As you buy your first newly built home, being the original owner of a new home is exciting. While the prospect of buying a home can be a little intimidating, breaking down the process into a few steps can make it easier to get started.
1. Work On Your Financial Plan
Visiting model homes and daydreaming about what you want in your own home can be a good way to develop your knowledge about houses and your preferences, but before you get serious about shopping you need to know how much you can afford to spend. If you don’t already have a monthly spending plan, now is the time to develop one. Before you can determine your new housing budget you need to know how much you currently spend on your housing and other expenses. Most financial advisors recommend that you stay in a home five to seven years or longer, so while you can project some increase in income, you should also consider future expenses such as an expanded family, saving for college and for retirement.
Deciding on your own comfort level with a housing payment rather than relying entirely on a lender is essential because only you know about discretionary spending for vacations, golf or skiing or your preference to sweep as much cash as possible into a retirement account.
Next, consult a lender who will review your credit, your income, your assets and the minimum payments on your debt to prequalify you for a mortgage. It’s important to meet as early as you can with a lender in case you need to improve your credit score or fix mistakes on your credit report, which could take a few months.
Your lender can talk to you about the pros and cons of loan options. You’re not obligated to take out your loan with this lender, but meeting with one gives you a solid understanding of how much you can afford to borrow and an estimate of your upfront costs. You can compare loans with various down payment amounts to see what fits your financial plan best.
2. Decide Why and When You Want to Move
Understanding your motivations to move and your timeline for moving should be your next step. Think about your goals for the next five to ten years and how a new house will fit into that plan. If you’re moving for a new job or to live in particular school district, that can streamline your choices for a new home. If you want a larger or smaller home or to live closer to the city or to a town center or to a Metro station, that, too, can help narrow your priorities.
Unlike buying a resale home that’s ready for you to move into within a month or two at most, you may have to wait six to nine months for a new home to be built. However, many builders have homes that are partially built that could be ready in two or three months or even one or two that are move-in ready. Decide when it would be ideal for you to move based on your current lease or the need to sell your house or your kids’ school schedule or to save more for a down payment and then match that with a homebuilding timeline.
3. Establish Your Priorities
A great exercise, particularly if you are buying a home with a spouse or partner, is to physically make a list of everything that’s important to you in your property from the basics such as whether you want a townhouse or a single family home and the number of bedrooms and bathrooms to design features such as an open kitchen or a walk-in closet. Write down your ideal location such as near shops or a park or a Metro station or a skating rink where your kids can play ice hockey.
Think about whether you want a house that you can customize as much as possible or whether the ability to make one or two decorative choices will satisfy your need for personalization.
It may be that sticking to your budget and finding a house you can easily afford is more important than anything else or that the location in a community you like matters more than the house itself.
Once you’ve made your lists, rank the items so you and your partner can see where you would each be willing to compromise and when something is nonnegotiable. Keep these lists handy as you start shopping for a new home. You may find that your priorities change as you see what’s available in your price range, but it’s always wise to have a way to refer back to your original intentions when you’re ready to make a decision.
4. Shop Online and In-Person
Now that you’ve got your financial plan, your timeline and your priorities in order, it’s time to have fun. In addition to perusing New Homes Guide for information about builders and communities, you can shop online and look at photos, floor plans and descriptions of homes on builder’s websites. Using those resources can save time, but visiting model homes in person is essential. While you’re out shopping, make sure you understand which features are standard and which are included. A model home naturally includes the best amenities available, so ask how much those upgrades cost. Find out how much you can modify a house. Some builders allow structural changes, but others limit your choices to one of two or three packages of cabinet and counter finishes.
Check out the community amenities, and if they are planned for the future, ask when they are scheduled to be completed. You don’t want to be a frustrated swimmer who waits years before the neighborhood pool is open.
You should also get an understanding of the long-term plans for the community. Buying in the beginning or the end of development each has pros and cons, so it’s a good idea to consider them when choosing a home. For instance, early buyers may get a lower price but they could have to wait longer for amenities and will be competing against new construction if they have to sell. Late buyers will have fewer choices for their lot and may be paying a higher price depending on how well the homes have sold.
Don’t forget to check out the surrounding neighborhoods and ask about future plans for development.
Each of these steps prepares you to make an informed decision about the best new home community to suit your needs.
This story originally appeared in the March/April 2017 edition of New Homes Guide. Reserve your free copy of the New Homes Guide print edition today.
