So, you’re thinking of buying a new home. Smart move. Believe the hype when folks tell you there’s no better time. Mortgage interest rates are at historic lows, though no one knows for exactly how long. Now’s your best opportunity to take action. Whether buying your first house or fifth, you need to be on your toes. This market waits for no one and that goes double for new construction homes.
Avoid these mistakes when buying a house to ensure you get the best deal possible and don’t end up with buyer’s remorse.
1. Getting prequalified but not preapproved.
Before you ever open up Zillow or start shopping with a realtor, you need to make sure you know how much you can afford. Period.
Understand that prequalification and preapproval are different. Prequals are just estimated rates and loan terms. To know what type of rate you qualify for, you’ll need a preapproval, a process that involves a lender pulling your credit. In the latter example, you essentially fill out your entire mortgage application before you even have a property in mind. The higher your credit score, the less debt you have, and the more money you put down, the lower your interest rate and monthly payment will likely be.
Keep in mind that most financial experts recommend spending less than 25-30% of your monthly income on housing, or roughly one week’s pay before taxes. You can use housing payment calculators like this one from Acorns to decide what that number is for your family.
2. Falling in love with a house without considering the entire neighborhood.
A home is likely the biggest purchase you’ll ever make. But remember that you’re not just investing in the property itself. You’re also investing in the community.
In the case of new construction, emerging Texas neighborhoods often represent some of the fastest growth and opportunity potential anywhere in the country. You can see plans for how your neighborhood and the surrounding area may change over time by looking at city and construction plans.
It’s also important to ask questions like whether the builder or community has restrictions against investor purchases, as this could really change the feel and composition of the community.
3. Waiting for “the one”.
As with much of life, when you’re buying a new home, timing is everything. Just don’t wait so long that you time yourself out of a great opportunity.
Interest rates are as low as they’ve ever been, but expected to gradually increase, along with housing prices in hot markets like Texas, which are also on the rise. Waiting too long to start your new construction homebuying journey could leave you paying more and delaying your dream of homeownership.
4. Forgetting to research your builder.
Going with a reputable, high-quality builder can make all the difference when purchasing a new construction home.
Make sure you do your due diligence in researching a potential builder. When looking at online reviews, keep in mind that the squeaky wheel usually gets the grease, but be mindful of distinguishable patterns like construction issues or closing delays.
5. Not having your new build inspected.
New construction homes are automatically problem-free, right? Not exactly. Though it’s true that major repairs like foundation work, roofing, and plumbing are not likely to be on the punch list, that doesn’t mean you shouldn’t have your new home inspected before your final builder walk-through.
In reality, you probably want to have more than one inspection performed. Paying for a pre-drywall inspection as well as a final inspection is highly recommended. After all, even the most experienced and well-reviewed homebuilders are still only human.
6. Foregoing a real estate agent when buying new.
There are plenty of differences between buying a pre-owned home and a new construction home. Working with a realtor isn’t one of them.
Not having real estate representation when buying a new build is a one of the most common homebuying mistakes people make. Your realtor serves as a go-between, helping you and the builder communicate, assists with things like home inspections, and in some cases, negotiates your closing costs.
7. Automatically going with the builder’s lender.
Only talking to one lender is one of the most common first-time homebuyer mistakes. In the overwhelming majority of cases, the builder’s preferred lender can probably offer you incentives and competitive rates that others can’t touch. Still, it’s good to shop around so you can feel confident you’re getting the absolute best deal.
8. Failing to read your purchase contracts carefully.
Purchase contracts for new construction properties are designed to protect both builder and buyer. Make sure you read them in full (yes, even the boring parts).
Doing so will help you understand the process of buying a new build and know what to expect in certain situations should things change from the time you make your offer until the time you close.
9. Not accounting for upgrade costs.
Some new construction homes allow buyers to pay for upgrades to the property. Work with your real estate broker and the builder’s representative to ensure you upgrade where necessary and fully understand the cost implications of doing so.
It’s not just first-timers who make homebuying mistakes. Even seasoned buyers can benefit from tips for buying your first home. The most important thing is to educate yourself so you feel empowered and prepared going into your new home purchase.
Consider one of Hillwood’s New Home Communities
Considering a move within or to Texas? Our new home communities have state-of-the-art amenities, award-winning lifestyle programs created to build community connections, and the top school districts in their areas. Find your community here or contact us for more information.