5 Things You Need to Know About Buying a New Construction Home in Hinckley

If you can afford and can buy in the right area buying a new construction home may seem like a no-brainer. You get a brand-new, never-before-lived-in home built to your specifications and with the exact features you want. What could be better and easier, right? Buying such a home isn’t always all that easy, and you still have to exercise caution in some areas. Read on to find out the 5 things you need to know about buying a new construction home in Hinckley.

1. The Financial Side Is Different

Yes, when buying a new construction home in Hinckley or anywhere else, you still need to get pre-approved first. “Before your builder will begin building your dream home, they want to make sure that you have been approved for a loan. They don’t want to get to the end of the building process only to find that you can’t secure financing, forcing them to have to search for someone else interested in buying new construction.”

But you may not be aware that the loan process is different for a new construction home. You won’t be applying for and getting pre-approved for a mortgage. Rather, you will have to secure a home construction loan. “Unlike a mortgage, which releases all of the funds at once, these loans are released to the builder in increments (called draws). Once your home is complete, the home construction loan is rolled into a regular 30-year mortgage.”

In addition, not all lenders offer these loans because nothing yet exists to secure the loan – the “collateral, the home, is not yet built.” And lenders who do offer these loans will likely have stricter lending requirements than they do with a straight-up mortgage.

2. Be Prepared to Put 10% Or More Down

Buyers have many options for buying an existing home with a down payment of less than 10%. But with a new construction home, that is very rarely possible.

“It’s possible to buy an existing home without making a 10% down payment. But when you buy new construction, you need to put down 10% or even more.” Here’s how one buyer explains her experience: “When we bought our home, my husband and I were required to put down 20% on our home’s purchase price, even though we both had excellent credit scores. This was required to give the builders more of a guarantee that the deal wouldn’t fall through.”

If you’re considering buying new construction, contact an Hinckley agent at (440) 628-1321 to find out what you should expect with respect to down payments in your area. 

3. The Model Home Isn’t Standard

Also, if you’re going to buy a new construction home, you will probably tour a model home (or more) at some point. You need to keep in mind that all the features you see in the model home are not standard.

A model home is basically an interactive showroom outfitted with all the premium upgrades to entice buyers. They are intended to display all the customization a builder offers and to allow potential buyers to fully experience a home’s design potential. But you won’t get all that in a standard model/

The model home’s features aren’t reflected in the base price. Base sales prices are commonly based on construction with “builder-grade” options, which are of lower quality and not the premium materials and finishes you see in a model home. So if you want those bells and whistles, be prepared to pay a lot more.

4. You Should Still Get an Inspection

Many people who buy a new construction house assume that an inspection isn’t needed because the builder is reputable and the home is brand new. But this can be a costly mistake because even new construction can have structural issues. So you should still get an inspection done by a licensed professional before closing.

Yes, builders take care of city and county inspections, and they usually have their own third-party quality-control company look things over. But this is not the same as a bona fide inspection and does not replace an inspection by a licensed professional. 

Your inspector will verify that everything is up to code and that none of the work is subpar. If the inspector does find any problems or issues, she will include that in the inspection reports. You can then take the report to the builder and negotiate fixes for the problems.

5. And You Still Need an Agent

On the face of it, buying a new construction home would seem to obviate the need for an agent. It’s all so straightforward, and the home is brand new, right?

Nevertheless, industry experts recommend that you hire an agent early on. “The salesperson who is discussing features, upgrades, and pricing with you actually works for the builder and is there to represent them. You need [an] agent who will have your best interests in mind when buying a new construction house.”

Not only can your agent help you negotiate a better deal, but she can help you understand the contract (which is very different from a contract for an existing home) and the many builder’s warranties. “Your agent can also help you if there are any delays in construction, problems with inspections, or if you want to negotiate upgrades to the standard features.”

We have agents who can help make your new-construction buying experience all that you hoped it would be.

So if you’re considering buying a new construction home in Hinckley, be sure to contact us at (440) 628-1321.