What’s involved in buying a home that isn’t built yet? Before you accept common misconceptions, New Home Inc has answers to 14 most frequently asked questions (FAQs) for buying a new construction home.
1. What are my choices for a new construction home? Do I start right from the beginning or choose one that’s under construction or already built?
You can do either! If you have to move quickly or don’t have about six months to build a home from the ground up, a home that is already in the build process or finished would be a great fit. You still get all the benefits of new construction and can move in more quickly.
If you want to choose every detail—interior and exterior—then start by visiting communities where new homes are coming. New Home Inc is planning new homes and communities and we’re happy to guide you through the process of choosing your new home and all the features.
2. How long does it take to build a home?
In normal circumstances, a new home could be built from the ground up in about six months. With the surge in homebuying, the demand on building materials has strained the inventory. Manufacturers of lumber and other building supplies have been trying to keep up with demand but limited availability has caused a slowdown. We’re all working together to build homes to solve the problem and returned to a more timely building.
3. What’s included in the price?
Included features vary from builder to builder. Even within the same community, you might find that certain floor plans include more or less standard features than others. Ask the new home sales professional for a list of included features. If there’s something you want that’s not on the list, ask about adding it. There may be a cost (known as an “upgrade”), but you never know until you ask!
4. Can I choose my own details?
Your choices will depend on the stage at which you contract to buy the new construction home. If construction hasn’t started or is in the very early stages, you’ll have more design selections. As the building process moves along, the builder has already committed to features like cabinets and countertops. If you want to personalize your home, it’s better to make the commitment as early as possible in the construction process.
5. Can I provide my own floor plan?
Some builders allow you to bring your own floor plans, but that option comes with a price. You will be paying for a custom build, which is usually higher than if you use a builder’s tried-and-true home designs. When a builder has experience with a floorplan, they know it’s accurate. They also purchase building materials in higher quantities, according to their plans, making it more affordable to the homebuyer. If you provide floor plans to a builder and there’s an error, you are responsible for all costs in correcting it, which could result in additional labor and materials.
6. Do I need to find the land or does the builder do that?
Many builders have purchased homesites for future builds. Some have entire communities where you can choose your lot; others find buildable lots in various areas. Before purchasing your own land, have your builder evaluate it to make sure the property will suit your plans and even be able to pass the necessary inspections to be considered a buildable lot.
7. Do I need to secure a construction loan?
When you contract to buy a home on land owned by the builder—like in a community or subdivision—you don’t need a construction loan. If you are having a home built on your land, you will need to obtain a construction loan, which is a short-term loan for the cost of construction. You can also get a Construction-to-Permanent Loan, which automatically converts from paying only interest during construction to a mortgage when the construction is complete. Construction loans are considered higher risk because buyers don’t always see it through to the completion of the home. As a result, plan to pay a higher rate and put more money down.
8. Is the mortgage approval and closing process the same as it is for buying an existing/resale home?
Whether buying a new construction home or a resale, mortgage pre-approval is the first step. If you choose a spec home that’s complete, the mortgage process is identical to buying a resale home.
When you buy a home to be built or that’s under construction on property owned by the builder, you don’t need a construction loan. You’ll have just one closing when your home is finished.
With a to-be-built home, you will need mortgage pre-approval for the maximum amount you plan to borrow (which includes all options and upgrades). Before closing, the lender will re-verify that you still qualify for the total amount of the loan.
9. Should I use a Realtor?
A Realtor is a valuable resource for homebuyers. They know the local markets they serve—what’s selling and for how much, what’s coming on the market, and up-and-coming locations. At New Home Inc, our team members are licensed Realtors so they understand the ins and outs of buying and selling homes.. If you have a Realtor you trust, particularly someone experienced with new construction, include them in your new home search. If not, you can feel confidant working directly with New Home Inc associates.
10. What is a rate lock?
A rate lock ensures that you get a certain rate, even if the rate goes up before you close on your new construction home. However, most rate locks have a time limit, often 30 to 60 days, which is one difference between buying a completed home versus one that isn’t yet built. Some lenders offer a longer guarantee, but you might pay a fee for doing so. Talk to your lender to determine when you can and should lock in your interest rate.
11. Is there any benefit to using a builder’s preferred lender?
A preferred lender is someone who has proven to be a reliable, professional resource for homebuyers of a particular home builder. There is no contractual agreement, no commission involved. The lender has simply demonstrated excellence in serving the homebuyers. Preferred lenders understand the new home construction process, so they know when to process certain documentation, which prevents delays. A preferred lender might also offer incentives, like closing cost credits, so before you decide on a mortgage lender, ask about the builder’s preferred lenders to determine if they’ll be the best choice to handle your mortgage.
12. When do I close on a new construction home?
Before you can close on your home, it must pass the required inspection for various systems and features (e.g., electrical, fire code, HVAC) to qualify for the Certificate of Occupancy. . You can close on a home before it is certified as complete, but will require at least a Temporary Certificate of Occupancy. This certificate is usually valid for 60 days. The temporary certification has a checklist of minor items that must be fixed before the Certificate of Occupancy can be issued. New Home Inc has launched its own program to certify our homes as Smart/Healthy/New, which holds our new construction homes to even higher standards.
13. How much deposit do I need to provide for a new home?
When you buy a new construction home, the builder establishes an amount to be paid when you sign the purchase agreement. This builder deposit shows you are entering the agreement with the intent to complete the purchase. The amount of this deposit is determined by the builder, often a small percentage of the purchase price. Before you sign the contract and pay the earnest money, find out if any portion is refundable if you need to cancel the contract.
14. What kind of warranty is included with a new home?
You’re making a big investment when buying a new home so you should expect your builder to guarantee their work. New Home Inc offers what’s known as a 2-10 warranty, in addition to our own builder’s warranty. This combined protection offers several layers of coverage. Your home is covered from all defects in materials or workmanship for the first year (beginning from the closing date). Systems—electrical, plumbing, HVAC—are covered for two years. The home’s structure is covered for ten years from your closing date. In addition, your home’s systems and appliances are covered by the manufacturer’s warranty.
How do I choose a homebuilder in the Raleigh area?
This is the most important question. Finding the builder who adheres to quality standards—for materials, craftsmanship, and customer service—is going to make a big difference in the experience, from construction and beyond. New Home Inc builds new construction homes throughout the greater Raleigh area. We apply a customer-centered approach for every step of the home buying and home building processes. Our new homes for sale in Raleigh reflect the latest research in what homebuyers want and need. We look at lifestyle trends, smart home automation, healthy-home options, and energy-efficient building.
The result of these efforts is a new construction home that is future-proof—flexible enough to support your lifestyle for years to come.
At New Home Inc we get the answers you need before buying a new construction home in Raleigh area!