Steps to Buying a New Home: Your 7 Step Guide
If you’re exploring the option of buying a new construction home in Raleigh or its surrounding areas, chances are you’ve got some questions about the steps to buying a new home. While the process does require a few more steps than buying a used home, it’s all worth it in the end. Not only do you get to select a floor plan and homesite that exactly fit your needs, but you also get to choose the finishes and features that you’ve always dreamed of in a home. Here’s how the new home buying process typically works:
1) Step One to Buying a New Home: Floor Plan Selection
Your New Home Specialist is likely the first person you will meet when you walk into a model home or community sales center. He or she will work with you to select your floor plan, asking questions about how you like to live, what you want to change about your current living situation, etc. At New Home Inc, we offer a variety of plans with different lifestyle opportunities and even can personalize those plans to meet your requirements. As you go through the floor plan selection process, there are a few questions you should ask yourself early on:
- Do you plan to start or grow a family?
- Within the next 5-10 years will I still want the flexibility of stairs, or will I need most of my living on the first floor?
- How many bedrooms and bathrooms do you need to comfortably accommodate your family and guests?
- Where should the bedrooms be located in the home?
- Do you ever work from home?
- Do you enjoy entertaining?
Knowing the answers to these questions up front will help your New Home Inc Specialist narrow down the best options, and save you time in making a final selection.
2) Step Two to Buying a New Home: Homesite Selection
The next step to buying a new home is deciding which community to build your floor plan in, or if you already have that narrowed down, where in the community you’d like your home to be located. Most builders typically release homesites in phases, so that they can build out one area of a community at a time, creating a neighborhood feel right from the beginning. Homesites within a phase can have lots of variety, so it’s best to consider the ideal type of land for your lifestyle:
- Do you need a flat, grassy yard for your kids to run?
- Do you prefer mature trees for privacy or shade?
- What would be your ideal view from a particular room in the house?
- Would you prefer a smaller lot so you have less yard maintenance?
- Do you prefer the privacy of a corner or cul-de-sac lot?
Again, thinking about these answers now will make the decision-making easier, allowing you to reserve your perfect homesite before anyone else does.
3) Step Three to Buying a New Home: Financing
When you’re building a new home, you have a few financing options available to you. One is that the builder can assume the construction loan, which means the building company owns the homesite until construction is complete. You will typically find this when selecting a home inside of the builder’s own community. You would pay a deposit (similar to earnest money in the case of a used home) in order for building to begin. Once the home is complete, you would take out a regular mortgage based on the terms agreed upon with your lender, and at closing, ownership of the land and home transfers from the builder to you.
Alternatively is the construction-to-permanent loan, where you finance the entire construction process and the cost of the lot with one loan. This can also be referred to as “Cost Plus”. You make only one application with your lender, have one closing, and pay only one set of closing costs.
During the construction process, you own the land, and the builder will request milestone payments from the lender, supported by detailed documentation. The lender will disburse those funds, and that is the amount that you will make interest-only payments on. Once your home is complete, your construction-to-permanent loan will convert to a standard 15- or 30-year fixed-rate mortgage, and you will begin paying principal and interest just like a traditional home mortgage. This may seem overwhelming, but with the right builder it can be quite easy.
For more information on financing, please contact us to speak with a preferred lender.
4) Step Four to Buying a New Home: Sales Agreement
Once you’ve got your financing in order, the builder will need a signed sales agreement in order to kick off the building process. This contract will cover the basics of the decisions you’ve made up until this point: floor plan, lot, address, price, items that are included with the home, and any special conditions. It will also include timelines for selections, deposits, and the construction process itself, so that your build stays on schedule. Lastly, the contract will include the contact information for key people you’ll need to communicate with along the way. Once all parties sign off, the sales agreement serves as a guide to getting your house built on time and within budget!
5) Step Five: Finishes
One your sales agreement is finalized, it’s time for some fun! A builder typically allows homebuyers to make some or all finish selections, so that their home is a true reflection of their style. You’ll work with a professional interior designer to select cabinets, flooring, light fixtures, paint colors, exterior elevations, landscaping, and more.
A useful tip is to keep a record of your favorite interior looks — that could be magazine clippings or Instagram photos saved to a folder. It’s best to go into your design appointment having an idea of what you like; that way, your designer can present a few options that really hit the mark. By working with a professional designer, you’ll have the benefit and peace of mind knowing that everything you selected will work together cohesively in your home.
Your home builder may have a design center where they’ve assembled all the products that are available for you to choose from. Alternatively, the builders designer may accompany you to a handful of locations where you can choose your finishes. Either way, you’ll have professional design guidance every step of the way. At New Home Inc, we have full time professional designers on staff to help walk you through the entire process.
6) Step Six: Construction Process
By the time construction starts, all your selections have been finalized, pricing has been set, and agreements have been signed. Pouring the foundation of your dream home is one of life’s most exciting moments! Throughout the process, your Project Manager will keep you in the loop with updates and developments, often through a weekly email or phone call. You’ll also participate in a series of walk-throughs to make sure you are satisfied with the progress. Construction times vary depending on the level of customization, but the wait is always worth it.
7) Step Seven: Closing on Your New Home
Construction is complete and you’re almost to the finish line! All you have to do is attend your New Home Orientation to learn how your home and all its systems work. Once your builder has your final sign-off, you’ll close on your new home, receive the keys, and move into the dream home you’ve worked so hard for. HOME SWEET HOME.
There’s a lot that goes into buying a new home, but working with a great builder makes the process smooth, exciting, and enjoyable! For more information on building in the Greater Raleigh area with New Home Inc., please contact us. We can’t wait to start building with you!
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