Wow! Look at all the new construction around us. It is hard not to get caught up in the excitement of building a new home that has everything you want. After all, you get to choose all the options and be the first to live in the home. The builder’s model homes are designed to show you every option available and make it easy for you to buy. Those homes are decorated perfectly to entice you. It’s like buying a new car. It has that “new car smell” it’s pretty and ready for you.
But before you sign on that dotted line with the builder, there are a few things to consider that if not prepared could cost you a lot of money. Here are a few helpful hints for buying new construction.
Decide on Your Improvements Before the Design Center Appointment: Some upgrades with the builder make sense, mostly structural. For example, if the builder offers an extended lanai, you will more than likely want to do that with them, especially if it involves extending the roof. However, if they offer to add additional screening to the lanai, it may be less expensive to get that done after you close. Items such as a refrigerator, washer & dryer, if you choose to buy with the builder will more than likely cost more. Plus, if you are getting a mortgage to pay for your new home, buying appliances and things like garage door openers will be financed for 15-30 years. And therefore, will cost you almost 4 times the amount than if you would have just purchased them outright. Going to the design center can be a little overwhelming. You will be presented with a lot of options and asked to make a decision most likely at that moment. So, have a game plan on how much you want to spend on upgrades, otherwise, you may blow your budget before you know it.
Know the Average Sales Price in the Neighborhood: This is super important for two reasons, one you don’t want to be the highest priced house in your neighborhood and two if you are and the house doesn’t appraise, you might have to bring more money to closing to pay the difference. Let’s face it, sometimes life can get in the way of our best-made plans. When you build a new home, it is a commitment to live in it or own it for a period of time. Gone are the days when you could flip a new construction home for a profit. So, knowing the average sales price and not overspending may help you out in the long run.
Compare Mortgage Products: Most builders have relationships with mortgage companies and may offer an incentive to use their lender. However, the fees that their preferred lender charges, as well as the interest rate, may not be the best. If you have good credit, it pays to shop around. The incentive the builder gives you to use their lender may end up costing you more money in the long run.
Get the New Home Inspected: Just because the house is new doesn’t mean it’s perfect. Protect your investment and pay for a home inspection. A typical home inspection costs around $400-$500. You just paid quite a bit of money for your new home, paying to double-check someone else’s work could save you headaches later. I have personally seen new homes with shoddy roofs, improper electrical wiring and gas leaks due to faulty installation. Most items found in the inspection, the homeowner would have probably never caught. But one day you will sell the home and the buyer’s inspector may find those errors and then you will pay to fix the issues. Builder’s warranties expire after a certain period of time and therefore they may not be obligated to repair those items after the fact.
Buying a new home can be an enjoyable experience. Having a budget, comparison shopping for a loan and checking the end product can protect your investment for years to come.
Photos from Shutterstock