Whether you’re a first-time homebuyer or returning to the process, you probably have questions. We’ve tried to help you out with these answers to frequently asked questions.
Getting pre-qualified for a mortgage is the best first step. Spend a few minutes on the phone with a lender and you’ll know how much you’re likely to be able to borrow for the purchase of a new home. You’ll then receive a pre-approval letter that you can submit with any offer, showing the seller you are a qualified buyer.
You don’t need a construction loan when you contract with Shaddock Homes to build your home in one of our communities. There’s one closing, when your new home is ready for you to move in.
When you buy a home to be built or one that is under construction, you provide earnest money, which is a small deposit due when you sign the contract. The earnest money is deducted from the down payment at closing.
When your down payment is less than 20% of the purchase price, you’ll need to pay for Private Mortgage Insurance (PMI). The amount—which is usually between 0.5% and 1.0% of the loan amount—is paid monthly as part of your mortgage. The PMI protects the lender in the event the home goes into foreclosure. When you have paid enough of the principal to equal 20% of the loan, you can cancel the PMI.
We can’t use plans from another source. Shaddock Homes provides a wide range of floor plans to choose from, with many options to personalize them to your style. We have experience building from these plans and know that they are accurate. Unfortunately, we can’t count on the same reliability from other plans, and when there’s a problem or error, the homebuyer assumes the cost for fixing the problem.
Traditionally, from the time we actually begin the construction process on-site, you can expect your home to be completed in about 4 to 5 months. With the recent housing demand and delays in materials and labor shortages, it has become difficult to predict a definitive timeline. We make every effort to provide an educated estimate what the projected build time would be at the time of contract and with the understanding that labor and material delays may affect that timeline. We ensure to communicate proactively throughout the build process to update timelines.
We do our best to accommodate your needs. If the desired change doesn’t impact the structure or progress of your home’s construction—like a different bathroom vanity that hasn’t yet been ordered—we’re ready to help. If, however, you want to remove, alter, or replace something that we’ve already built, bought, or installed, we’ll need to discuss the cost for doing so, both in time and money.
Yes! You’ll move into your home with a fully-sodded lawn and sprinkler system to help maintain it.
If you’re already working with a licensed Realtor, we welcome this team member, but it’s certainly not required. Every Shaddock Homes community has a professional salesperson on-site who will help you find the right home that meets your criteria for location, features, and budget.
When your home is completed, you will finalize the purchase at the “closing”. You’ll sign all of the loan documentation and pay a variety of fees (also known as “closing costs”). These fees include appraisal, title search, attorney fees, home inspection, loan origination, property taxes, homeowner’s association fee, and transfer taxes, to name a few. Some are rolled into the loan (e.g., property taxes, HOA fee), while others must be paid at closing.
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MUDs, PIDs, PUDs & TIFs: What is the difference and what do you need to know when selling or buying a property in a MUD, PID, PUD or TIF?
The 2020-2021 Legal Update CE Class includes a section dedicated to Municipal Utility Districts (MUDs) and the Law. In that section it states that “Chapter 49 of the Texas Water Code says IF a person is selling a property that is in a district created under the Texas Water Code or by an act of the legislature to provide certain utilities such as water, sanitary sewer, drainage and flood control, and any of these services or facilities have been financed with bonds that are payable by the persons who live in the district, THEN the seller must give notice to the buyer of those potential fees for owning this property. Furthermore, the law says the notice must be given to the buyer prior to the buyer entering into the contract OR as an addendum to the contract at the time the contract is negotiated. If the notice is not timely provided the buyer can terminate the contract at any time.“
The main take-away is that “there is NO binding contract if such notice is not acknowledged by the buyer at or prior to executing the contract! Giving the notice after the contract is executed does not eliminate the buyer’s right to terminate the contract any time prior to closing.”
Real estate professionals often ask about the differences between MUDs, PIDs and TIFs. The most notable difference between the different types of districts are the projects they fund and how they are financed.
MUDs (Municipal Utility Districts) finance the construction of public infrastructure that does not yet exist, typically utility facilities and roadways. Over time, developers within a MUD can be reimbursed for water, sewer, drainage and sometimes road infrastructure through property taxes. The purpose of a MUD is to provide a developer an alternative way to finance infrastructure. Homeowners in a MUD receive a monthly bill from the MUD for water and sewer usage as well as an annual tax bill. This MUD tax will be in lieu of a city tax. MUD taxes are a deductible property tax. The MUD is a political entity that can levy taxes overseen by the Texas Commission on Environmental Quality.
Fun fact…there are over 900 MUDs in the state of Texas, approximately 65% of those are in the Houston area.
PIDs (Public Improvement Districts) can be used for the same purposes as a MUD (i.e. water, sewage and infrastructure) however PIDs can also be used for sidewalks, roadways, landscaping, parks and recreation, public safety/security, parking facilities, affordable housing, etc. PIDs are utilized to make these improvements authorized by Chapter 372 of the Local Government Code. Unlike a MUD, a PID is not a political entity.
Some developments use a PID instead of a HOA since PID assessments are tax deductible. Unlike tax rates for MUDs, these assessments are fixed once the bonds are sold.
PIDs are funded through bonds secured by liens against the property. Bonds are issued based on the property’s appraised value. Once issued, bonds are paid back through the collection of special assessment taxes. This assessment is in addition to property taxes. These special assessment taxes are only levied for a set number of years established by the PID’s service plan which is a minimum of five years. It is important to note that a public hearing must be held before a PID can issue bonds.
PID or PUD?
Although the acronyms are often used interchangeably, PIDs and PUDs are not the same thing. In addition, they are often confused with HOAs. Here is the difference:
A PID is an entity created by a city or county. A PUD (Public Utility District) is created by the community and operated under an elected board which may seem similar to a HOA, however it exists solely to provide electricity, water sewer and telecommunications. Although PUDs are controlled by the homeowners, they operate independently from the HOA.
TIF (Tax Increment Financing) is a public financing method used to subsidize community improvements such as new public utility facilities and area improvements. TIF is authorized at the state level and administered by local governments. TIF is intended for local government to designate areas or redevelopment to encourage economic development to create jobs and to increase the tax base. Both TIFs and PIDs are components of a city and governed by a city council.