Construction Home Loan

Do not overbuild for the neighborhood. Having the biggest and most expensive house in the area may be wonderful for your ego, but it will be a disaster when it comes time to sell.             

Build for resale. No matter how long you intend to stay in the house you build, it will have to be sold at some point (which is often sooner rather than later). Never build strictly for your own needs and tastes--a 1 bedroom 3 bath house may be perfect for you, but it will be next to impossible to sell. 

Get the best contractor your budget will allow. When building a house, quality is usually more important than quantity.                         

Be prepared for delays. When building a new construction home it is a complicated project and utilizes dozens of subcontractors, workers and suppliers. Delays can and probably will happen, and that will back up the entire process.

• A delay, for example, in the framing stage stops everything: electricians and plumbers are unable to do their "rough-in" work until the framing is completed. Do not lock your move-in date in stone--it may be weeks later.

Mortgage Lender’s Outlet suggests tracking the progress of the house building as much as possible. During new construction a lot can be accomplished in a short amount of time. This is especially true during the framing stage. Catching a mistake early will save a lot of headaches later.

Watch your new construction allowances. Generally, in the total cost of building a new house you will be given allowances for such items as flooring (carpeting and vinyl), lighting, plumbing fixtures, etc. Make certain that you can actually get the materials you want within the allowance amount.

• For example, if you have a $4500 flooring allowance and the carpeting and vinyl floors you want will cost $5500, you are the one who will have to make up the $2000 difference. These "allowance overruns" can add up quickly!

Purchasing from a Builder

Buying a new construction home is a major purchase.  From picking your lot, to choosing your upgrades, to moving in - The entire process can take months, if not longer to complete

New home buying begins with research - look at homes and communities, and talk with builders. Do some pre-planning to help you to focus on the decisions ahead and prepare you for a successful house search.

Define what you are looking for in your new home and community, it helps to identify your needs and wants: 

• Type and size of home; number of bedrooms; other space requirements, e.g. garage.
• Layout: open or divided spaces; flexibility for future changes.
• Outdoor living areas: space and privacy.
• Desired features for looks or convenience.
• Special considerations, e.g. accessibility for household members with mobility restrictions.
• Distance to work, shopping and medical facilities.
• Public transportation.
• Schools, recreational facilities, places of worship.
• Green spaces.

Get pre-approved for your New Home project

It is a good idea to determine your price range before you start looking for your new home.  Discuss with your Mortgage Professional your options for a pre-approval.  That way, you know exactly how much you can afford to spend on your new home.

With a pre-approval, your lender approves the amount of your mortgage and gives you a written confirmation or certificate for a fixed time period before you start looking for a home. The pre-approval term, for new home usually lasts up to 365 days, also sets the mortgage rate the lender will offer to you. If rates go down in that period, the lender should offer you the new lower rate.

Selecting the right builder for you..

Buying a new home may present some advantages over resale properties. You get everything you want in a house right from the start.  You may have a choice of upgrades and are able to define the look and style of your home. 

If you decide to buy a brand-new home, it is extremely important to choose the right builder.  When you choose to buy a new home, you also buy the company that will build it.  Your experience and satisfaction will depend on their experience, their skills and their commitment to customer service.  Ensure that your builder has the qualifications and the ability to meet your needs and expectations.

There are thousands of builders in the surrounding areas, ranging from small companies building a few houses a year to large builder-developers constructing thousands of homes annually. Whether you live in a large urban area or a smaller community, you will have a number of builders to choose from.

Each company may offer a different selection of homes. Some may focus on specific market segments or neighborhoods. Others may specialize in particular types of homes or have certain distinctive expertise, such as adult lifestyle design or energy efficiency.

Every company does business in its own unique way.

To ensure a builder’s credibility and quality, ask for references, talk to other customers about the builder’s work or check with the new home warranty program.  Before choosing which one to buy from, take a close look at each builder you are considering and always ask several questions.