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Please upgrade your browser to improve your experience. How much cash do I need to buy a new home? What's included in the base price? How do I negotiate with the builder? We've got your answers! This article is the third part of a three-part series discussing the buying process of your new home. For part one, click here. For part two, click here. As you move through the buying and building process, you should be prepared with accessible cash for a variety of needs. Later, the earnest money counts as part of your down payment.

You may also need funds for additional fees and closing costs. Some lenders require cash reserves to approve you for a loan. Most financial planners recommend keeping three to six months of expenses in the bank as your emergency fund. The size of your down payment depends on your loan terms and how much cash you have available to invest in your home. FHA loans in require a minimum down payment of 3. Many financial planners recommend making a down payment of 20 percent because this eliminates the need for mortgage insurance, reduces your interest rate, and makes your monthly mortgage payments more affordable.

These can include an appraisal fee, survey, title insurance, and document fees charged by the lender. Depending on your local market conditions, your builder may offer to pay all or some of your closing costs.

Other builders, such as Beazer Homes, offer incentives without requiring you to finance your home with a particular lender. If you lack cash, some loan programs allow you to use gift funds from a family member. FHA loans allow your entire down payment to come from a gift as long as the gift is documented.

Conventional loan programs require you to make at least 5 percent of your down payment from your own funds. Although financial planners say you should avoid this, if possible, you can sometimes borrow from your retirement fund to make a down payment on a home. Consult your employer regarding your k or your investment advisor to make sure you follow the rules about borrowing from a fund and repaying yourself so that you avoid a tax penalty for early withdrawal.

Another option is to look into state and local home buying programs that offer down payment assistance.

7 Things To Know About New Home Builder Contracts - Stapleton Scoop

Most of these programs require you to take a homebuyer education class and are limited to first-time buyers or those who meet other requirements such as income limits. Some employers offer down payment assistance to their employees. An important part of buying a new home is understanding what features are included in the base price of your home and what features are optional.

And, as mentioned above, you may have to pay an additional premium for particular lots.

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Keep in mind that what you see in the model home includes options. Most builders put upgrades in the model home, so that buyers can see what upgrades are offered. The sales staff can help you identify which features and finishes are included and which are optional. These two items are among the most important pieces of paper you need during your home search because they form a basis of comparing different builders and communities.

Which features are standard and which are optional could impact the final cost of your home. Buying a newly built home is much simpler than that.

Existing homes are typically put on the market at a listing price based on a comparative market analysis by a Realtor who looks at recent sales in the community of similar homes. The listing price for a resale home can also be influenced by how quickly a private owner wants or needs to sell the home and the level of motivation of the sellers.

Builders also look at local current market values, but they also have other factors that go into pricing their homes. Rather than relying solely on their estimation of the value of a home, new home builders can base their prices on the cost of the land, the cost of construction materials, labor costs, and marketing costs, and then add on a profit margin so that they can stay in business and build their next community.

In a robust housing market, some builders may stop selling homes for a few weeks or months and keep customers on a waiting list until more homes can be built. In addition to maintaining the pace of sales, builders need to be cognizant of protecting the investments of their initial buyers as well as keeping appraisals in mind as they price their homes.

This is why builders are far more likely to negotiate with potential buyers on optional features or paying closing costs rather than the base price of their homes. While contracts and purchase agreements vary from one builder to another and according to state regulations, there are standard parts of the contract that you should be certain to review carefully: The base price should be specified on the contract; you can add your options later to the final price.

Your builder should provide an estimate of your completion date. This should tell you how to officially communicate any problems with your builder.

Earnest Money Deposits When Making an Offer - FAQs

This section should explain how any disputes between you and the builder will be handled. An attorney or Realtor may not be required in every state. For more expert advice on buying and building a home, check out the free eBook download of New Home Your Guide to Buying and Building a New Home at NewHomeSource.

The eBook will be delivered to your inbox. We will not share your email address. Check your email to download your eBook. The most intimidating part of the new home process is actually buying your new home. Lucky for you, New Home is here to guide you through it all, from finding the right location to negotiating down to the final dollar.

How much do you really know about loans? When it comes time to buy a new home, we can help you find the one that's right for you. One of the first decisions you'll need to make when buying a new home is new vs. We seek to ensure that all of the data presented on the site regarding new homes and new home communities is current and accurate. However, we do not assume any liability for inaccuracies. It is your responsibility to independently verify the information on the site.

New Home Guide The Buying Process New Home Buying Your New Home, Part 3. Michele Lerner is an award-winning freelance writer, editor and author who has been writing about real estate, personal finance and business topics for more than two decades. Buying Your New Home, Part 1 The most intimidating part of the new home process is actually buying your new home. Buying Your New Home, Part 2 How much do you really know about loans? Why Buy a Newly Built Home One of the first decisions you'll need to make when buying a new home is new vs.

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