Buying New Construction Home Advice From A Lender

When home buyers are faced with the option of buying a new construction vs a previously occupied home, they usually go with the new construction home.

They don’t want someones old carpet that needs to be replaced, Pepto Bismol colored wallpaper that matches the carpet and all the personal effects of a former owner. Some home buyers want brand new without a single piece of hair on their new home.

New home under construction with wood, trusses and supplies

If you need a new home and the can smell the new kitchen smell as you read this, then here are a few tips for buying a new construction and making the experience enjoyable and make it work for YOU!

Hire Your Own Realtor From The Very Beginning When Looking At New Construction

Many prospective home buyers check out the new home construction site to see what the builder has to offer. Doing so, they usually sign up for email alerts for price update, new build site available alerts and other incentives. Doing so, you may go without representation and allow the builder to dictate what incentives they will offer you.

Find your own realtor and then allow them to introduce you to the builder and their on site rep.

** Remember the on site realtor/rep are paid to represent the best interest of the builder, no matter how many free cookies, muffins and coffee they offer you =)

Awesome realtors will help to negotiation the sales price, closing cost assistance and tons of other goodies when it comes to dealing with a great builder. Your realtor will have the fiduciary responsibility to update you through the entire process, good, bad or ugly about the process of getting you into this new construction. The realtors will put your best interest first and foremost before the builders.

Using the Builder’s Lenders

Builders usually have relationship with a mortgage company and prefer you to use their preferred lender as they are super aware of the relationship is on the line if they screw up the transactions for you and for the builder. It’s a way for it all to be a one stop shop for the builder and they can also count on timely updates of how the progress of loans are going. Also, keep in mind the builder and the mortgage company may be under one company that owes them both. Ask if using the builders lender if there is an incentive for using them vs another lender. Sometimes the builder will allow you to use your preferred lender and still give great incentives.

If you are giving the option of using your own lender, please reach out to us to get a preapproval letter to get the build underway

*** MAJOR*** Hire a Home Inspector

I HIGHLY suggest you hire a home inspector when buying a home, new construction or not. Hire someone you can check reviews and license against others. Do not go with a family member or friend who brought a home before just so you can save some funds. GET A REAL LICENSED INSPECTOR!!! Be sure to know when the home inspection will take place, so you can be there to ask questions and see if the new home has any defects or problems (Yes, even New construction can have house defects) Things could have been installed wrong or not installed at all, contracted construction workers sometimes miss things and make mistakes. No one wants to have HVAC issues because a construction worker went on lunch before finishing the job and forgot to complete the work when they came back or stuffed food wrappers in pvc pipe that is now being used in your guest bathroom.

The licensed home inspector will tell you if something needs to be address and if another licensed contractor should come here and fix an issue before you purchase.

Know the Builder’s Style and Reputation

Simply type the builders name into Google and Facebook and ride what others have side about their new construction after moving in and the process of becoming a homeowner in one of the builder’s communities. Be assure that in this day and age, if someone had a bad experience it will be on the internet for all to ride and digest. Understand if this is an isolated experience or a red flag of the builder.

** Check public records to see if any lawsuits have been filed against the builder

If the community has homeowners in there from the different phase builds, knock and introduce yourself to your future neighbors and ask how their experience was with the builders, the preferred mortgage company and even title/settlement company. Ask about the quality of the home, after a little wear and tear of staying in the home for a few months.

Ask if any investors are renting out some of the new homes, as you may not know, neighbors with high investor as more likely to have more foreclosed homes and home that are not upkeep as much as homeowner who lives in the home would. And if the market takes a dip the first to leave a community and bail on a home is an investor. One of the primary reasons you are buying new construction is to have a BRAND NEW home and to also be in a new neighbor surround by homeowners like you and not renters.

The author of this article is Brian Riddick with the Loan Rangers Lending Team and is a licensed Producing Branch Manager in the state of Virginia, North Carolina, Maryland And Washington D.C.

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