new home construction

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1 new home construction LOT SELECTION GETTI NG STARTED CHOOSE HOME DESIGN SELECT LENDER Authorization from lender INTERVIEW BUILDERS/DESIGNERS Sign contract & specifications OWNER/BUILDER TO DO S Site Visits Prepare for Miscellanous Changes (Change Order Pre Occupancy Walk Through BUILDER TO DO S Foundation Inspection Rough In Inspection Final Occupancy Inspection Inspections required may vary based on home location BUILDER & LENDER TO DO S CONSTRUCTION First Draw Second Draw Third Draw Final Draw Draws require sworn statement and lien waivers which are provided by builder. CLOSE LOAN FI N ISH HOM E CONSTRUCTION OBTAIN CERTIFICATE OF OCCUPANCY MOVE INTO YOUR NEW HOME ANYTHING FOR YOUR HOME...START HERE mygrhome.com PROVIDED BY: HOME BUILDERS ASSOCIATION OF GREATER GRAND RAPIDS

2 home buyers dictionary ARM? GPM? PITI? You d have to be a cryptologist to figure out some of the terms buyers encounter during the home buying process. Doing research on how to buy a house before beginning the process can greatly improve your experience and prepare you for the exciting course ahead. And with this glossary of home buying terms at your side, you can rest easy that your new home won t get lost in translation. Adjustable Rate Mortgage (ARM). A loan whose interest rate is adjusted according to movements in the financial market. Amortization. A payment plan by which a borrower reduces a debt gradually through monthly payments of principal and interest. Annual Percentage Rate (APR). The annual cost off credit over the life of a loan, including interest, service charges, points, loan fees, mortgage insurance, and other items. Appraisal. An evaluation to determine what a piece of property would sell for in the marketplace. Assessment. A tax levied on a property or a value placed on the worth of property by a taxing authority. Assumption. A transaction allowing the buyer of a home to assume responsibility for an existing loan on the home instead of getting a new loan. Binder. A receipt for a deposit paid to secure the right to purchase a home at terms agreed upon by the buyer and seller. Buydown. A subsidy (usually paid by a builder or developer) to reduce the monthly payments on a mortgage loan. Cap. A limit to the amount an interest rate or a monthly payment can increase for an adjustable rate loan either during an adjustment period or over the life of the loan. Certificate of Occupancy. A document from an official agency stating that the property meets the requirements of local codes, ordinances, and regulations. Closing. A meeting to sign documents which transfer property from a seller to a buyer. (Also called settlement) Closing Costs. Charges paid at settlement for obtaining a mortgage loan and transferring real estate title. Conditions, Covenants, and Restrictions (CC and Rs). The standards that define how a property may be used and the protections the developer has made for the benefit of all owners in a subdivision. Conventional Loan. A mortgage loan not insured by a government agency (such as FHA or VA). Convertibility. The ability to change a loan from an adjustable rate schedule to a fixed rate schedule. Cooperative. A form of ownership in a multi-unit complex; the purchasers own shares of the entire complex rather than owning individual units. Default. A breach of a mortgage contract (such as not making monthly payments). Density. The number of homes built on a particular acre of land. Allowable densities are usually determined by local jurisdictions. Downpayment. The difference between the sales price and the mortgage amount on a home. The downpayment is usually paid at closing. Due-on-Sale. A clause in a mortgage contract requiring the borrower to pay the entire outstanding balance upon sale or transfer of the property. A mortgage with a due-on-sale clause is not assumable. Earnest Money. A sum paid to the seller to show that a potential purchaser is serious about buying. Easement. Right-of-way granted to a person or company authorizing access to the owner s land; for example, a utility company may be grated an easement to install pipes or wires. An owner may voluntarily grant an easement, or in some cases, be compelled to grant one by a local jurisdiction. Equity. The difference between the value of a home and what is owed on it. Escrow. The handling of funds or documents by a third party on behalf of the buyer and/or seller. Federal Housing Administration (FHA). A federal agency which insures mortgages that have lower down payment requirements than conventional loans. Fixed Rate Mortgage. A mortgage whose interest rate remains constant over the life of the loan. The payments are not necessarily level. (See Graduated Payment Mortgage and Growing Equity Mortgage). Fixed Schedule Mortgage. A mortgage whose payment schedule for the life of the loan is established at closing. The payments and interest rate are not necessarily level. Graduated Payment Mortgage (GPM). A fixed-rate, fixedschedule loan which starts with lower payments than a level payment loan; the payments rise annually over the first 5 to 10 years and then remain constant for the remainder of the loan. GPMs involve negative amortization. Growing Equity Mortgage (Rapid Payoff Mortgage). A fixedrate, fixed-schedule loan which starts with the same payments as a level payment loan; the payments rise annually, with the entire increase being used to reduce the outstanding balance. No negative amortization occurs, and the increase in payments may enable the borrower to pay off a 30-year loan in 15 to 20 years, or less. Hazard Insurance. Protection against damage caused by fire, windstorm, or other common hazards. Many lenders require borrowers to carry it in an amount at least equal to the mortgage. Index. The interest rate or adjustment standard which determines the changes in monthly payments for an adjustable rate loan. Infrastructure. The public facilities and services needed to support residential development, including highways, bridges, schools, and sewer and water systems Interest. The cost paid to a lender for the use of borrowed money. Joint Tenancy. A form of ownership by which the tenants own a property equally. If one dies, the other would automatically inherit the entire property. Level Payment Mortgage. A mortgage whose payments are identical for each month over the life of the loan. Mortgage Broker. A broker who represents numerous lenders and helps consumers find affordable mortgages; the broker charges a fee only if the consumer fins a loan. Mortgage Commitment. A formal written communication by a lender, agreeing to make a mortgage loan on a specific property, specifying the loan amount, length of time and conditions. Mortgage Company (Mortgage Banker). A company that borrows money from a bank, lends it to consumers who want to buy homes, then sells the loans to investors. Mortgage Loan. A contract in which the borrower s property is pledged a s collateral and which can be repaid in installments over a long period. The mortgagor (buyer) promises to repay principal and interest, to keep the home insured, to pay all taxes, and to keep the property in good condition. Mortgage Origination Fee. A charge by a lender for the work involved in preparing and servicing a mortgage application (usually 1 percent of the loan amount). Negative Amortization. An increase in the outstanding balance of a loan when a monthly payment is not large enough to cover all of the interest due. Note. A formal document showing the existence of a debt and stating the terms of repayment. PITI. Principal, interest, taxes, and insurance (the 4 major components of monthly housing payments). Point. A charge of 1 percent of the mortgage amount. Points are a one-time charge assessed by the lender at closing to increase the interest yield on a mortgage loan. Prepayment. Payment of all or part of a debt prior to its maturity. Principal. The amount borrowed in a loan, excluding interest and other charges. Property Survey. A survey to determine the boundaries of your property. The cost will depend on the complexity of the survey. Recording Fee. A charge for recording the transfer of a property, paid to a city, county, or other appropriate branch of government. Real Estate Settlement Procedures Act (RESPA). A federal law requiring lenders to provide home buyers with information about known or estimated settlement costs. The act also regulates other aspects of settlement procedures. Sales Contract. A contract between a buyer and seller which should explain, in detail, exactly what the purchase includes, what guarantees there are, when the buyer can move in, what the closing costs are, and what recourse the parties have if the contract is not fulfilled or if the buyer cannot get a mortgage commitment at the agreed-upon terms. Shared Appreciation Mortgage. A loan in which partners agree to share specified portions of the down payment, monthly payment, and appreciation. Tenancy in Common. A form of ownership in which the tenants own separate but equal parts. To inherit the property, a surviving tenant would either have to be mentioned in the will or, in the absence of a will, be eligible through state inheritance laws. Title. Evidence (usually in the form of a certificate or deed) of a person s legal right to ownership of a property. Transfer Taxes. Taxes levied on the transfer of property or on real estate loans by state and/or local jurisdictions. Walk-Through. A final inspection of a home before settlement to search for problems that need to be corrected before ownership changes hands. Warranty. A promise, either written or implied, that the material and workmanship of a product is defect-free or will meet a specified level of performance over a specified period of time. Written warranties on new homes are either backed by insurance companies or by the builders themselves. Zoning. Regulations established by local governments regarding the location, height, and use for any given piece of property within a specific area. Information provided by: mygrhome.com

