Steps to building new
If you are in the market to build a new home, there are myriad things you need to consider before you start picking out paint colors.
The Home Builders Association of Middle Tennessee recommends your first find a builder agent, who will help guide you through every step of the process to make building your dream home that much easier. To find an agent you like, ask around for recommendations or contact the HBAMT for guidance.
Overall, when building a new house, be fully involved in the process and prepared to make lots of decisions.
- Determine your needs
School systems, health care facilities, crime statistics and upcoming improvements or expansions planned for the area are all determining factors. Keep in mind, even if proximity to schools isn’t important to you now, real estate professionals agree that the issue is often an important factor in resale value. Be clear and firm about your wants and needs when it comes to where you want to buy.
- Get mortgage pre-approval
No point building a home you can’t afford, so meet with a mortgage lender to determine how much you will qualify to borrow. This will help you narrow your search. Many builders have preferred lenders that can help in this process.
- Choose location, floor plans
There are new communities being developed all over the Midstate, with homes ranging in size and price. Find a neighborhood that you love and start looking at floor plans the builder offers. You may find a spec home already built that suits your family’s lifestyle. Be sure to think beyond what your needs are now so the home can suit your family well in to the future.
You can also opt to find a vacant lot and hire an architect to make your dream a reality. You almost always need to choose the land before you start looking at floor plans. Once the lot is chosen, you’ll need to research soil conditions, drainage, zoning and building codes issues before you can begin to build. If you chose to buy the lot and the home directly from a homebuilder, you can avoid several of these steps since the builder will handle drainage, zoning and codes issues for you.
- Upgrade
Once you’ve selected a floor plan, it’s time to add upgrades. Will you need extra exterior outlets or a hookup for a gas grill? Do you want to splurge on granite countertops or add an air filtration system?
- Make an offer
Once you have decided on the where, make an offer and be sure that it contains three important contingencies: one for obtaining financing, another for a successful home inspection and a third for selling your existing home.
- Understand your contract
Sign on the dotted line . . . only after you fully understand your contract. The contract will be a detailed description of everything that is going into the home and all the various parts to be included. It needs to be signed by the builder and the buyer, as well as the architect and the designer if you’ve gone that route.
- Consider financing options
The biggest choice here is between a fixed-rate and an adjustable rate loan, but other factors play into the loan equation, such as how long you’ll be in the home. Work with your mortgage broker to get the lowest interest rate you can. If you are building yourself, consider getting financing that will cover the purchase of the land as well as the construction of the home. Understand that loans for land usually require a down payment of 30 to 50 percent.
- Appraisal and Inspection
Your lender will require an appraisal to establish the market value of the home. If it does not appraise for the amount you’ve requested, your loan may be declined. You will need to pay for the appraisal at closing.
While the appraisal protects the bank, the inspection protects you, the buyer. Most new homes undergo a 16-step inspection process during construction, but since some of the work may have been subcontracted, it’s always wise to get an inspection on a new home.
- Final walk-through and warranty
Once the home is complete, be sure that everything is exactly how it was laid out in the contract. Newly constructed homes usually come with a one-year warranty through the builder. Be sure your builder provides one, as it’s not required by law.
- Closing
Coordinate with your closing attorney and mortgage lender to learn everything you’ll need to bring with you to the closing. Be flexible because they may ask you for a few items at the last minute. You will need to have your funds in order, as well as any other loose ends, such as homeowner’s insurance, tied up. Personal checks are rarely accepted, so bring any money in the form of a cashier’s check. You will sign and get copies of several documents as well as ownership of the home at the closing.
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