Buying a new home is always an exciting time, but it can also be notoriously stressful. While some stress is usually unavoidable in the process of moving home, our guide below will help you start your journey on the right foot.
Why buy a new construction home?
There are pros and cons to buying any home, so let’s take a look at the pros and cons of buying a new construction home.
- Brand new home – no one else has put their stamp on it
- If you buy your home before or as it’s being built, you may be able to make some key decisions about kitchen cabinets, flooring, etc
- You’re not going to discover something is wrong with the house due to age or neglect by the last owner
- New homes have a warranty
- You can’t find a more energy-efficient home (especially if you buy from an energy efficiency-focused builder like us)
- You usually have to wait unless you’re buying a home that is finished
- Things that are outside the builder’s control can delay the build
- A lot of decisions to be made if the home isn’t finished, which can get a little overwhelming
5 Steps to Buying a New Construction Home
1. Decide Where You Want to Live & What Kind of Home You Want to Buy
This may sound obvious, but the first step is to look at developments and builders in the area(s) you’re interested in and reach out to them about their plans if they don’t already have a community you’re interested in.
Also, consider what kind of home you want to buy. Generally, there are four types of new-construction homes to choose from:
A buildable home plan: here, a builder will set floor plans for buyers to select for empty lots. You will get to have a say in any major decisions on the finish of the home.
An inventory home or speculative “spec” home: this is where you buy a home that’s already in the process of being built. Depending on how far along the process it is, you may or may not have a say in the finish of the home.
Semi-custom homes: these are the middle ground between a custom build and a buildable home plan. Here, you purchase the lot and select floor plans with some scope to make structural changes.
Custom homes: are entirely customized by the owner. This option involves the most work and is, unsurprisingly, the most costly.
2. Decide How You’ll Fund It (& Where You’ll Live in the Meantime)
Once you’ve decided to buy a new construction home, you need to think about funding. You’ll usually need to seek a home construction loan, but a mortgage expert can help you decide what’s right for you.
You can also consider “buy-down” programs. This is where you can pay more cash upfront to save interest on your loan later. One point equals 1% of the purchase price (for example, you would get 1 point for $1,000 on a $100,000 home). The more points you have, the more you can save on the interest of your loan. Considering interest rates are currently increasing, this could be an incredibly beneficial strategy.
You’ll also need to consider where you’ll live while your home is being built if you need to sell your current home to fund the purchase of your new home. There are loans that can help you do this (such as bridge loans, but they come with risk so step cautiously), but it may be best to rent or stay with family if you cannot fund your new home and stay in your current home while it’s being built.
3. Enjoy the Process
From here, your home will be built, and you’ll either start getting ready to move in or can start making all the fun decisions about the decor of your new home. Most people visit their new home regularly throughout the process (if they live locally) to see the progress and check that things are moving smoothly. Once the house is complete and you’re ready to move in, it’s closing time!
Common Mistakes to Avoid
Your builder will endeavor to do everything they can to ensure the process is moving smoothly, but there are some common mistakes we see buyers make. Here are a few quick tips to help you avoid them:
- Work with the right builder – don’t choose a builder because they’re cheap or simply because they’re building in the area you’d like to live in. Review your potential builder’s values and build standards to make sure you’re getting the best product for your money.
- Don’t work on a tight timeline – your builder will do everything they can to get the house done on the timeline they told you, but you should expect some delays. Bad weather, economic conditions, made-to-order cabinets, and other factors that are out of their hands can delay the process.
- Think about additional expenses – Make sure you’re clear about what is and isn’t included in the finished home and what you want to fix straight away so you can budget for them as the home is being built. Consider things like curtains and blinds, landscaping the front and backyard, and appliances.
Buying a new construction home is one of the most exciting ways you can buy a home, but the extended timeline can be stressful if you aren’t prepared. With this guide, you’ll be well-equipped to buy a new construction home. If you’re thinking about moving to the Prescott Valley, Clarkdale, or Flagstaff area, take a look at our communities to see if they’d be right for you.