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new home construction

Should I Buy a New Construction Home or a Resale Home?

Are you trying to decide whether to buy a new construction home or a resale home?  While it depends on your specific goals and needs, there are advantages to both.  Consider these 4 reasons before deciding which is right for you.

 Four Reasons to Consider Buying a New Construction Home

  1. Customization: If you want to be creative, need specific floor plans or want certain design features and colors personalized to your tastes, then purchasing a new home might be the right choice for you.  Many production or semi-custom home builders allow for some customization by the buyer.  Those may include structural options like deciding whether a space is better utilized by your family as an office or an extra bedroom.  You may want to add a guest room or casita to accommodate guests or extended family living needs.  You may want a larger back patio or an extra garage space.  You also have the ability when purchasing a new home to select your flooring, cabinets, counter tops, whether you want a gourmet kitchen or large island, paint colors, lighting, faucets, fixtures, media, security and electrical needs.  Buying a new home helps you personalize the home to fit your lifestyle and design preferences, while controlling your budget. Personalization is a big incentive for new home buyers.
  2. Energy Efficiency: Newly built homes must adhere to current building codes and meet higher minimum energy efficiency standards than homes built in the past. Advancements in building techniques, technology and materials for roofing, windows, sealants, insulation, appliances, etc.  will work synergistically to produce a more comfortable, energy efficient home which will save you money on your monthly utility bills.
  3. Warranty and Maintenance: New construction homes are required to pass several inspections by the builder and the city to insure everything is up to code and able to be permitted to receive a certificate of occupancy.  The builder offers a warranty for the home which varies by builder and by item warranted.  Usually builders offer a one year “bumper to bumper” warranty on all parts and labor.  There are extended warranties for structure, roof, air conditioner and heating systems, appliances and workmanship.  All in all, the newness should mean less maintenance and give you peace of mind for fewer maintenance concerns, especially for first-time home buyers.
  4. Builder Incentives: Builders in new home communities will often offer incentives to help build out the community.  Sometimes these incentives come in the form of a credit toward options selected at the design center, keeping your costs lower.  Sometimes the incentives include blinds or an appliance package consisting of refrigerator, washer and dryer as these items are not normally included as standard.  Builders may offer to pay part of the buyer’s closing costs if they use the builder’s preferred lender. These incentives offer buyers who may be tight on funds get into a home with less money out of their pocket using the builder to pay fees they would normally be responsible to pay. This can often allow a buyer to move forward sooner on a purchase because they don’t have to wait additional time to save more money for the purchase or other down payment assistance.

Four Reasons to Consider Buying a Resale Homeresale home

  1. Location: If you want or need to live in a specific area to be close to work or a specific school or certain preferred amenities, a resale home may be your best solution. With new homes you are limited to living where the homes are being built. This usually means an area of town where there is enough land for the builder to build many homes.  This is often found in outlying areas where builders can purchase land at a better price point. If you want an urban lifestyle, this may not work for you.  Some people do not like the idea of a Homeowners Association (HOA) and sometimes have parking, animal, or other needs that are often prohibited by HOA rules.  Most new home communities have homeowner associations serving them, so a resale home may be your best option.
  2. Floorplan and Style: If you like a certain style or homes with “character” or historic appeal, you are probably best suited for a resale home.  Unless you are building a complete custom home, new home builders in master planned communities have established and permitted styles and floorplans.  You generally are unable to move walls or do any customization that is not already an approved and permitted option offered by the builder.
  3. Landscaping: If you have your heart set on a pool a resale home may be a better choice for you. If you are financing, not all builders or lender programs, allow pools to be included during the construction of the home. Appraisers generally do not give a pool full value for what you paid so buying a home that already has a pool may save you some money. If you like large trees, established flower beds or greenery, even well-designed desert landscaping, and don’t want to wait for it to grow, a resale home with mature landscaping may be your best option.  When purchasing a new home, generally a front landscaping package is included but often, the backyard will be just dirt, a blank canvas waiting for your creativity and wallet to complete.
  4. Short Time Frame: If you have to move quickly, a resale home may be the best option. While builders sometimes have “spec” homes in inventory that can be completed and occupied within 30 – 60 days, more often you will have to wait to build, a project that will generally take 4 – 9 months from start to finish, depending on the builder and location.

