Table of Contents
Think you're ready for the adventure of building a home? You're in the right place. Learning what to expect is the first step, so let's get you prepared for the journey ahead.
☐ Talk to a trusted lender
Before you get your heart set on a floor plan or even a builder, get pre-approved. Better yet, speak with a mortgage loan officer! There are many types of construction loans available, so you want to make sure you have the best fit for your budget, timeline, and future goals.
☐ Choose your builder wisely
Just like a lender, your homebuilding experience depends greatly on the quality of your builder. Do your competitive research and ask a lot of questions, like:
How long have you been building in this area? (Builders that have a strong track record in the neighborhood will have a firm understanding of local permitting and inspection requirements, relationships with subcontractors, etc.)
What is included in the base price of your floorplan?
What upgrades do most homeowners choose?
What is the estimated completion timeline? What factors typically cause delays?
What happens if material costs increase during construction?
How are change orders handled?
What warranty coverage do you provide?
You may also want to request references from recent customers or see if you can tour any of their completed homes.
☐ Choose your lot wisely, too
Location, location, location. It's an overlooked aspect of building a new construction home, but it's one of the most important. Here are few things to keep in mind:
- What's it close to? Is it near a busy road? Or is it close to amenities like parks, pools, and entertainment?
- What is the area like? You might like it now, but it could look different in a few years.
- How usable is the lot? Remember that the shape of the lot affects your outdoor living space and so do easements. Sun exposure, drainage, and topography (whether your lot is flat or sloped) are also factors to keep in mind.
☐ Budget beyond the base price
The base price of a floorplan is rarely the final one. Make sure your budget factors in additional costs, which can add 10-25% or more to the final pricetag.
Common additional costs can include:
- Lot premiums, like those in cul-de-sacs or with desirable views
- Utility connections
- Fencing
- Design upgrades, like flooring, light fixtures, backsplashes, and countertops
- Appliances
- Landscaping
- Driveways
- Finishing out the garage with drywall
☐ Keep your credit in mind
Your credit and debt-to-income ratio are critical factors lenders use to determine your loan eligibility, and they're essentially under review from pre-approval through closing. For new builds, construction can take 6-18 months, so you're looking at a longer timeframe to keep them in check.
That means not taking on additional debt, like buying a car, opening new credit cards, or making other major purchases for the duration of the process.
☐ Focus on monthly payment
The true cost of home ownership isn't just the house itself. Remember to evaluate the other costs that add to your monthly payment, including:
- Interest rate and private mortgage insurance (PMI)
- Property taxes
- Homeowners insurance
- HOA fees
- Utilities
- Maintenance and upkeep
Check local rates for property taxes, insurance and utility costs, and any potential HOA fees so you aren't caught off-guard. For questions about interest rates and PMI, talk to your lender. They'll find the ideal mortgage product for you and help estimate your monthly payment.
We're here to help.
Visit gosunward.org/home-loans to explore loan options, speak with a loan officer, or start your application. Happy homebuilding!
Equal opportunity lender. Insured by NCUA.
