Categories: Buying a New Home | Posted: September 5, 2017
Buying a new home can be daunting, especially if it’s your first one! That’s why we’ve put together a list of home buying tips to help guide you through the home buying process.
Here, we’ve covered everything from financing to how to search for the best builder for you. Before you know it, you’ll be ready to dive right into the buying process.
Step One: Decide What You Can Spend
At this point, you should ideally have some cash saved up for a home down payment. Typically, you’ll want to make sure you have twenty percent saved up of what the total home cost will be. So, if your home budget is $220,000, you’d want to have $44,000 saved up to put down for a new home. This would set you up with a mortgage of $176,000.
That’s a sizable chunk of change, but thankfully there are several programs out there that can help with down payments, especially if you’re a first-time homebuyer. A homeownership program would be your best bet. These can include loans, grants, and even tax credits geared towards first-time home buyers.
Many builders will often work with a preferred lender, which gets you access to even more deals! Typically, the preferred lender will be able to find the best deals for you or may even have special deals just for a specific builder.
You’ll want to get Pre-Approved or Prequalified, especially before you talk to a builder. This will help reveal what kind of a mortgage you can obtain. Pre-Approval happens when a credit check is run and, combined with the current down payment amount available, an estimated amount is given to the buyer.
Prequalification, on the other hand, happens after a mortgage company interviews a buyer and, based on that interview, provides an estimate. Usually, the Pre-Approval route has more weight.
Step Two: Pick Your Location
Before you can effectively search for builders, you need to decide the general area you want to live. Now, this doesn’t have to get incredibly specific quite yet – you can finalize it once you’ve zeroed in on a builder and learn what areas they serve. Many builders will also build on your lot, but often within a selected metro area or zip code.
However, before you get to that point you’ll want to narrow down what you’re wanting out of your location. Is walkability incredibly important to you, or are you fine with driving? Do you want a short commute to the city, or are you looking for a more rural area? The answers to these questions will help you narrow down the general metro area or even specific town you might want to live in.
And if you’re already satisfied with your current location and are just looking for a new home, perfect! You’ve successfully completed the second step in the process with minimal effort.
Step Three: Pick Your Home Type
You’ve got your budget and your location – now’s the time to decide what kind of house you’re looking for! That way, you’ll be able to weed out any builders who don’t fit the style or type that you’re desiring.
Are you wanting a ranch home, or do you need a home with two stories? How many garages do you need? Is not having a large yard or patio a dealbreaker? You’ll want to make sure you at least have a general idea before you leap onto the Internet.
Step Four: Begin Researching Builders
Now that you have a general idea of your home type, how much you can spend, and where you want to live, you can start creating your list of potential builders.
There are several ways you can conduct this search: you can type things like “Lexington builders” into Google, browse Zillow or Trulia, or you can even drive around and scope out neighborhoods in your area.
Once you’ve zeroed in on a builder, take the time to do your research. Explore their website and look for the following:
- Do they cover financing options, or do they provide you a resource to someone who can help you with financing?
- Are they upfront about their prices and general building schedules?
- Do they give a face to the name and let you know who you’ll be talking to?
- Check their social media: are they on top of responding to customers, and does it seem like buyers are generally happy with the quality of their work?
- What does their warranty program look like?
Step Five: Visit Houses
You’re almost there! Now’s the time to set up appointments to visit communities and model homes with the builder who’s passed your test. At this point, you’ll begin talking with the sales representative for the builder (or builders, if you’re looking at multiple).
Now is the time ask any lingering questions that weren’t answered by the website, and the representative typically has questions for you as well as they work to find the home for you.
If possible, try to see examples of homes that both have been staged (with furniture set up) as well as those that are still empty. That way, you can have an idea as to what kind of furniture will fit in your new home but you’ll also be able to gain a good idea as to the space you’ll be dealing with once the home is complete.
Here are some suggested questions for your sales rep:
- How will the financing process work? Do you have an estimated cost for XYZ home?
- What are the personalization options I will have?
- Will I have a contact throughout the building process?
- What separates you from the competition?
- Can I bring my own lot, or do I need to choose one of yours?
- If I need to choose one of your lots, is the price included in the cost of the plan?
Step Six: Secure Financing & Sign the Contract
Ready to commit? You’ve reached the final step in the home research process! This is where you seal the deal on your new home and sign the contract with your chosen builder. Congratulations! You just learned how to buy a house.
From here, you’ll either work with the builder’s preferred lender to secure financing for your new home. Since you’re already pre-approved or pre-qualified, this should be a snap. Happy home building!