How to Build a New Home - A Wells Fargo Guide

If you’re searching for your dream home and can’t find the perfect fit, you may think to yourself, “why don’t I just build my dream home?”

In fact, 2024 has shown a recent uptrend in construction spending, and according to a 2024 Wells Fargo report, easier monetary policy should help single-family construction maintain a positive trajectory into the future.

Needless to say, building a home can feel like a big undertaking when coupled with the rest of the homebuying process. That’s why we’ve put together this handy list of what you can expect from the home mortgage process for new construction to stay prepared.

There are three key phases to the home lending process when it comes to home construction. Let's explore what they look like together.

At the beginning of your journey, meet with a Wells Fargo home mortgage consultant to understand your loan options and find out which is the best fit for you. This will allow you to work with your builder to select your home and determine the options and upgrades you want, while considering the loan amount you’re seeking.

Next, we’ll help you complete and submit your loan application. You’ll receive and review your initial disclosure package. This package includes your loan estimate, which will outline the estimated closing costs, fees, and monthly payments associated with your loan. From there, you’ll complete these three action items: 

1. Sign and return all the required disclosures from your initial disclosure package
2. Provide us with your intent to proceed
3. Pay any applicable fees

To help make the process more convenient, you can complete these tasks online. Once your application is submitted, you’ll receive a welcome call from your home loan processor, who will work with you to help you understand your next steps. Think through these items and discuss them with your spouse or other family members that may be living with you.

Once you’ve established a foundation for what an ideal home means to you, carefully consider these items while you begin to tour homes. It may be beneficial to have a physical list of these traits to review as you begin house-hunting.

Remember to be realistic with yourself and understand that it’s rare to find a home that checks off every item on your “must-have” list. While you’re touring, think about which factors may not be as important – for example, do you need a fourth bedroom, or can you live without it? – and which items are truly non-negotiable.

This stage consists of two important phases of information-gathering: a financial review and a property review. 

For your financial review, you’ll submit documentation like your W-2s and tax returns, if you haven’t done so electronically.

• This helps your home loan underwriter review your information and confirm you’re eligible for the loan you’re applying for.
• If your underwriter has everything needed to complete your financial review, you’ll receive a conditional credit approval letter.
• Alternately, your home loan processor may request additional documentation from you, but they will work with you to let you know what the next steps will be. 

After your financial review comes your property review.

• We’ll order an appraisal after you and your builder complete the purchase agreement, determine all options and upgrades, and confirm the final sale price.
• Once we receive your appraisal, we’ll review it to make sure we can lend you money based on the appraised value of the home. 
• After the appraisal has been approved and we have all necessary documentation, we’ll conduct a final review of your information, confirm your homeowners insurance, and contact the title company to verify the property title. 

To help avoid delays during the financing process, be sure to keep all credit accounts current and keep all copies of paycheck stubs, payments made to your builder, and bank statements.

As your home nears completion, your builder will schedule your home closing date. Once that date is established, we’ll work with you, your builder, and your settlement agent to schedule your loan closing date and time. You’ll receive a final closing disclosure that provides the details of your loan, including how much money you may need to bring to closing, as well as your final monthly payment. We will carefully review the closing disclosure together to make sure it’s correct. 

Next up is the big day itself: closing. When you attend your closing, you’ll receive a closing package, which includes the details of your loan and important disclosures.

• While you’re there, be prepared to read and sign multiple documents.
• Ask questions if there’s something you don’t understand.
• Bring your payment for any closing costs. Your settlement agent can let you know ahead of time if a wire transfer or cashier’s check may be required.

Once all questions are answered, all documents are signed, and all closing costs are accounted for – congratulations, you’ve bought your newly constructed home! You’ll receive a thank-you letter and survey a few weeks after your closing, so you can tell us what we did right and where there’s room for improvement.

Ready to start building your dream home? Explore more about getting a home loan for newly constructed homes. You can also call your home mortgage consultant any time you have questions about your account and we’ll help answer your questions.