When it comes to buying a new home, there are plenty of options for borrowers. Buying an existing home is the most common practice currently. However, it newly built home may offer a more cost effective approach to home ownership.
Buying a newly constructed condo or home can ensure that you get the features and amenities you want in that home. However, buying a brand new home also means that you need to research more than just a neighborhood. We’d recommend doing a little more homework and researching which company you want as your home builder, as well.
What Is A New Construction House?
First and foremost, we should discuss what the definition of a new construction house is. Newly constructed homes are either homes that are purchased right after they are built or homes that are built on plots of land purchased by a buyer.
If a construction company is developing a specific area with homes, the first owner of each home has technically purchased a newly constructed home. These homes do have sellers, usually agents from the company responsible for the development. We’d recommend getting into contact with a real estate agent to help you with moving forward with a home of this nature.
The other option is having the buyer purchase a plot of land and pay a company to build a home on that land. This allows buyers to have the full freedom to have a home designed with their best interests in mind. You can build a home with your preferred open floor plan while also trying to minimize future utilities by focusing on energy efficiency. Building a home yourself may be one of the most financially responsible decisions you make.
Research The Building Company Who Will Build Your Home
We’d recommend doing a little research so you can have an idea of the quality of the homes being built. Building a custom home can come with a lot of difficulties that some companies have more experience in than others. We’d also recommend researching what the home builder warranties are. Most high quality home builders will put a warranty on their work in case something goes wrong.
Even though you may have hired a very high quality home builder company, we’d recommend still getting a home inspection as well. A home inspection may shed light on issues that your home builder may have missed so that you can get those issues fixed before closing. And hopefully, you would be able to avoid having this issue happen outside of your home builder’s warranty.
Builders Might Offer You Their Preferred Lender
Some builders may have a preferred lender that they use for helping with the home buying and build process. These lenders may be more convenient to use, but you should always make sure you shop and compare mortgage lenders for the best rate. While the builders can make it a bit easier for you, you want to make sure you’re getting the best deal.
New Construction Homes Cost Time And Money
While this point seems to be obvious, you also have to make sure you plan for a longer home buying process. We recommend that you check if you can start the home buying process while the home is being built and is almost completed. The moment it’s completed, you can have your home inspection and appraisal to confirm that the home is structurally sound and ascertain it’s value.
If you’ve been working with a loan officer or loan processor at this point, you can just submit the rest of your documents needed and hopefully get right to the closing as soon as possible. Even though this sounds like a speedy process, building a new home can take much longer than the standard 45 days it takes to close on an already built home. Make sure that if you can cover the expenses of the new construction as well as cover the expenses of your current living situation. You will need to stay financially afloat until closing.
This also means that it’s not recommended you open new lines of credit or take out any loans in this time, as this can put stress on the current loan approval. If your credit score and debts have changed in a negative way, even temporarily, this can put your current home at risk.
Hopefully we’ve shed some light on new construction homes! While most borrowers tend to buy a home that has been owned by another, new construction homes can be fantastic first purchases.
