With the housing market still in the throes of its dramatic slump, this year could be a great opportunity to snatch up a newly-built home with a VA loan. Buying new construction carries its risks, however.
Here are some more tips to get yourself ready to buy a newly-built home.
Looking for homes that are "deliverable" (as in, almost built) is a good way to find a deal. These homes are probably available because of a breakdown in the deal between the previous buyer and the builder, leaving the builder to scramble to meet their original deadline.
If you're interested in living in a development, check out homes in developments nearing completion. The last homes to sell are often cheaper, and you'll already have the full picture of what the neighborhood will look like. No new homes blocking your view of that picturesque lake.
The best resource for deals on newly-built houses is a local real estate agent. They know the area, and local builders. You won't find severely marked-down homes with online searches, because builders don't want to risk upsetting other buyers who paid full-price.
Do a background check on the building company before you commit. A lot of builders are in financial trouble, and you should be convinced they'll survive long enough to make good on your investment. Also, walk around and talk to the people that live in the development you're looking at. They'll give you the inside scoop on how reliable, trustworthy, and willing to negotiate the builder is.
A lot of builders will offer upgrades instead of lowering the price on the home. Be wary of this. You may end up pushing your home's value past that of the rest of the neighborhood, which will hurt you when you try to sell.
They may also offer incentives to encourage you to take their financing options. Sometimes they're competitive with what you could find on your own. Sometimes they aren't. If they aren't, make sure what they're giving you in return is worth it before letting them badger you into a bad deal.
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And hire someone to guide you through it anyway. It may increase the initial cost of buying your home, but it always pays dividends to know for certain that it was done correctly and legally. Make sure you are familiar with the vocabulary of new home real estate contracts so you can understand what's being said at the bargaining table. They differ from other real estate contracts, so pay attention and ask a lot of questions. The deal doesn't happen without you, so don't let someone else make the decisions.
This is true regardless of the type of loan, but it can be especially difficult to get a VA loan for construction. The key to making this work is bringing the benefits of VA loans into the process at the right time.
The basic strategy is called construction to permanent refinance. Secure a loan from the builder or a local lender to finance construction initially, and then refinance with a permanent VA loan after construction is complete. You'll want to make sure you have pre-approval for the refinance before you take out the initial loan, especially in today's tightening refinance market.
With some careful planning and a hard edge at the bargaining table, you can get a brand-new home for a great price while using the benefits of a VA loan.