Looking to Buy a Brand New Home?

Looking to Buy a Brand New Home?

If you have your eye on a brand new home and want to be the first person to ever cross that threshold, we have some tips for you. Learn what to look for when buying a newly constructed home.

Get a Buyer’s Agent
Your Builder’s team will be more than happy to help you buy your home, but you want to make sure you have someone looking out for you and only you. Your Agent will represent you and your interests, help you ask the right questions and help make the best possible deal. The builder pays the Agent’s commission typically, but there’s one loophole—many builders want that Agent there from step one so play it safe and bring them in right at the beginning of the process.

Shop for the Best Mortgage
You’ll probably get a list of preferred lenders from your Builder. You are not obligated to work with them, but there may be some benefits to working with them. Ultimately, you need to feel comfortable and choose the lender that’s best for you and your situation. It’s always best to shop around.

Get Pre-Approved
This is critical. Call your Loan Officer as soon as you start the process. This will help you determine exactly what you can afford to spend on this new dream home.

Research the Location
Take a ride around the development. Look at the surrounding community. Watch traffic at different times of day. Do this before you fall in love with the floor plan and site plan.

Research the Builder
This is key. Check them out on the Better Business Bureau website, talk with local real estate agents, and check for customer complaints online. It’s important to understand the Builder’s reputation and work ethic.

Consider the Total Cost
Certain items come standard in the base price of a new construction home. That price is typically lower than what you’ll end up paying. Before moving forward, make sure you know exactly what features you’re getting and what you’ll pay for them so you have time to look at other options if needed.

Investigate Property Taxes
Your Builder will give you an estimate of course, but it’s always best to contact your local tax authority directly. As your home is built and changes are made, the Builder’s estimate may not be as accurate as you’d like. Only when the home is complete, will you know the exact cost. Your tax authority has the experience to estimate these costs more accurately.

Arrange for at Least One Inspection
During the build, you’ll be able to bring in a home inspector. Protect your important investment. The inspector can find any mistakes or problems. Builders will usually allow for two inspections—one pre-drywall inspection and one when the home is complete. You pay for these inspections, but it’s money well-spent!

What is in the Warranty?
Your new home will come with a warranty from your Builder. Review this in its entirety and don’t make assumptions about what’s included. Know what’s covered and for how long.

Understanding New Construction Loans

New construction loans are a type of financing specifically designed for individuals who want to build a custom home from the ground up. These loans differ from traditional mortgages used to purchase existing homes. Here are some key points to consider about new construction loans:

  • Loan Structure: New construction loans typically have a different structure compared to conventional mortgages. They are often interest-only during the construction phase, which means you only pay interest on the funds disbursed for construction until the home is completed.
  • Draw Process: With a new construction loan, funds are distributed in “draws” at various stages of construction. The builder requests these draws to cover expenses like materials and labor. An appraiser may assess the property’s value at each stage before disbursing funds.
  • Transition to a Mortgage: Once the construction is finished, the loan can transition into a traditional mortgage, such as a fixed-rate or adjustable-rate mortgage. At this point, you’ll start making principal and interest payments.

Market for New Construction Housing

The market for new construction housing has been dynamic and promising in recent times. Several positive trends have been observed:

  • Strong Demand: There is a growing demand for new construction homes, driven by various factors such as low interest rates, increased preference for customizable spaces, and a desire for energy-efficient, modern designs.
  • Advancements in Sustainability: Builders are increasingly incorporating sustainable and eco-friendly features into new construction homes. This not only aligns with environmental concerns but also appeals to buyers looking for long-term cost savings.
  • Technology Integration: Modern new construction homes often come equipped with smart home technology, making daily life more convenient and efficient for homeowners.
  • Available Financing Options: A diverse range of financing options has made it more accessible for buyers to invest in new construction homes, further boosting demand.
  • Diverse Options: The new construction housing market offers a wide range of options, from entry-level homes to luxury properties, catering to a broad spectrum of buyers.
  • Surging Mortgage Rates: have put the market for existing homes into a state of deadlock, where homeowners have grown reluctant to sell and abandon the low rates they secured over the last few years.

According to the Census Bureau, sales of new homes rose 4.4% in July from June, making for a 31.5% increase on the year. If sales continued that pace for the entire year, 714,000 houses would sell, the fastest seasonally-adjusted annual rate since February 2022.

Transform Your Dream Home into Reality

Embrace Home Loans® opens the door to making your dream of a custom-built home a reality. With our expertise in new construction financing, you can seize this opportune moment in the flourishing market for new construction housing.

By forging a close partnership with Embrace Home Loans, your REALTOR®, your Buyers Agent, and builder, you’ll expertly navigate the intricate journey of new construction, ensuring that your dream home becomes more than just a vision—it becomes your cherished reality.

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