If you’re considering buying a house, it’s important to keep in mind that you have two main options: resale homes or new build homes.
Prospective homebuyers often have a lot of questions about those two options, so here’s a breakdown of the answers to some of the most frequently asked questions about resale and new build homes.
A resale home is exactly what it sounds like. These are houses that have already been lived in by another person and they are now re-selling it. In theory, you could move into one of these houses and start happily living there as soon as your moving date arrives after closing.
A new build home is one where the buyer will be the first person to live in the home. They are typically either pre-construction which means the buyers have the opportunity to customize the home to their needs and preferences or they are what the industry calls a ‘spec’ home where the home is professionally curated by the builder’s design team, to provide the latest and most popular finishes. This ensures that the investment is maximized and a buyer can move in as soon as possible.
In general, it’s more expensive to buy a new build home than a move-in-ready home. That’s just the overall trend, though, so it’s certainly possible to find a new build home that’s cheaper than a comparable resale house.
The final price you’ll pay for a home depends on many factors including location, size of the house, interest rates, and more. With a new build home, you have to consider the base price of the home you’re buying plus any upgrades you want to include.
You may decide that it’s worth paying a little more for a new build home to be able to customize it and to have a home that no one has lived in and also offers a warranty New build homes will be brand new and typically more energy efficient, so that’s something to factor into the price. Resale homes can be older with multiple previous owners and needed repairs, both known and unknown, that would add to the cost immediately or shortly down the road.
Most people are familiar with the general buying process for a resale home. You secure financing, find a home for sale that fits your needs, make an offer, and eventually close on the sale.
The process for buying a production new build home is not much different You’ll still need to find mortgage financing but you might want to find out if the builder has a preferred lender, as there are often incentives to use these lenders that are familiar with construction processes and timelines. The builder does not get a financial kickback. They just know that in the end using a lender familiar with them and their processes with make for a smoother, happier transaction. . If you own a lot and plan to have a custom home built, that may require a construction loan.
Production builders are more than happy to work with real estate agents and welcome a buyer having one involved, although it isn’t necessary, as the builder’s sales team will walk a buyer through all the various steps throughout the process of the build.
If you don’t already know where you’d like to live, the next step is to narrow in on neighborhoods where you might want your new home. Some builders only work in specific neighborhoods so you can tie this in with your home builder search.
Look for home builders with strong reputations and an established track record. A local builder will make the process smoother. Once you choose a neighborhood and builder, you’ll choose a floor plan and lot. Not all floor plans fit on all lots, so your new build community manager will provide clarity on that. Once you have choses a plan and lot, you will make a deposit to hold it, so it can’t be secured by someone else.
Then the fun stuff starts. You’ll get to choose the exterior style of your home, then various options and upgrades. Again, the builder’s community manager will walk you through all your choices and estimates. During the build process you will have various meetings such as a framework and new home orientation. When the build is complete and inspected, you’ll do afinal walkthrough of your new home. A closing date will have been set and documents prepared.
The final step is closing on your new build home to complete the buying process. This is when you sign all the documents and, the best part – Get the Keys!
Yes, the mortgage process is different for custom built homes on your own lot In many cases, you’ll need a construction loan to pay for the building of the house. These kinds of loans cover costs like the materials and labor required to build your custom home
In some cases, once you’re done with the building phase of the project, the new build loan turns into a permanent long-term loan lasting 15 or 30 years like a typical mortgage. This is referred to as a single-closing loan.
When working with a production home builder that builds in particular neighborhoods it can vary depending on availability of labor and materials. Currently from contract to close it takes about 7-9 months. If the home builder has spec homes available that are already in the process of being built, it could be significantly less. It’s best to check with the builder to learn if they have any available and if not, what timeframe you would be looking at for a new build from dirt. Just remember, this is a home you will likely have for awhile, and if it’s your dream home or forever home, it’s worth the wait to get exactly what you want. .