Are you planning to buy a newly constructed or custom-built home? It's an appealing idea for many reasons. As you explore this option, be aware of the many new construction factors to consider with new homes that can have a significant impact on your budget.
Upgrades
Throughout the new construction process, you may encounter a variety of upgrade choices that lead to increased costs. Keep track of the costs or you could go over budget very easily. Make a list of the updates and upgrades that really matter to you and review with financials in mind. What will you get for the cost? How will the upgrade impact the look and feel of the home? If you’re on a tight budget, consider choosing smaller upgrades that will make a big impact, like new handles and paint vs. new flooring.
Fixtures, appliances and window treatments
It's important to understand just exactly what is included in the final price of your new construction and what is not. Basic appliances are likely part of the deal, but window treatments most likely are not. Choosing fixtures you want rather than basic ones included in the package may cost more.
Landscaping and decks
Chances are you'll take possession of your new home before landscaping is completed. Depending on your location and the season you move in, you could wait several months for sod installation. If your building agreement includes an allowance for landscaping, it may not cover all the costs. Take your time deciding how to finish your new property. For instance, a basic deck may seem adequate, but live in your new home for a while, and you may decide a screened porch is better suited to your lifestyle.
Utilities
New homes are generally more energy efficient but be prepared to pay more too. Larger homes cost more to heat and cool. Also, switching utility providers could change the rates you pay. Be sure to understand that major appliances using gas or electricity could have an impact on utility costs.
Mortgage
New construction takes time, and delays occur. It can take three to nine months or more from signed purchase agreement to finished construction. Since your lender will need current proof of employment and more, documents required for mortgage approval may need to be resubmitted before closing. Be prepared with current pay stubs and bank statements. It's important to avoid major purchases that could affect your credit rating during this timeframe as well.