, we were hooked! We loved the diversity of the community, the open space, and everything else it has to offer. Our house has very rapidly turned into a home. We actually met some of our closest friends at a Painted Prairie event.

Jacci Cradle

Painted Prairie has become a place that feels like home for my family because of the strong sense of community and the diverse and inclusive atmosphere. It’s a place where we can connect with neighbors, support local businesses, and truly feel like we belong. The shared values of unity, diversity, and sustainability in the community align with what our family holds dear. It’s a place where children can thrive, and we can contribute positively to the community.

Gabriele Dos Santos

Being an active community while bringing us together on the different events throughout the year. We have been fortunate to enjoy the farmers markets, the neighborhood BBQ, the pancake breakfast, the family painting class, movies at the park and the Fall Festival! Our son and dog also love all the parks!

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