When you begin your home search it is a good idea to first meet with your real estate agent and discuss your needs and goals. Your agent will be very valuable in helping you determine whether a new construction home or a resale home will be the best option for you and your family.

Mac Bain is a Realtor with The Lang Group, HomeSmart Elite Group in Goodyear, Arizona.  He has years of experience in working with new construction homebuyers and has helped hundreds of new home buyers through a smooth and successful transaction with the builder. He has also helped many buyers successfully purchase a resale home and enjoys helping people make the right choice for their family.   His dedication to his clients drives him to go beyond normal agent performance to insure his clients get the best deal possible.  He can be contacted at 602.570.8877 or www.azhomeonline.net

down payment assistance

Buy a Home Now Using Down Payment Assistance Programs

Have you been renting, thinking you should save a huge down payment to buy a home? Are you finding it difficult to save enough money, watching as interest rates remain low while home prices continue to rise?  You may be surprised to learn that it can be less cash out of pocket to purchase a home rather than renting a house or an apartment. You may be able to purchase a home NOW, using a down payment assistance program or grant.

HOW DOES IT WORK?

When you finance the purchase of a home, there is a minimum down payment required as well as closing costs.  The down payment assistance programs that are available generally offer you funds to cover all your down payment and a portion of your closing costs. Your REALTOR® should be able to recommend a strategy to negotiate with the seller to pay all or a portion of the remaining closing costs.  This applies to new home buyers too!

WHAT ARE MY OPTIONS?

down payment assistanceThere are a variety of down payment assistance programs available, regardless of whether you’re a first-time home buyer or have gone through the process before. Some programs are funded by city or county government grants so you must purchase within certain boundaries. These programs offer a percentage of the purchase price to be used for down payment and closing costs. Some programs are lender specific and lenders must qualify with the providers to offer the grants, so not all lenders offer the same down payment assistance programs. Each down payment assistance program has different guidelines for borrowers to qualify as well so you may need to speak with multiple lenders to find one that has a program to help you.

If you have served in the military, you may be eligible to qualify for a Veterans Administration Loan. The VA Loan program provides for 100% financing and is available in any location. While there is no down payment required there are some closing costs which your REALTOR® may be able to negotiate with the seller. VA loans provide some of the best benefits available.

U S Department of Agriculture (USDA) Loans also are considered 100% financing.  These loans are location sensitive and the USDA provides an easy to use map feature on their website so you can determine if an address is in an eligible area.  Similar to a VA Loan, while there is no down payment, there are closing costs which will need to be paid or negotiated.

WHERE DO I START?

down payment assistanceSince there is such a variety of down payment programs available you are well advised to begin by discussing your needs and goals with a REALTOR® experienced in helping buyers who have used these down payment assistance programs and can assist you by connecting you with some lenders who offer the programs that will most likely help you achieve your specific goals. You should select the lender with the best program to accommodate your needs. Make sure you understand the terms of the loan program including the borrower obligations or any circumstances that could affect you over the life of the loan.

DeWitt & Sharon Lang are Associate Brokers with The Lang Group at HomeSmart serving Phoenix Metro Arizona.  They have years of experience in working successfully with both buyers and sellers.  They have helped hundreds of buyers navigate real estate transactions using traditional and specialized financing programs. Their client dedication drives them to constantly seek new programs to help people achieve their dream of home ownership. They can be contacted at 602.796.9060 or www.azhomeonline.net

Do I Need a REALTOR® to Buy a New Home?

