Building a New Home- Part 1

After working in the home building industry for many years I've noticed that first time (and even veteran) home owners can get confused by all of the deadlines, deposits and decisions going on in a relatively short period of time. So, here's a quick primer of what to expect when purchasing a new home:

1. Choose your Home and Neighborhood

First you must sift through all of the available homes out there to find a builder, neighborhood and floorplan that fit your family's needs. Many home owners these days are starting their search online, then visiting a few neighborhoods in their area of interest. Look for a builder with excellent customer satisfaction ratings who responds to your questions promptly and accurately. Once you've decided on a builder and a neighborhood, you can choose a floorplan and home site that fit what you are looking for in a new home.



2. Writing the Agreement

This is the first big step, and sometimes the scariest for first time home owners. The builder's sales associate should review this agreement with you completely and make sure all of your questions are answered. The main points of the agreement outline which home you'll be building and where, the price, deadlines for completing selections and making deposits, and general disclosures from the builder.
At this time you will also pay an Earnest Money deposit. This is a smaller deposit of $250-1000 depending on the builder and the size of your new home. Many builders will make this a refundable deposit, giving you a few days to be sure of your decision. Others require a non-refundable deposit. Make sure you know which you are paying.

3. Apply for a Loan

Once your signed Agreement is in place, you can apply for a loan and receive a Good Faith Estimate. This will let you know exactly how much loan you can qualify for and what your closing costs will be. (Of course, it's always a good idea to talk with a loan officer before signing your agreement, so that you have a good estimate of how much you can afford.)

4. Design Decisions

For many new home owners, choosing interior and exterior finishes is their favorite part of the process. One of the best things about owning a new home is that you can pick finishes to suit your budget and personalize your new home. Look for a builder who features a state-of-the-art new home design studio with professional design consultants and clear pricing information. You should be able to visit the design studio several times to choose finishes such as paint, countertops, cabinets and flooring. As long as your home is not yet under construction, you should have about 25 days to finalize those decisions.

5. Home Start Meeting

Also known as a pre-construction meeting, this is a final review of your plans and decisions for your home. Make sure you get answers to all of your questions before construction begins.

6. Construction Deposit

This is the final step before construction can begin on your home. A construction deposit is due, generally in the amount of 3-10% of your total purchase price. Most builders will require you to pay this about 30 days after you first sign your agreement. This deposit is non-refundable, meaning that if you don't close on your home, the builder will keep your deposit as damages. However, when you do close on your home this deposit is credited to you and can be used for your down payment.

Now it's time for the exciting construction phase of your new home process! I'll write more about what to expect during construction in a later post. In the meantime, please share this with any friends or family who may be building a new home in the future.

You can also visit the McArthur Homes website for an in-depth look at our building process.