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Originally posted by 12dn94dst
I really do appreciate it. Anyone have any thoughts about buying new construction? The homes I'm considering are in new sub-divisions.
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Having purchased a new construction home, here's my 2 cents:
First and foremost, make sure your credit is in order!
I used the builder's in-house financing company to check my credit and pay the appropriate loan fees and lock in my interest rate, but if you have a mortgage company or bank that can better help you with the interest rate, GO FOR IT!!! BTW, know what kind of financing you want (variable, fixed, 2-1 buydown, balloon, etc.)
Builder: What is the reputation of the builder? Very important; you don't want to have a home built, move in, and there are major problems with the plumbing, wiring, etc.
Type of house: Do you want a ranch, or a two story? Basement or slab? I own a 1600 square foot ranch house on a slab (no basement) with a two-car garage. Basically it's a starter home until my income improves or until I start a family. I figure I can get into something better later on. Do you want a small home or one you can "grow into" when you get married?
Subdivision/part of town: Know the part of town you want to live well enough to insure that your home will keep its value: Crime and/or a bad school district will drop a property's value with the quicks, y'unnerstan? As for subdivisions, be prepared to follow the rules of the subdivision or pay hefty fines (rules such as size of satellite dishes, no outdoor clotheslines, no metal swingsets, no chain-link fences, no wooden fences over 4 ft. high, etc.). Also be prepared to pay subdivision association dues, which can be from $100-$500/year.
Work equity: It can be a great way to cut down your down payment. But if you have the $ and don't want to put on the 'ol hard hat, you can do that too. Most work equity involves scrape and sweep of spackle off the floor, mailbox and landscape installation, which can also include seed and straw of your yard, painting your front and service doors, and installation of towel racks and TP holders in the bathrooms, to say the least.
If you don't have the full 3% down payment at the time of signing the paperwork, you may be able pay in installments while your home is being built. You may even get some of it back at closing.
Extras: This is the fun part, but it can tack on to your purchase price, and mortgage payment. Do you want vaulted ceilings, a spare bedroom to be converted to a den, complete with french doors? How about an extra bathroom or a built-in microwave? Bay windows perhaps, or a special phone line for Internet access? Where do you want the lines for cable TV installed? Type of front door and kitchen cabinet style? A loft in the upstairs bedroom overlooking the downstrairs so you can see those bad kids tearing up your living room at all times. You get the picture. Also keep in mind that unless you plan to live in that home for the rest of your life, some extras you may need just to help make the home more marketable for a prospective buyer.
Construction issues: Stay on top of the progress of your home being built at all times. If the foreman isn't TCBing, call him out on it. Don't be afraid to be a pest or bug him with issues that concern you. However, please be tactful; I have heard stories of workers doing some nasty stuff to be spiteful (like leaving a pile of excrement in an isolated corner of your home).
TAXES. Be prepared to get a sudden hike in your mortgage payment for property taxes. Because the property may not be assessed by the county at closing, the taxes due may accrue from the time of closing up to a year after the closing. The builder will pay all taxes up to closing. Your method may vary, depending on the county you live and how they accrue and collect taxes.
Also, know the GEOGRAPHIC address in which you live as well as the school district so that you know which taxes you have to pay. This can make the difference b/t whether or not you have to pay school district taxes and/or a higher city tax rate. New build subdivisions often do not have clear geographic locations and with village and town annexations this can often obscure the issue even more
For instance, my postal address is not the same as my geographic address, and neither of the above is the same as the school district I live in. BTW, my postal address is at least 7 miles away from the actual city itself, while I live within 20 feet of a village whose post office I can walk to in 2 minutes. Go figure.
Hope this helps you.
RM