Buying a new construction house is an exciting way to get a brand new home without starting from scratch in design and customization. With this approach, you’ll work with a pre-established development and choose a layout from an approved list. The process of buying a new construction house can be overwhelming, but we have few tips which will make the process smoother.
Process of Buying a New Construction House
If you’re buying a new build home, here’s what you need to know about the process of buying a new construction house.
01. Understand the Pros and Cons:
First, take some time to understand the pros and cons of buying a new construction home— especially in today’s market. The benefits are obvious. You get a brand new house that won’t require extensive maintenance for years with some room for customization.
The overarching downside is the upfront costs of building new, which have been exacerbated by the pandemic. There are also additional delays caused by supply chain issues which could extend the completion timeline and costs. However, these issues should level out in the future if you have time to wait.
02. Clarify Your Financing and Budget:
Financing for a new build works differently than with an existing home. Before you dive into the process of determining where you want to be and what style of home you want, you need to clarify your financing options.
Find a lender with experience in new builds, as the mortgage varies during the building process. Many builders will set up a milestone payment system in which you pay smaller lump sums once certain portions of the project are complete. A new build loan will consist of draws on the total amount to cover those milestones, rather than a one-time payment as with buying an existing home. Clarifying the financing and getting approval before proceeding when buying a new construction house is a must. Remember to factor in other expenses such as insurance, legal fees and removalists. You can use sites like Muval to find affordable movers.
Check out our guide on strategies for purchasing a property:
03. Evaluate the Location:
Next step to consider in the process of buying a new construction house is the location you want to be in. Look at developments in your desired area and evaluate both the development and nearby amenities. Ask around to determine if there are any potential issues with the development location, like water shortages. Your options may be limited based on where developments are located, but it’s a starting point.
04. Research Potential Builders:
Certain developments are typically associated with a specified contractor or company. Before you sign on the dotted line, be sure to research the builder and determine the quality of their work. Ask for reviews and reach out to your network to see if anyone can provide insights.
Depending on your approach, you may choose to research builders first and choose a development based on their offerings.
05. Choose the Style and Customizations:
One of the major advantages of buying a new construction house is you can customized certain elements of the house according to your requirements. Depending on the development and contractor you select, you might have the option to choose from a few pre-determined home styles. Clarify your needs and preferences before reviewing the available styles. If you’re going this route, it’s important to keep an open mind.
Some contractors are more flexible than others. Ask what customizations are available and peruse some of the options.
06. Clarify Your Home Closing Plans:
Finally, understand what happens legally at closing and how you’ll navigate the moving process. As delays are typical in new construction house, you may require a contingency plan between when your existing home becomes unavailable and when you can move into the new build.
During the home closing, you’ll have warranties, walk-throughs, and inspections to navigate. Additionally, your construction loan will transition to a more conventional mortgage— your lender will guide you through this process.
Summing it up,
While the process of buying a new construction house is straightforward on paper, it can become complex in reality. Keeping in mind the above points, will make the process of buying smoother. Still if you have any doubts, don’t hesitate to ask questions, and be sure to understand everything before signing paperwork.
Read articles for more knowledge on buying a home:
Under Construction Property or Ready-to-Move-in Property | Which is Better?
House-Hunting Mistakes to Avoid while Buying a Home!