Many people ask this question and are surprised to hear that the answer is yes, if you want your interests to be protected when you buy a new home. The builder does not require you to work with a REALTOR®, but since there is NO CHARGE to the buyer for REALTOR® representation, why would you consider purchasing a new home without an experienced, knowledgeable agent working on your behalf?  Similar to the question, “Should I have an attorney represent me in court?”, the answer is why would you assume the risk of representing yourself with one of the largest financial purchases you may ever make.  A REALTOR® is your advocate.

Can’t the Builder’s Sales Agent Help Me?

They can. However, when you enter a new home sales center and are greeted by the builder’s sales agent, remember that person is employed by and represents the builder, and has an obligation to get the best deal for their employer.  That does not mean they will intentionally take advantage of you, but they may not work on your behalf to get you the best deal.  Builder contracts are created by lawyers employed by the builder.  You need a REALTOR® to help you understand your contractual obligations, advise you with decisions and inspections, negotiate with your interests in mind, make sure you and the builder meet contractual terms, and guide you through the process with the builder, lender and title company in a timely manner, protecting you each step of the way. Similar to representing yourself in court, if you are unfamiliar with the process, why take the risk? It’s a very good idea to work with a REALTOR® to buy a new home!

buy a new homeWhat if I Just Want to Look Around First?

Maybe you just want to just stop by a new home sales center to take a quick look around, check out floor plans and prices and visit the model homes.  You are just beginning your search and aren’t sure what area, subdivision or type of house you may want. In your mind, you are just looking and may not want to “waste” the time of a REALTOR® until you are further in the process. You might be a first time home buyer and just want to see what is out there.

In Arizona and many other states, all the builders place a sign on the door entering the sales center that reads something like, “If you are working with a REALTOR® they must accompany you on your first visit to this community.” They believe that notice provides you with notification that once you enter the sales office without your REALTOR® the builder can claim to be “procuring cause”, a real estate term which means the builder made you aware of the product first and you are now their customer, without REALTOR® representation. According to the builder rules, since your REALTOR® was not with you at your initial visit, they would not acknowledge them as procuring cause at that community.  This is true even if you didn’t sign a registration with the builder, if they remember you, hand you any information or answer any questions, the same rule applies.

A REALTOR® can be a valuable asset throughout the process and wants to be with you even in the “just looking” stage.  As you interview REALTORS® be sure to ask if they are REALTORS® experienced in new home sales to ensure your best outcome.  A REALTOR® who has new home sales experience will be familiar with the builders, subdivisions and floor plans that will be in your budget and meet your desired features. They can save you time and money finding the best home and builder.  They’ll know the right questions to ask on your behalf and what builder incentives might be available from each builder, incentives that you would not know were available on your own.

Can I Save Money if I Don’t Use a REALTOR®?

No, REALTOR® Services are FREE to you as a BUYER. All builders price their homes to include compensation for a real estate broker in the base price of the home.  They do NOT discount the price of the home if you come without your REALTOR®, it just improves their bottom line.  In fact, you may spend more money without a REALTOR® because a REALTOR® experienced in new home sales knows when and where a builder may be willing to negotiate and can often secure savings or additional incentives for you.  A builder recognizes the value that a REALTOR® brings as they become the liaison between the builder and the buyer and can help facilitate communication and processes. Why would you choose to purchase without an experienced agent on your team?

A home purchase is one of the largest financial transactions you may ever experience. Constructing a new home can be a way to get everything you desire in your home. A REALTOR® familiar with new home sales can help insure your new home purchase is as stress free and enjoyable as possible. If you are considering a new home purchase call your REALTOR® first.

DeWitt & Sharon Lang are Associate Brokers with The Lang Group at HomeSmart, serving Phoenix Metro Arizona.  They, and members of their team, have years of experience in working with new construction home buyers and have helped hundreds of new home buyers through a smooth and successful transaction with the builder.  Their greatest satisfaction is delivering keys to buyers that just couldn’t believe they could actually purchase a brand-new home! Their client dedication drives them to go beyond normal agent performance.  Their motto is “When Experience Matters” They can be contacted at 602.796.9060 or www.azhomeonline.net

first-time homebuyer

What is a FICO Score?

