For anyone that has been following the site lately (or any of my social media accounts), you've probably seen that my wife and I recently closed on our first home! Like a lot of millennials, we rented for a looooong time in our twenties.
In my opinion, there's nothing wrong with renting if you don't want to own a home, or just flat-out can't afford it yet (as long as you understand the financial implications of renting vs. buying). I will say though, it's a nice feeling finally having more space and somewhere that we will live long-term.
This is the third post in a series that I'm doing on new construction homes. You can find the first on surviving the design center here and the second on the actual building process here. The final post will cover the last few steps of moving into a new construction home.
Here are 7 things to remember after your new construction home is built:
1. You don't have to do business with the builder's lender
From the very beginning of the home building process, your builder will most likely try to entice you to work with their “preferred lender”, and in some cases, they will just straight-up try to bully you into it. It's important to understand that the builder's lender won't always give you the best deal.
Here's typically how it works:
The builder will tell you that their lender closes fast, works more efficiently with the builder than outside lenders, and may also offer a large “cash towards closing” incentive to help bring your closing costs down.
Last but certainly not least, the builder will probably tell you that they will charge you exorbitant fees for each day an outside lender isn't able to close after the house is completed.
In my opinion, all of those are mostly just scare tactics. If you're getting a mortgage, you need to get the best deal possible. Period.
My suggestion? Start early and create a competition among lenders.
At one point, I actually had a three-way competition going for my business. After I had the initial offer by the builder's lender, I just sent it over to an outside lender that had been recommended to me by a friend.
From the jump, the outside lender was able to match the closing cost offer as well as beat the interest rate from the builder's lender.
Then I sent the better offer to the builder's lender, and they came back even lower. After two or three back and forth negotiations with each one, they both stopped budging.
That's when I brought in the second outside lender. 🙂
Ultimately I was able to save a giant chunk on the closing costs by going outside of the builder's lender. I could tell that all of the lenders involved were slightly annoyed with me for putting them all against each other…but on a purchase as big as a house, who cares?
The key here is that you have to start way before the house is even close to being done. If you mess up and wait too late, an outside lender could delay closing and cost you a ton of money in fees from the builder.
2. Make sure the home is completed to your liking
Your house won't ever be perfect, and it's important to remember that when you're getting closer to the closing date. This is hand-done work, so in my opinion, you need to be realistic on some of the tiny things like microscopic paint issues or a slightly-cracked brick here or there.
But that's not to say you should just roll over and let the builder do sub-par work. Call them out for things that are legitimately done poorly. You should always expect your house to be the same quality as the builder's model home.
You'll do a final walkthrough before the house is finished, which is the time that the builder wants to you point out any flaws you see that need to be repaired.
The problem is, some of the repairs might take a long time to fix and could cause you to delay closing. They know that you probably don't want to do that and might try to convince you to ignore it (which is why I think they put the final walkthrough so close to closing, but a builder would have to chime in during the comment section to confirm).
In my opinion, it's best to make your builder aware of work you don't approve of throughout the process, rather than waiting till the final walkthrough to tell them. They want to get off of the house just as much as you want to move in, so giving them plenty of time to make repairs is a solid plan.
3. Read over your contract one more time before closing
We didn't have any issues here, but it's always a good idea to go through and make sure that everything in the contract has been honored by the builder.
I don't want to say that they will pull a fast one on you, but they do want to keep their profit margins as high as possible. What if you were supposed to get crown molding or LED lights throughout the home and never heard the sales rep or construction manager mention it?
A week or two before you close, pull out the contract and go over the details one last time just to be sure that you aren't missing out on anything that the builder was supposed to supply.
4. Have an independent inspector go to the final walkthrough with you
If anything, this is just for peace of mind. The builder has their own inspector, but in my experience, they aren't nearly as detailed with their inspection reports as an outside inspector.
Again, I'm not trying to say you shouldn't trust your builder. However, you should at least make sure that you're doing your due diligence to keep them honest and check the quality of their work.
Ask your inspector a ton of questions and have a list of items that you'd like them to take a closer look at.
I'll talk a little more about warranties below, but you don't want to have to rely on your home warranty later on for things that can be corrected right now.
5. Don't be afraid to ask your construction manager questions after the home is completed (within reason)
Right after our home was finished, we went ahead and had wood tile flooring put in instead of the builder grade carpet that came with the house.
We went outside of the builder for this upgrade, and it saved us roughly $10,000!
I did hit a little snag though. When the flooring contractor got to the house, he said that the entire floor needed to be re-leveled and would cost $50 per bag of float for 10-12 bags before they could lay tile.
Needless to say…I wasn't happy haha.
After arguing with the contractor for about 30 minutes, I went ahead and got in touch with my construction manager and asked him to double check the floors for me.
It turns out that I really only needed four bags of float instead of ten. Funny how that works, isn't it?
This is why I'm a big believer in being nice to your construction manager throughout the home building process. They know way more about your house than you do, and even though I consider myself to be semi-handy, I'm no contractor by any stretch of the imagination.
Just remember, after you close on the house, the construction manager doesn't really need to answer any of your questions if they don't want to.
6. Make sure you understand your warranty and keep track of needed repairs
Depending on your builder, certain things may or may not be covered under your home warranty. You'll probably have a shorter warranty on all of the smaller components of the house, and then a longer structural warranty.
The deal with warranties is that whatever repair you may need could take a while. All you have to do is Google reviews for any builder and you'll see horror stories about the warranty repair process.
This is just another reason why I think you really need to stay on top of the builder throughout the entire build; not just at the final closing walkthrough or any other builder-designated checkpoints.
If you see something legitimately wrong with your house, talk to your builder about it in-depth before closing on the house and make them fix it. When they still own the property and want to get off of it, they tend to fix things way faster than when YOU own the property and it doesn't hurt their bottom line anymore.
7. Think long-term on household necessities
Once you move in, you'll very quickly realize that you need to buy a ton of crap. A lot of Millennials like us came from an apartment, so we don't have nearly enough furniture to fill our homes right now, let alone lawn equipment and basic things like a ladder.
You don't need to panic and buy everything all at once (especially if you don't have the cash to do it).
You're going to be in your new home for years. Play the long game, create a list of items you'll need to purchase, and then work it into your budget so that you can purchase whatever you need guilt (and credit card) free.
Who cares if your house looks a little empty for the first six months to a year? As long as you have everything you need to actually live in the house, you have all the time in the world to fill the rest out.
Ultimately, we enjoyed the homebuilding process a lot
It really is what you make it though. My wife and I could have looked at some of the little issues that popped up super negatively if we wanted to. We made an agreement from the very beginning that we were going to enjoy building a home, and we did.
Just remember – building a home is a process with a lot of moving parts and humans involved. Mistakes are going to happen, but being organized and over-communicating with the builder and all parties involved makes it way less stressful.