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We recently built a new home in hopes of getting a larger yard and community feel. We were so excited about the prospect that we didn’t stop at first to sit down and figure out what questions we might need to ask when considering whether we should build or not. Luckily, the excitement wore off before we put down our down payment. Thus, we were able to make wise financial decisions. The marvel of a new home was just so enticing that we almost ignored our financial responsibilities!
So you don’t have to waste time thinking of your own questions, I’ve come up with a handy list of questions to ask when building a house. Let’s get right to it.
Things to Consider & Questions to Ask When Building a House:
What Builder Incentives Are There?
When looking for the right builder, make sure to ask about incentives! These incentives can include discounts on upgrades, money for closing costs, or deals for working with their approved realtor or Mortgage Company. The chances of the final price of your home being the same as the sale price are slim to none. If you have several builders to select from, make sure to include these incentives in when deciding to build a house.
What Will Final Closing Costs Be Like?
Closing costs are anywhere between 2-5% of the value of the home. Sometimes, depending on the lender, you can include these into your loan. However, commonly, you must pay these out of pocket on the day of closing.
What Are the Current Interest Rates for Home Mortgages?
It takes months to build a home. You can lock in your interest rate until 60 days prior to closing. Therefore, just because interest rates are low when you begin building, doesn’t mean they still will be when you close. Because of this, you need to be ready and prepared for a fluctuating mortgage payment. Make sure you are able to afford a wide range of monthly payments. If you’re wanting to at least get an idea of the current interest rates, you can check out NerdWallet.
How Will You Fare With Apartment Life While You’re Building a House?
Unless you are financially stable enough to own and pay mortgage on two homes at the same time, or are willing to take the risk of putting your house on the market as soon as you see a closing date, you will need to sell your home and move to temporary housing. Keep in mind that by doing this, you will be moving twice and might need to put some of your belongings into storage.
Does Your Builder Require a Down Payment, and Do You Have It Saved?
In order to secure your lot, most builders require you to put down 1-3% of the sale price. This will eventually go towards the value of the home; however, it is still a pretty big chunk to pay all at once. Once you go to the design center, you will also need to pay a portion. Unless your selections are outlandish, these will most likely be less than $1,000.
Final Thoughts on Building a House
Building a new home can be an awesome but costly decision. Make sure you have weighed all options prior to choosing your lot and don’t forget to have fun! You’ll love living in your new house for years to come!
Interested in Crafting and DIY for your new home? See some of our ideas here.