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NEW HOME BUYER'S GUIDE
4. SIGN AN AGREEMENT TO PURCHASE
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At the expiration of the lot hold time frame, you will go back to the builder’s sales office and sign a contract to purchase your new home.
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The purchase and sale agreement and the addenda comprise the legal contract between the builder and you regarding your new home. The buyers and the sellers must sign and/or initial all forms and attachments for the purchase and sale agreement to become binding.
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A copy of the standard features and specifications for your home are included in your contract as well as the obligations of both the buyer and seller.
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When you sign your contract, you should receive a copy of any deed restrictions on your property. These restrictions exist to protect you and preserve the integrity of your home and community. In addition, some communities have homeowners' associations, which will have their own set of covenants, restrictions and by-laws. You must be given copies of these documents by law.
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At this time you are expected to put down a substantial deposit to show good faith on your impending purchase. Depending on the builder’s policy, the amount of the deposit could be as much as 5% - 20%, but the builder may have special provisions for a low down payment…ask the sales representative at the time you put down your lot deposit what their requirements for a down payment deposit will be.
5. MORTGAGES
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Your contract will generally include two very important provisions for getting a mortgage:
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You will have a short time frame (usually 7 – 10 days) in which to go out and make an application for a mortgage. The builder wants to move the process along so they don’t want you to sit around and not look for financing. You should attempt to obtain the funds to complete the purchase as quickly as possible.
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The second time period in the contract is to actually obtain a mortgage commitment from a lending institution (usually 30 – 60 days). If you are unable to obtain a commitment, the builder may have a provision in the purchase agreement to get one for you, but the terms for this are spelled out in your contract so pay particular attention before you sign as you will be bound by those mortgage terms.
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If you already have a lender with a pre-approval letter, or have a preferred mortgage lender, you've eliminated the first step in the process, but you will still have to actually secure a mortgage commitment in order to satisfy the second step.
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