3 7 reasons to own your own home Thinking about buying a house? If you need convincing, here are some very practical reasons why you should buy. If you currently rent an apartment, think of all the things that bother you: monthly rent payments down the drain, noisy neighbors and apathetic landlords. When you purchase your own home, not only do you invest in what is yours, but you also end up saving money in tax deductions. Having more independence and freedom in decision-making adds to your quality of life as a homeowner. When you buy your own home, you enjoy more tranquility and personal space. Finally, you have the ability to make your home the creative expression of your personality. Purchasing a house is an investment When you rent a house or apartment, every monthly check you write is money you ll never see again. Not only that, but you are continually paying for something that isn t your own, and never will be. Some people are surprised to find out that the money they spend in rent ends up being about the same as monthly mortgage loan payments but you should add in the cost of utilities and maintenance. For this reason alone, it may be more financially savvy to buy your own home. And if the value of your house increases, you have an even more valuable investment. Receive tax deductions when you buy a house Now you can see that monthly payments to an apartment owner are really an irrecoverable financial loss. When you purchase your own home and pay for it with monthly mortgage payments, you can benefit from tax deductions. For example, it is possible to deduct the interest from your mortgage loan on federal (and usually state) taxes. Property taxes will also comprise a good yearly deduction for you. This will add up over the course of your lifetime. Buying a home gives you independence Who wants to wait for a landlord to get around to fixing leaky plumbing or faulty electricity? When you buy a house, you become the proprietor and gain control of the maintenance of your home. While having this responsibility may seem daunting, ultimately it is to your benefit. You can be in charge of all the decision-making needed for the upkeep of your home, and can take pride in the ownership of your property. Gain more personal space Home ownership is a way to create more physical and mental space for you. It s hard to settle down in your own space if you have to hear arguments from next door or loud metal music blasting from the apartment downstairs. Having personal space is such an important factor in one s quality of life. When you own your own home, you can escape the noise and claustrophobia of apartment living and enjoy the peace and quiet of your own personal space. Home sweet home, your own creation Your home is the creative expression of your personality. Whether you want to paint the walls in funky colors, add on an extra room, refinish the floors or add a mosaic to the wall, you become the king or queen of your own palace. You have freedom to play music late at night without worrying about a knock at your door. However you decide to decorate, it s up to you. Savings Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 - $500,000 for a married couple) as gain without owing any federal income tax. Unlike rent, your mortgage payments don t go up over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will rise. No place like home By now you re thinking that purchasing a house may be a worthwhile investment. Certainly there are the downsides to everything. But there are so many good reasons to buy a home. Why not make a list of pros and cons to help you make a final decision? If you can come up with more reasons to buy than reasons against it, you can feel good about moving forward towards owning your own house.