A First Time Homebuyers Introduction to FICO

The first step in buying a home is to obtain a lender prequalification. First time homebuyers should be prepared to have their loan originator investigate their credit worthiness as every loan program has minimum FICO requirements.

What is a FICO Score?

FICO is a software company based in San Jose, California. It was founded in 1956 as Fair, Isaac and Company. Its founders were an engineer, William Fair, and a mathematician, Earl Isaac. Together they created a method to measure a consumer credit risk known as your FICO Score. The FICO Score has become one of the most accepted methods used by U.S. lenders and credit companies. FICO is now a publicly traded company on the New York Stock Exchange.

How are my scores measured?

The rating system determines your credit worthiness based on a number as low as 300 to as high as 850. The higher the number, the lower credit risk you appear to the creditor. Most home loan programs require a score in the range of 580 to 640 for government insured loans but conventional products might require a score above 680. You can consult a lender for more specific information.

FICO scoreHow are my scores reported?

Most U.S. consumer credit information is collected and kept by at least three credit reporting agencies. Those are Experian, Equifax and TransUnion. When you borrow money from a bank or use a credit card the creditor files a report with the credit reporting agencies as to how you have handled your credit. Did you pay on-time?  Did you pay the amount due?  Did you borrow up to your maximum credit limit? A variety of other data is also taken into consideration. All of your credit information is analyzed and reported by the credit reporting agencies to any creditor who wants to purchase that information. Mortgage lenders are a primary user of these credit reporting agencies and rely heavily upon the information provided. Credit reporting agencies are regulated with oversight by the Consumer Financial Protection Bureau (CFPB).

What is a Tri-Merge Credit Report?

When you apply for a home loan the first thing the lender asks for is your name, address, social security number and your permission to access your credit history. The lender uses a special software program to connect to the three credit reporting agencies, Experian, Equifax and TransUnion. These three reports merge your low, mid and high FICO scores and the mortgage lenders generally use your mid score as the basis to approve or deny your ability to qualify for a particular type of loan and will help determine your financing options.

How can I see my credit history before contacting a lender?

Federal law allows you to get a free copy of your credit report every 12 months from each of the three credit reporting agencies. You can get access online at www.annualcreditreport.com. The data provided on the free sites generally do not provide you with a FICO Score but does give you information on your credit history.  Many sites charge to report your FICO Score so you should investigate the details of the site providing you the credit history. While the cost is relatively low, there is nothing worse than thinking you are getting free information only to find out a fee is required. Even without a score, your credit history will reveal a lot of information. As a new home buyer, you should pay close attention to any negative information and review that for accuracy. You have the right to challenge the information in your credit history but it may take more than a phone call or a letter to clear up inaccurate information. Consult with your lender before opening a dispute. Please note that the scores presented by the free site may not be the same as the lender receives and may reflect a higher FICO than your lender score. This is primarily due to the merging of the three credit reports and the special software program used by the lender. At least you will have some idea of your current credit and will have information to discuss with your lender regarding your credit. Don’t be discouraged if your credit score is under 580, a good lender can make recommendations regarding ways to improve your credit.

If you are a first-time homebuyer, need down payment assistance, have credit challenges due to foreclosure, bankruptcy, student loans, medical bills, give us a call. We have lenders who have programs that may be able to help you. Together, as a team, we can work toward achieving your goal of buying a home!

Disclaimer:  This article is not intended to provide legal advice. For legal advice, consult an attorney.

DeWitt & Sharon Lang are Associate Brokers with The Lang Group at HomeSmart serving Phoenix Metro Arizona.  They have years of experience in working successfully with credit challenged buyers.  Their greatest satisfaction is delivering keys to buyers that have repeatedly been told no and were losing hope. Their client dedication drives them to go beyond normal agent capabilities.  Their motto is “When Experience Matters” They can be contacted at 602.796.9060 or www.azhomeonline.net