Your Mortgage Works Differently
When the Home Is Not Built Yet

Before diving into rate locks and lender options, it helps to understand which type of new construction purchase you are making. The financing process looks different depending on which one applies to you.

Production New Construction (Most Common in Southeast Michigan)

A production builder builds homes in planned communities using standard floor plans with selectable options. You sign a purchase agreement, choose your lot and floor plan, make your design center selections, and wait for the builder to complete the home. When the home is finished, you close using a standard mortgage, the same type you would use on a resale purchase. No construction draws. No staged disbursements.

This is by far the most common type of new build purchase in Wayne, Oakland, Washtenaw, and Livingston counties. Communities from Ryan Homes, Pulte, Toll Brothers, Robertson Brothers, Singh, and local builders across the region operate on this model. If you are buying in a production community, this guide applies to you directly.

Custom and Semi-Custom Builds (Less Common)

Custom and semi-custom builds typically involve a construction loan, where the lender disburses funds in stages as construction milestones are reached. The borrower pays interest only during the build, then converts to a permanent mortgage at closing. This process is more complex, involves more lender oversight, and usually requires higher reserves and qualifying standards. It is more common when you own the land and are contracting directly with a builder.

This guide focuses primarily on production new construction because that is where most Southeast Michigan buyers are. If you are pursuing a custom build, the rate lock and lender considerations still apply, but the construction loan process has additional steps your lender and real estate attorney should walk through with you specifically.

A rate lock is a lender's written commitment to hold a specific interest rate for a defined number of days. On a resale purchase, this is usually 30 to 45 days: plenty of time to complete underwriting and close. On a new construction purchase, the build can take six to twelve months or more from signing to closing. A standard 30-day lock is useless for this timeline.

This creates a real problem that many buyers do not think about when they sign the purchase agreement. Their focus is on the contract, the design selections, the floor plan. The mortgage question feels distant. Then they are four months into a build, rates have moved significantly, and they are trying to figure out what their lock options actually are.

When to Lock: The Timing Question

There is no universal right answer, but there is a practical framework. If you lock too early and the build is delayed, you pay lock extension fees. If you wait too long and rates rise, you pay a higher rate for the life of the loan. Most buyers in Southeast Michigan benefit from coordinating with their lender approximately three to four months before the builder's projected closing date, then deciding based on the current rate environment and their own risk tolerance.

Your REALTOR should be in communication with the builder about timeline status throughout the build. That information is what makes the lock timing decision intelligent rather than a guess.

What Happens When the Builder Delays

Builder contracts in Southeast Michigan typically include language permitting extensions for weather, labor shortages, material delays, permitting, and other circumstances outside the builder's immediate control. The builder is often not in breach for delays of weeks or months, and most contracts do not require the builder to cover your rate lock extension costs when delays occur.

This is not a reason to avoid new construction. It is a reason to understand your lock options before you sign the contract, ask your lender explicitly what a 30-day extension costs, and build a realistic budget for the possibility that the build takes longer than the projected timeline.

As the build enters the finishing phase, your lender becomes more active. The home's completion triggers a series of lender actions: a final inspection or appraisal update, final underwriting review, and preparation of closing documents. The final 60 days require coordination between you, your REALTOR, the builder's sales team, your lender, and the title company.

Confirm the Closing Date Before Your Lender Prepares Documents

Builder closing date projections can shift by days or weeks even in the final stretch. A municipal inspector delay, a backlogged certificate of occupancy, or a late trade finish can push a Thursday close to the following week. Confirm the projected closing date directly with the builder's sales contact at least two to three weeks out, and keep your lender updated. Closing documents are prepared for a specific date. Changes require re-preparation and can add stress to an already tight timeline.

Your Final Loan Approval and the Three-Day Window

Federal law requires your lender to deliver a Closing Disclosure at least three business days before closing. This document shows the final loan terms, all fees, and the exact amount you need to bring to the closing table. Read it carefully against the Loan Estimate you received at application. Fees should not increase significantly without explanation. If something looks different than what you expected, ask your lender before the three-day window closes.

Homeowner's Insurance Must Be in Place Before Closing

Your lender will require proof of homeowner's insurance before they fund the loan. On a new construction home, this means insuring a property you do not yet own at an address that may not be fully registered with your county yet. Obtain insurance quotes early, well before the final 60-day window, and confirm the policy effective date aligns with your projected closing date. Your insurance agent should be familiar with new construction policies, which sometimes include a builder's risk transition period.

Closing costs on a new construction purchase share many elements with a resale closing: lender origination fees, title insurance, recording fees, prepaid homeowner's insurance, and prepaid mortgage interest. A few things work differently when you are buying from a builder.

Builder's Title Company

Most production builders direct buyers to a title company they have an existing relationship with. In some cases, this is an affiliated title company owned by the same parent organization as the builder. You may have the right to choose your own title company, but switching often forfeits the closing cost credit tied to the builder's preferred services. Evaluate whether the fee savings from an outside title company are meaningful before making this call. In most Southeast Michigan production communities, the builder's title company handles closings efficiently and the fees are market-standard.

Property Tax Prorations and the First-Year Uncertainty

Property taxes on a new construction home are frequently not fully assessed at the time of closing. Michigan assessors typically assign the land value before the build and the improved value after occupancy, which means your first full tax year may reflect a lower initial assessment that adjusts significantly once the home is on the tax rolls as a completed structure. Your lender will estimate your escrow requirement based on available tax data. Budget for the possibility that your escrow payment adjusts upward in the second year once the improved value is assessed. Our Michigan Property Taxes Guide covers how assessments and taxable value work for new construction buyers.

Homeowner Association Fees and Community Assessments

Many new construction communities in Southeast Michigan have homeowner associations. HOA dues may be disclosed in the purchase agreement or a separate exhibit. Some communities also have special assessment districts that fund shared infrastructure. Confirm what association fees apply to your home, when they begin, and whether any capital contribution or setup fees are due at closing. These are separate from your mortgage payment and are your responsibility from the first day of ownership.

Builder Closing Cost Credits

If you used the builder's preferred lender and qualify for the closing cost credit, confirm in writing how and when that credit applies. Credits typically appear on the Closing Disclosure and reduce your out-of-pocket costs at closing. They cannot always be used to cover down payment. Confirm with your lender what the credit covers and whether any portion is applied to your rate rather than to fees.