You’ve made the decision to become a homeowner – congratulations! That’s a big step! Now that you’re ready, let’s look at some of your most burning home buying questions. We’ll tackle three this week and three more next week.
Q: Should I buy a resale house or build my own?
A: That depends on a lot of factors and it mostly boils down to being a personal choice. If you’re ready to move in right away, a resale is your best bet. Resale homes are great because they usually have all the window coverings in place (which can be quite expensive), some have a pool already installed, and many have nice upgraded features that the previous homeowners added. There tends to be a little more wiggle room on price negotiation here as well, as the seller is anxious to sell.
If you have some time and want brand new, consider different builders in the neighborhoods you’re interested in. There are quite a few differences in quality and craftsmanship, so don’t just go for the one you’ve seen on TV. Look at different elevations and structural options and think about life changes coming down the road. You never know how long you might be in your home, so make sure it’s built to grow with you.
If you do decide to go with new construction, be prepared for delays and a longer timetable than you originally plan for. Building a new home can take an average of six months, sometimes longer. In any home build, there will be unforeseen delays, so the more you can be prepared for that, the better. See if your builder has any incentives to take advantage of, and plan for “startup” expenses like major appliances, landscaping, and window coverings.
Q: Should I get financing in advance?
Getting pre-approved for a mortgage loan is one of the first things you should do, even before you begin house hunting. It is important to know how much house you can afford so you can narrow down your search right off the bat. You wouldn’t want to fall in love with your dream home only to find out it costs double what your bank will lend you. When you make an offer on a house, that will include how you plan to pay for it, so having everything lined up in advance makes the entire process much smoother.
Q: What is “earnest money?”
Earnest money is the relatively small amount of money you will put down when you initiate a contract to buy a house. It can be anywhere from a couple thousand dollars to ten or twenty thousand, depending on the price of the home, and it must be money you have on hand (as in, not from your mortgage loan). It tells the seller or builder that you’re serious about buying that home and begins the homebuying process. This earnest money will be applied to the sale price at closing.
Check back next week for three more commonly asked questions by first-time buyers!