Check the Credit History of Builder

When we are ready to buy a car, open a credit card, or jump into the big world of making a home purchase, one of the first things that happens is a lender checks our credit score.  Have you paid your bills on time?  Do you have any major dings on your credit like a judgement or unpaid child support?  Is there a foreclosure in your 10-year history or a short-sale in the last five or seven years?

Like regular consumers, builders also have a credit history.   Their credit history is just as important as ours as people again start thinking about buying new construction homes.  Why?  Consider what it would be like to have a contract on a house and then you wait for construction to be completed so you can close prior to the June 30th deadline to get the $8000 first-time home buyer or the $6500 existing homeowner tax credit.  Suddenly, everything stops because the builder’s assets have been frozen because of a credit problem.

There are ways to ensure that you won’t be caught in someone else’s misfortune, according to Ken Kruse, president of Payne Family Homes.  He offers tips on how to be sure your builder is financially sound as you consider a new construction home,

Check third-party resources, such as the Better Business Bureau, which may have a rating on the builder, and Dun & Bradstreet, which may have information on a builder’s credit history. And there’s no harm in asking if the builder has a forward-looking view by investing in more land and more floor plans.

Ask lots of questions of your real estate agent, the workers at the houses (but don’t interfere with their work), and even the other people who live in the neighborhood.  As the economy improves, the sound of hammering, saws, and drilling should return … make sure they don’t suddenly stop on YOUR house by being sure your builder is financially stable in advance.