An increasing number of home buyers are opting for new construction over an existing home in an established neighborhood and rightfully so. From the clean lines and shiny new appliances to updated backsplashes and flooring, there’s no more worrying about the previous owner’s personal taste and planning out home renovations.
The buying process of a new construction home has many of the same steps as buying an existing home, but there are a few additional things to think about including financing and buying options.
Understanding Your Options
When buying a new construction home, you have three options:
- Built on spec. A new construction home that has just been completed and you purchase it as is.
- Semi-custom. The structure of the home is almost completed, and you are able to customize it in some ways.
- Full custom. You purchase a piece of land and you are able to custom every aspect.
Once you decide which type of new construction home you are comfortable with, you will be able to start the buying process!
Hire an Agent with New Construction Experience
Having an agent to help you through the new construction buying process isn’t necessary but is well worth the money, especially when looking for land to build with and dealing with builders. Your agent will be able to advise you on how to structure your offer, making choices that will increase your home’s resale value, and help with any contingency’s associated with your current home.
Speak with a Local Mortgage Lender About New Construction Loans
Obtaining financing for a new construction home is much different than obtaining financing for an existing home so it’s crucial that you not only speak with a mortgage lender about new construction loans but also with a lender that’s local. Your lender will be able to walk you through the entire process of obtaining financing as well as ensure that all of the correct paperwork is obtained.
Some things to keep in mind about new construction loans:
- New construction loans tend to have shorter terms (typically one or two years).
- New construction loan rates are usually higher when you compare them to mortgages for an existing home.
- Some of the paperwork you will need to apply for new construction loans includes construction timetable, building plans, purchase offers, and realistic budgets.
Get Everything in Writing
This is especially important when it comes to working with a builder! Always, always get everything discussed in writing, including pricing, upgrades, and features of your new construction home.
Hire a Home Inspector
You might think that having an inspector to come out and inspect your new construction home is silly, but a new home can still have defects. If possible, have your home inspected twice – once before the walls are closed and again before you move in. Having an inspection contingency in your sales contract can also give you a cushion to pull out of your contract if something major goes wrong.