Want To Buy a New Home in San Diego?
Some simple steps to get ready and prepare yourself for your new dream home.
STEP 1 – SELECT A BUYER’S REP
Buying a newly constructed home typically entails considerably more steps and decisions than most existing-home transactions. It’s hard enough to keep up with all the details, much less know how to make the best decisions. Your new home buying experience will be more successful and enjoyable if someone is looking out for your interests.
Builders and their representatives may be searching for buyers to purchase their product, but only a buyer’s representative will be 100 percent loyal to you, providing advice and guidance.
The new home on-site sales person’s goal is to sell you on the best home that you can qualify for and sell you upgrades and options.
There is no cost to hire me as your Buyer’s Rep. Builders pay Buyer’s Reps directly and my service does not affect the purchase price of your home. With years of experience as a Buyer’s Rep and as an insider in the new home industry I can help you navigate the new home purchase process and accomplish your goals.
STEP 2 – EVALUATE AFFORDABILITY
Financial Information. Get your financial house in order. Start by gathering all you financial information that the lender will require including tax returns, pay stubs/ W-2’s, bank statements, investment statements, loan statements, profit-and-loss statement if you are self-employed, rental property income, gift letters if funds have been received as a gift. When you establish a relationship with a lender they will outline all the required
documents that will be needed.
Lenders and mortgage insurers look at a variety of factors, but the two most important are your monthly mortgage payment and your total debt load, relative to your gross income. As a home buyer, it’s also important to consider additional expenses, beyond your mortgage payment, that can impact how much home you can afford. Depending on your situation, these other expenses could include property taxes, mortgage insurance, homeowners insurance, home maintenance expenses, homeowner association fees and utilities.
Get Pre-Qualified. One of the most important steps of getting ready to purchase a new home is to first get pre-qualified with a lender of your choice. A pre-qualification will let you know what your buying power is based on your assets, debt, income and expenses. Getting a pre-qualification is easier than going through the pre-approval process and will get you started to learn what price range of home you can start looking for. This can usually be done very quickly.
I can recommend lenders that I have worked with in the past that have specialized in new construction homes and can walk you through the process.
Builder’s Preferred Lenders. In the San Diego area, most home builders require you to pre-approve with their preferred lender prior to entering into a purchase agreement or reservation on a new construction home. This process does not require you to use their preferred lender to purchase the home. You will find that many of the builders will offer an incentive for using the preferred lender to finance your home. Often these incentives could include credits to cover closing costs and/or upgrades. Besides the incentives the preferred lender works closely with the builder and Title Company to ensure that deadlines are met for a smooth closing since they have possibly made many loans for the particular subdivision.
The builder’s preferred lender may provide you with a very competitive loan package and rate. It may be wise to get a second or third quote from another source such as your personal bank that you have a relationship with, an independent Mortgage Broker or another source.
Extras. Buying a new construction home presents you with the necessity to have a reserve of funds available for extra costs that will be required above and beyond the purchase price. Options and upgrades that are available through the builders require you to make a cash deposit or at times for you to pay in full all extras and options that you select for the home. Deposits for upgrades and options typically are as low as 20% but sometimes higher. Every builder is different. The balance would have to be paid at closing in cash or incorporated in the purchase price and you loan.
To go to contract on a new home you will be required to make an initial deposit at the time you sign your contract. Each new home community in North County San Diego is different and can vary between $10,000 and $30,000 or more depending on the community. Custom homes could require a larger down payment.
Landscaping. New homes do not typically include any rear yard landscaping and some do not include front yard landscaping. In most cases new homes do include fencing around your entire rear yard. Landscaping will have to be completed after you close on your home and financed by yourself. Be prepared to have the cash on hand to do so. I suggest you budget accordingly and get some estimates from landscape contractors. Most new homes just provide a concrete stoop outside of any rear entrances. Take into consideration you will most likely need to include irrigation, drainage, electrical, gas lines for grills or fire pits, hardscape, and whether you will have a lawn, artificial turf or plant areas.
Depending on the size of your lot and complexity that you desire your costs could be very high.
STEP 3 – SELL YOUR HOME
Many, if not all builders will not go to contract on a new home if it is contingent on the sale of your existing home. This will vary depending on the market conditions and If your lender pre-approval states that you need to sell your current home to use the equity for the new home. You will have to sell your home prior to going to contract. Some builders are flexible as long as you have the home on the market and can show that it is priced appropriately for the current market conditions. If you already are in escrow on the sale, builders will also be flexible. When the new home market slows builders are more likely to accept a sale with a contingency.
If you are currently renting you will need to coordinate your lease expiration date with your closing on the home and move.
Timing is a big challenge when buying new. New homes take anywhere from 4-6 months to build and deliver for occupancy. This causes some buyers to sell their home, live in a temporary environment and store their furniture until the new home is ready to close. As builders get more aggressive with their building starts there may be homes that are already started or near completion that have not been sold which can shorten the timeline. However, you may lose flexibility in selecting design changes and options and upgrades.
I can provide you with a home valuation and marketing plan to sell your home for the highest possible value. A contingent new home purchase will be looked upon more favorably if the new home sales person knows who is selling your home and can stay in constant communication on the status of your existing home sale.
STEP 4 – START LOOKING AT NEW HOMES
With me as your Buyer’s Rep, knowledge of what you can afford and a written confirmation from your lender we can start looking at new homes. I can show you all the new and existing homes for sale that meet your criteria and discuss new homes in North County San Diego that are in the pipeline. The Buyer’s Rep should be present with you whenever you visit these homes, especially on the first visit.
STEP 5 – PURCHASE YOUR NEW HOME
Purchase your new home, select your options and upgrades, watch them build it, do your final walk-through, close on the home and move in. I’ll be there for you as you coach during the entire process.
Schedule a Free Consultation. Call me at 760-517-6087 or CONTACT ME to schedule a free consultation on the new home buying process and discuss the benefits of working with an Accredited Buyer’s Rep for a new construction home.