Are you thinking of buying a new “turn-key” home?

I hope everyone has had a great week. Last Tuesday, I took tothe CJAD air waves with a new call-in show on mortgages on debt. I usuallyco-host the show with Terry Kilakos but this time I ran solo as Terry was awayat a mortgage conference. I had some very interesting callers asking aboutrefinancing, the advantages of using a mortgage broker and some questions aboutmanaging debt load. I was hoping to get a caller asking about “turn-key” homesas this is the focus of this week’s article. 

By my definition a “turn-key” purchase refers to you as aconsumer approaching a builder to purchase a new home. Typically, in such casesthe builder is creating multiple homes that are expected to be delivered atsome point in the near future (say 6 to 12 months away).  Some builders have their own bankrepresentatives on-site to assist with your financing needs however their mortgageproducts may not necessarily be best suited for financial circumstances andneeds. As always some planning is not a bad idea. 

When you identify serious interest in a turn-key home thebuilder literally reserves that property for you. In most cases, they will askfor cash deposit(s) and you may be permitted to customize the home. After signingthe pre-contract you may lose your job, get sick whatever the reason. What’s importantis to be aware of the pre-contract exit policies because at a certain point intime you may not be able to back-out. Also, keep in mind that even if you signyour mortgage papers today, rates and mortgage products change over time especiallyif the home is ready in 6 months. You can always switch banks at a later dateif you feel that you’ve found something better for your needs. The builder’s goalsare to complete the house quickly and sell just as fast. As long as you have afinal mortgage approval they will get paid. Keep in mind that the caveat isthat some builders may not permit you to seek financing elsewhere but I haveyet to see that occur.

If you have any specific questions you’d like to discuss innext week’s article please feel free to contact me.