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8 New Year’s Resolutions for Building Your New Home
December 31, 2015
If building your dream home is on your list of New Year’s Resolutions, there’s quite a bit more involved than “eating better” or “working out”. Here are some resolutions you should make if you’re seriously considering building a new home.
1- Know What You Want in a Home.
We’ll start with the fun part. Most people (especially ladies), like to research what they want in a new home. They scour Pinterest, read HGTV magazines in the grocery check-out lane, save all the Property Brothers episodes on DVR, and sneak upstairs at holiday parties to investigate the layout of a Jack and Jill bathroom And all for good reason. It’s very important to figure out what you’re looking for in your next home, so that you’re armed with that knowledge before you begin meeting with lenders, builders, and real estate agents. Write it all down! It’s helpful to prioritize your list of needs and wants to determine what you’re deal breakers are and where you’re willing to compromise. Making these decisions ahead of time will help prevent you from hesitating when the time is right.
2- Know Where You Stand Financially.
Before you contact a realtor or a builder, it’s a good idea to contact a lender to find out the amount of money you are approved to borrow. There’s nothing more crushing than to create your dream home on paper, only to find out you can’t afford it.
- Are your credit reports accurate, up-to-date and correct?
- What information will you need to gather to apply to finance your new home?
- What can you afford in the way of a mortgage?
3- Understand the Process.
From choosing a floor plan to determining a timeline, one mistake home buyers make when choosing to build a new home, is not understanding the lengthy and involved process required. Processes may differ slightly by builder, but the bottom line is that you will be making a lot of decisions and design selections over the course of the build, and you should have a good understanding of the various stages. No matter the stage, however, you should be able to ask any question at any time and expect to get a direct and honest answer from your builder.
To see an example, you can view First Choice Home Builder’s building process here: http://bit.ly/BuildingProcess
4- Make a Home Building Folder.
When building a new home, there are a lot of decisions and choices that have to be made. And by “a lot”, we mean A LOT. To stay organized, it’s a good idea to keep a binder or folder to hold all of the information you will need along your journey. Anything that you may need to prepare for or execute the purchase of a new construction home should be included. Include items like:
- A monthly home budget
- All financial statements – you’ll need these to apply for a mortgage
- Credit report information
- Documents to obtain mortgage pre-approval and pre-qualification
- Pre-approval letters
- Research on prospective neighborhoods, planned communities and properties
- Research on Realtors and Builders
- Any contracts or agreements with Realtors or other contractors
- All future documents related to contracts, appraisals, offers etc.
- Your needs and wants list
5- Understand the Loans.
A typical purchase money mortgage that you acquire when buying a house that’s already built is not the same as a lot, land, or construction loan. Even if you already own your own lot, construction loans can be tough to get without a previous banking history. They have special guidelines and include monitoring to ensure timely completion so your repayment can begin promptly. Some builders, such as First Choice Home Builders, will actually apply for the Construction loan on your behalf.
Construction loans are typically short term with a maximum of one year, and have variable rates that move up and down with the prime rate. The rates on this type of loan are higher than rates on permanent mortgage loans. To gain approval, the lender will need to see a construction timetable, detailed plans and a realistic budget, sometimes called the "story" behind the loan.
For more information on the difference between the types of loans, this is a helpful website: http://bit.ly/TypesofHomeLoans
6- Don’t Sacrifice Quality to Save a Few Dollars.
Buying and building a home is a huge investment, and you don’t want to save a little money up front just to end up paying it back over the next 30 years, because the quality of your new home isn’t what you thought it would be. Don’t settle for less than the best when it comes to building materials, fixtures, carpet, etc., and make sure that your builder doesn’t either.
7- Select the Best Builder in Your Area.
Choose a builder that will treat your new home build like it is one of the most important decisions of your life- because it is! Building a new home involves your time, your family, and is a huge investment. You want a builder who is involved in the process from start to finish - and even after your new home is built. (Don’t forget the warranty!) It’s a smart idea to ask for references of home owners that have lived for a few years in a home built by that builder.
8- One Big Change at Time.
Your final home building resolution should be to take on just one challenge at a time! It’s important not to make any other big financial changes during the home building process. We know you really want to buy that boat this summer to cruise around on Lake Strom Thurmond, but it’s best to save that until after you’re living in your new home.
Happy New Year and Happy Home Building!
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