Apr 3, 2023
Home Buying Process
Buying a home can be one of the biggest investments of your life. And for those who want to build their dream home, the process can be even more complex.
New home builders offer the opportunity to build a custom home that meets your specific needs and style preferences. However, several factors must be considered when buying a new home from a builder.
One of the biggest advantages of buying a new home is the ability to personalize it to your liking. You get to choose everything from the color scheme, kitchen cabinets, flooring, and more.
However, when buying a new home, it's essential to understand that builders don't have to follow the Colorado Real Estate Commission rules when it comes to contracts. They can use their own contracts, which are typically very favorable to the seller, leaving the buyer with little say when it comes to having the home finished on time or substitutions of appliances, landscaping, etc.
This is why it's crucial to have a buyer's agent when purchasing a new home. Even if you're using a buyer's agent, if you stop at a new home site and aren't with your agent, the builder may not allow you to use a buyer's agent. So, if you go without an agent, do not fill out any paperwork.
New home builders may offer incentives if you use their preferred lender. These lenders typically have competitive rates and costs. However, by going to visit with your agent, you may be able to add additional items because your agent knows the procedures. These incentives may mean dollars to be used to lower the price, for closing costs, upgraded items, and even money back to you, or they may mean upgraded appliance packages, fencing, air conditioning, and other items.
When you go to the design center to pick out tile, carpeting, fixtures, and colors, take your agent if this is your first new home purchase. The designers receive a commission on all that they sell you, and in some cases, these additional options will not make a difference when you sell the home. Your agent can tell you which items make a difference and which do not.
It's essential to understand the difference between a mortgage banker/direct lender and a mortgage broker when choosing a lender for your mortgage loan. A mortgage banker is a lender who originates their loans and does the underwriting, and approval provides the funds and services the loan.
Typically, a mortgage banker has access to a smaller number of loan programs. On the other hand, a mortgage broker originates the loan but then submits the information to an outside source. A mortgage broker can usually offer you a much wider variety of loan programs.
When choosing a lender, it's also important to ask several questions to ensure that you get the best deal. These questions include asking about the lender's references, the rate with "0" discount points, how long you can lock in the rate at no cost, the closing costs (quoted as a dollar amount), whether those closing costs include various fees like appraisal credit report, recording fees, survey, origination fee, title closing fees, lender's title insurance, tax service, state and local recording fees, real estate taxes, underwriting/processing fee, hazard insurance, document preparation fee, and escrows for taxes and hazard insurance, if applicable.
Finally, research the property thoroughly before making a purchase.
For a detailed guide, click below to download a pdf.