Buying a new home is an important step that involves thoughtful planning and a well-organized approach. To help you navigate the process efficiently and confidently, we have outlined some steps to help you get started. Read on for detailed insights into every phase of buying a new home, from budgeting to moving in.
Step 1: Determine Your Budget and Financing Options
Before beginning your home search, it is crucial to establish a budget based on your financial situation. This includes evaluating your income, debts, and long-term financial goals.
- Calculate your monthly mortgage affordability: Aim to keep housing costs below 28% of your gross monthly income.
- Do not forget about PITI: principal, interest, taxes, and insurance, all the components of your monthly mortgage payment.
- Factor in upfront costs: Down payments, closing costs, home inspection fees, and moving expenses are just a few of the costs associated with home buying.
- Explore loan types: Conventional loans, FHA loans, VA loans, and USDA loans each come with different down payment requirements and interest rates. Speak to a mortgage broker to understand which option best suits your needs.
Step 2: Get Pre-Approved for a Mortgage
Be sure you understand the difference between
pre-qualification and pre-approval. Both are initial steps in the mortgage process, with pre-qualified being an indicator of the size of the mortgage you'll likely be approved for. Pre-approval is an essential part of the home-buying process as it demonstrates to sellers that you are a serious buyer and gives you a clear understanding of how much home you can afford.
- Submit documentation: Lenders will require pay stubs, tax returns, and bank statements to verify your financial situation.
- Review your credit score: A higher credit score can result in lower interest rates. If necessary, work on improving your credit before applying for pre-approval.
- Understand your loan terms: Compare interest rates, loan terms, and fees from different lenders to secure the best deal.
Step 3: Define Your Needs and Preferences
Now that you have a clear budget, it’s time to define what you need and want in a new home. Consider both your short-term and long-term needs.
- Location: Research neighborhoods, proximity to work, schools, and amenities like shopping centers, parks, and medical facilities.
- Size and layout: Determine the number of bedrooms, bathrooms, and additional spaces you require, such as home offices or outdoor areas.
- Features and finishes: Create a list of essential features (such as energy-efficient systems, smart home technology, or a spacious backyard) along with preferred, nice-to-have options.
Step 4: Start Searching for Homes
With your criteria in hand, you’re ready to begin your home search. Utilize various resources to explore different listings.
- Real estate websites: Explore The Charleston New Homes Guide. Our business is to know Charleston, South Carolina's new home construction, home builders, neighborhoods, and homes so we may assist you as you take your new construction home journey. The Greater Charleston New Homes Guide is considered the best and most reliable ‘local’ resource to new home construction throughout the Lowcountry since 2004.
- Work with a real estate agent: A knowledgeable agent can provide access to listings that meet your criteria and guide you through the entire process. A list of some Charleston area real estate agents specializing in new home construction sales are available on our website.
- Tour model homes: Visit homes in person to get a feel for different layouts, neighborhoods, and designs.
Step 5: Make an Offer and Negotiate
Once you’ve found the perfect home, it’s time to make an offer. This is a critical step, as you want to submit an offer that’s competitive but within your budget.
- Offer to Purchase: Keep in mind most builders will only use their own contracts and typically won't sign external documents or offer to purchase agreements.
- Earnest money deposit: The amount of earnest money can vary widely depending on the builder and circumstances, but it's typically wise to plan for about 1-3% of the home's value. This money will eventually go toward financing the home, but it's an important initial step to start the process.
- Negotiation points: While negotiating, don't focus solely on the price. You may gain more leverage by asking for additional closing cost contributions, or perks like free appliances, blinds, and similar extras.
Step 6: Conduct a Home Inspection and Appraisal
After your offer is accepted, you’ll enter the due diligence phase. Two critical steps are the home inspection and appraisal, which ensure the home’s value and condition.
- Home inspection: We recommend getting a third-party inspection, but often contracts are not dependent on them. In many cases, builders are not required to address items found in outside inspections that don't align with their construction standards.
- Appraisal: Builder contracts are often not dependent on an appraisal, so if the home appraises for less than the purchase price, the buyer may be expected to cover the difference. However, with a VA or FHA loan, if the home doesn't appraise, homebuyers may have the option to cancel the contract and get their earnest money back if they choose not to pay the difference. While the builder may lower the price or offer additional closing cost assistance to avoid cancellation, they are not required to do so.
- New Home Orientation: Many homebuilders offer an initial walkthrough once the home is finished. This allows you to see how the floorplans, features, and finishes have come together and learn about the various components of your new home, such as how to use your appliances and smart home devices.
Step 7: Finalize Your Mortgage and Close the Deal
Once inspections are complete and you’ve resolved any contingencies, it’s time to finalize your mortgage and prepare for closing.
- Lock in your interest rate: Before closing, confirm that your interest rate is locked in to avoid any last-minute changes.
- Review closing documents: These include your mortgage note, deed of trust, and settlement statement. Ensure that all details are accurate before signing.
- Proof of Funds: Confirm with your agent, home insurance professional, and lender you have the certified funds, and evidence of insurance lined up prior to closing.
Step 8: Move Into Your New Home
Congratulations! Once the closing process is complete and all documents are signed, the home is officially yours. Here are some final considerations to ensure a smooth transition.
- Hire movers: Whether you hire professional movers or rent a truck, start planning your move early.
- Set up utilities: Contact your local utility providers to set up water, gas, electricity, and internet service at your new home.
- Change of address: Notify your bank, employer, and any other necessary institutions of your new address. Don’t forget to update your driver’s license and voter registration, too.
Related Articles:
Bill Byrd’s 8 Steps To Buying A Home
Financing A Home In Charleston
New Construction Homes vs Resale Homes: Making the Right Choice
Should I have my new construction home inspected by a home inspector before closing
Benefits of Working With a Realtor When Buying a New Construction Home
Buying a New Home What to Expect After You've signed a contract
Never Bought a New Construction Home
###
Thank you for reading and sharing our articles from The Greater Charleston New Homes Guide. Our business is to know Charleston, SC's new home construction, home builders, neighborhoods, and homes so we may assist you as you take your new construction home journey. Please take the time to explore our site. The Greater Charleston New Homes Guide is considered the best and most reliable ‘local’ resource to new home construction, builders, neighborhoods, and homes throughout the Lowcountry since 2004.
Categories: Blog Categories Tools