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Ark Mortgage Inc, NMLS# 103915

Ark Mortgage Inc, NMLS# 103915

Mortgage Advisors & Lending Services in New York & New Jersey

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Buying a New Home in a Subdivision

A new home is like a blank canvas—everything is waiting for you, the first buyer, to add your personal touch. But to avoid expensive surprises after you buy, when purchasing a new construction home — especially in a subdivision or development —  you should do some basic research before you sign the contract. Consider the following guidelines

What Means “New”?

New construction comes in three varieties:

  • A custom-built house that you 
  • A “spec” home that’s already built but never lived in
  • A subdivision of houses in some phase of construction

If you are considering a purchase in a new subdivision, ask yourself, how customized and unique are you hoping your house to be? Keep in mind that in subdivisions you can choose from various materials and finishes, but there’s usually a limit to how much you can change, and floor plans are typically not customizable. Some builders will allow you to purchase your preferred materials separately if they don’t supply them, but they may or may not credit you to cover those costs.

Other issues to consider: Subdivisions are not usually built in the center of town. Will the commute become an issue? The properties might be built closer together than houses outside developments. Will you mind having less privacy?  And are you ok with minimal landscaping? It might take years for the area to look “lived in” with mature trees and plants.

Who’s on Your Team?

Unless you are paying cash, work with a good Mortgage Advisor licensed in the state you are purchasing in. Some builders will insist that you use their lenders, but often you can override this. Sometimes their lender may offer monetary incentives, but you very well might do better elsewhere, especially with fees and how they structure the loan. Your preferred lender might be able to structure a deal that, when taking into account loan program, interest rate, down payment, length of term and many other factors, can save you tens of thousands of dollars in the long run over the builder’s lender.

Make sure you hire a Buyer’s Agent to represent you and protect your interests. In most subdivisions and developments, the on-site real estate agent works for the seller, not you. Their job is to maximize the developer’s profit. Buyer’s Agents are normally compensated by the builder or Selling Agent, but they work in the buyer’s interest. Make sure to have your Buyer’s Agent contact the builder before your initial visit (otherwise, they might not get paid!) and even if the builder discourages it, have them at every walk-through and copy them on all correspondence. They can advise you how to negotiate the purchase price. Be forewarned: some builders don’t like to drop their prices but may consider paying for closing costs or throwing in upgrades. Your Agent may have knowledge as to a particular builder’s negotiating style.

Aside from your Buyer’s Agent, others on your team should include a real estate lawyer since builder’s contracts and addendums can be confusing. Also make sure you have a competent inspector who should accompany you on your final pre-closing visit, so you can write up a “punch list” of requested repairs of anything not completed as per the sales contract.

Do Your Homework

Research the neighborhood before purchasing. Personally visit the schools, the houses of worship, the shops, and the neighborhood at different times of day. Search social media for comments about the builder’s other projects. Were the owners happy with the construction? With the amenities? Also, check out the zoning laws so you know what might be built in the neighborhood in the future.

Check the builder’s reputation before purchasing. Ask about the projected date of completion of the home and then add on a few months — construction can often run overtime. Be sure your contract includes a cost escalation clause to protect you against rising prices.

What Exactly are You Purchasing?

Don’t settle on a layout based on virtual reality. Ask if there is a model of the home that you can visit, even if it’s part of a different development or located in a different town. Understand that the size or dimensions of the lot you choose may require the final design of your home to vary from the model.

Also understand up front what exactly is included in the standard purchase price because the model homes they show are typically packed with upgrades that may not be included in your price. Be sure you can afford the colors, finishes, and fabrics of your choice. Ask if the building lot and landscaping are included in the sale price or will require additional payment. When your budget won’t include everything you desire, choose square footage and location over upgrades. You can always upgrade later but you can’t affordably increase the size of the home or move it to a different location. Also, never over-improve. Owning the most expensive home in a subdivision may impede resale later.

Get everything in writing, including a home warranty, and know in advance what the warranty covers. Check out the rules of the Homeowner Association (HOA) if there is one and the monthly required fees to maintain the upkeep of the development. Finally, ask the builder to leave any leftover paint, tiles, and carpet scraps behind. They will help you maintain the property as well as assist you when shopping for furniture and decorations.

Get Funded First

Always find out how much home you can afford to buy before you shop, but if you are ready to acquire your new property, contact one of our Mortgage Advisors ASAP. We’ll give you great guidance and make sure you are getting the best loan for your situation.

 

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Posted: August 28, 2019 Last Modified: March 28, 2023Categories: Uncategorized

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Ark Mortgage, Inc. NMLS ID #103915

400 Rella Blvd, Suite 300 • Montebello, NY 10901 • (800) 247-4432

Serving California, Arizona, Colorado, Connecticut, Florida, New Jersey, New York,  Pennsylvania & Texas
For licensing information see our licensing page or visit the NMLS Consumer Access page.

For Texas consumers, learn how to file a complaint here. 

Equal Housing Opportunity

Rates, terms and programs are subject to change without notice. All loans are subject to appraisal and property condition requirements and underwriting approval. The information on this website does not represent an offer to enter into a loan agreement. Restrictions apply

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