Building a home is a lot different than buying an existing home, and there are some important facts to know before making that commitment.
One of the best things about building a home is the privilege of choosing certain design elements like paint color, carpet color, bricks or siding, flooring, wallpaper, etc. In most cases, you also choose your floor plan. In addition, many builders offer upgrades that let you choose molding, tile, counter tops and sometimes even sink fixtures for an added cost. This can save you a lot of time and money after you move in, because the house is built to your specifications, and you won't feel the need to remodel.
On the other hand, the buying process is generally longer when you build, because construction must be complete before you close on your mortgage loan. Weather could prolong the process even more, and during that time period, interest rates could go up or down significantly.
There's also the reputation of the builder to take into account. Choosing builders without knowing anything about the quality of their work could result in a house full of mistakes that will cost you money down the road.
The Better Business Bureau offers these tips for avoiding common pitfalls associated with building a new home:
- Zero in on land plans. How can you find out what you're getting into when you buy the ninth house built in a 200-home development? Ask the town's land planner about current zoning requirements and any proposals that have been submitted to develop nearby land.
- Visit the developer's earlier projects to check out the quality of the community centers, landscaping, and other amenities. Ask residents if the developer delivered what was promised. Check with your local Better Business Bureau for a reliability report on the developer.
- Check out the homeowners' association. In large metro areas, at least half of new home sales include membership in a homeowners' association, according to the Community Associations Institute. Ask for a copy of the association's rules as soon as you're seriously interested in buying. Find out how much the association fee is.
- Carefully scrutinize the contract, and consider legal review before signing. Make sure any upgrades are included in the contract. Also, add a statement to the contract allowing you to visit the site at several designated times. Keep your deposit check as small as possible. That money is at risk until you and your family move in.
- Inspect the finished product. Before you take delivery of the property, give the new house a top-to-bottom examination yourself and consider bringing along an experienced new-home inspector with you.
- Protect your mortgage rate. As the closing date approaches, you'll want to lock in your interest rate. If delays occur, talk to your lending institution. It may agree to extend your rate lock-in. If that doesn't work, ask the lender to close the loan and hold some of the money in escrow until the appraiser verifies the home is complete.