Buying a newly built home can be very attractive. It’s clean in a way that a home that was previously owned never will, and as the original owner you can customize some features.
At the same time, you can avoid the costly renovations associated with older homes. That said, newly built homes can have pros and cons and a few surprises that could change your price range.
HOW MUCH MONEY DO YOU REALLY NEED TO BUY A HOME?
If you are ready to buy a home and are considering new construction, keep the following home buying tips in mind to avoid the hiccups that could turn your dream home into a nightmare. You can explore your mortgage options in minutes by visiting Credible to compare rates and lenders. Discover Credible and get prequalified today.
1. Unforeseen costs
From San Diego to Kansas City, and Washington, DC to West Virginia, if you’ve visited a model home and fallen in love with everything from lighting fixtures to flooring, don’t be too excited to buy a new construction.
“When buying a home before construction, the fine print is important,” says Agent Warburg Realty. Christophe Totaro. “There’s a base price for a home, and then there’s upgrades like kitchen cabinets, granite counters, insulation upgrades, and lots of extra options. It is essential to understand the cost of upgrades, as well as the reasons why an upgrade adds value to your quality of life, reducing cost of ownership and potential resale value. “
Are you wondering what you can afford? Use an online mortgage affordability calculator to determine potential monthly payments.
Unexpected additional costs for home hunters include: utility hookups, landscaping, decks and fencing. Darren K. Proulx, Strategic Funding Advisor at Real estate bees, adds that some newly built homes may not include appliances, and just because the home is new, buyers shouldn’t skip the inspection, which costs around $ 400, according to HomeAdvisor.
12 MISTAKES TO AVOID AS A FIRST HOME BUYER
If you’re ready to buy a home, explore your mortgage options by visiting Credible to compare rates and lenders and get a mortgage pre-approval letter in minutes.
2. The impact of COVID
The pandemic has skyrocketed the cost of building custom homes in the housing market, notes Ruby barnes, real estate agent at Compass.
“During the COVID crisis, supplies increased by 50%,” she says. “The builder cannot absorb these kinds of costs, so be aware that it can impact the bottom line of your price.”
Deliveries of supplies were also delayed, causing many contractors to fall behind. This can leave new home buyers scrambling to find housing until construction is complete.
3 MISTAKES TO AVOID WHEN BUYING A HOME DURING THE CORONAVIRUS PANDEMIC
3. What is covered by your home warranty
When you get a home warranty you can assume it covers everything, but it doesn’t, note. Karen kostiw by Warburg Realty.
“Usually only the structure is covered,” says Kostiw. “Plus, a home warranty from an independent builder is only good as long as the builder is in business – if it goes bankrupt, your warranty probably goes with it.”
Proulx recommends that the warranty cards be completed immediately for each piece of mechanical equipment. These are delivered to buyers during their virtual tour, he adds. During this walkthrough, pay close attention.
“As a general rule, minor cracks in drywall, masonry, tile, slab or foundation are unlikely to be covered by a warranty,” Totaro says. “Craftsmanship, workmanship, and imperfections are likely to have limited coverage, so it’s very important to speak up if you see anything askew during the walkthrough before closing. Read and understand the warranty. – ask questions if you don’t understand something. Also, if something is communicated verbally, put it in writing. “
Additionally, the Federal Trade Commission recommends understanding how to make a claim and how any dispute between you and the home builder or warranty company will be resolved.
4. The type of mortgage you will need
The type of mortgage borrower that borrowers need depends on the specific home buying situation and the structure of the purchase.
“If the house is under construction, a traditional mortgage won’t be an option until the house is completed and an appraisal can be made,” Kostiw said.
If you’ve hired a builder, you may need a construction loan that turns into a mortgage upon closing or upon issuance of a certificate of occupancy, Totaro notes.
“A construction loan will be paid in installments based on the completion of the various stages of construction, and the completion will need to be verified and approved by the lender,” he says.
LOW PAYMENT MORTGAGE OPTIONS FOR FIRST-TIME HOME BUYERS
In addition, the purchase of a house in a development can be financed internally by the promoter or the lender with whom the promoter has partnered on the project.
Use Credible’s free online tools to learn more about mortgages, including the rates you are currently eligible for and the estimated amount of your monthly payments.
Borrowers may be able to find lenders who offer construction mortgages that allow them to make interest payments only during construction. Or, they can take out a construction to permanent mortgage that allows them to secure an attractive interest rate.
During the process of buying a new construction home, it is important to keep unforeseen costs in mind, take the time to research the builder, and take advantage of the resources of home buyers. No matter if you are looking to build in Palm Beach, Los Angeles, San Antonio, or Colorado Springs, there will be pros and cons to new construction that must be properly weighed before making a final decision.
To find the best mortgage rate, start by using Credible to view current mortgage rates from several lenders and make an informed decision about your mortgage.
Have a financial question, but don’t know who to ask? Email the Credible Money Expert at [email protected] and your question could be answered by Credible in our Money Expert column.