4 50 pieces of advice when building a new home It s always exciting to build a new home! Of course a process this big and expensive comes with a lot of stress and anxiety. You can help ease some of the stress of building a new construction home by simply planning ahead. Most people fortunate enough to be able to build a new home consider it their dream home, one filled with all the bells and whistles they ve seen in magazines or admired on television. To make the home building process an exciting and fulfilling experience read as much as you can and do your homework! Spend time researching the latest building trends and materials. Talk to people in the real estate and home building industry, do extensive online research and ask lots of questions. In the end, you will be thankful you spent so much time preparing to ensure your new construction home really is a dream come true! Here are 50 helpful tips for building a new home. 1. Check References From Your New Construction Home Builder 2. Hire Your Own Structural Engineer 3. Have A Professional Attorney Review The Contract 4. Fully Examine The Complete Home Builders Warranty 5. Choose Your Homesite Carefully 6. Talk To The Neighbors 7. Shop Around For Financing 8. Set A Realistic Budget 9. Make A Priority List & A Wish List 10. Ask What The Builder Includes In The Base Price 11. Ask What The Builder Charges Extra For 12. Ask What Fee The Builder Charges To Build The Home 13. Examine The Cost Estimate Line-by-Line 14. Work With A Certified Architect To Design The Floor Plan 15. Mentally Walk Through The Floor Plan (Over And Over Again)! 16. Examine The Natural Light & Window Sizes (Consider Views) 17. Understand The Property Boundaries 18. Consider A Walkout Or Lookout Basement 19. Protect Mature Or Old Growth Trees On The Property 20. Research The School District & Property Taxes 21. Expect To Spend More 22. Take Time To Build It RIght 23. Be Flexible 24. Don t Build The Most Expensive Home In Your Neighborhood 25. Plan For Outdoor Living Space 26. Include Energy Efficient Features 27. Enhance Bedrooms With Tray Or Vaulted Ceilings 28. Position The Laundry Convenient To Bedrooms 29. Create Wide Walkways & Stairways 30. Include A Walk-In Pantry 31. Allow Ample Work Spaces In The Kitchen 32. Reconsider High-Maintenance Materials (Marble, Stainless, Natural Stone) 33. Whenever Possible Use Low Or Maintenance-Free Building Components 34. Price Compare & Purchase Fixtures Online (Lighting, Plumbing, Blinds) 35. Invest In Great Closet Storage Systems 36. Enhance Walls With Sconce Lighting 37. Add Ambiance With Dimmer Switches 38. Make Sure Porches Are 6 Deep Or More (For Furniture) 39. Include Outlets Outside & On Roof Line (For Holiday Lights) 40. Include Space For Your Hobbies (Craft Room, Extra Garage Space, Garden) 41. Don t Skimp On The Details 42. Ceilings Should Be At Least 9 Feet High 43. Enhance The Home With Unique Trim & Moldings 44. Consider Some Extra Conduit Behind Walls For Future Electrical 45. Plan Smart For Outlet Locations (Computer, Coffee Maker, Modem, TV, Etc) 46. Insulate, Insulate, Insulate 47. Know That Adding Something Later Will Always Cost More 48. Go To Home Shows To Get Ideas & Take Pictures 49. Stay Organized With A Binder For Paperwork & Save All Correspondence 50. Remember, If Designed Right, A Great Home Doesn t Have To Be Huge

5 property wish list While your opinions on the type of home you want to own may change during the homebuying process, here is an easy checklist to help you prioritize and make the shopping process less time consuming. How close do you need to be to: (a) public transportation (b) schools (c) airport (d) expressway (e) neighborhood shopping (f) other What type of neighborhood would you prefer? Urban (in the city)? Rural (in the country)? What school systems do you want to be near? What architectural style(s) of homes do you prefer? Do you want a one-story or two-story house? Do you have special facilities or needs that your home must meet? Do you require a fenced yard or other amenities for your pets? Prioritize each of these options into your must haves or would prefer : Home Options Must Have Would Prefer Garage (Size) Patio/Deck Pool Yard/Outdoor space Bedrooms (number) Bathrooms (number) Family room Formal living room Formal dining room Eat-in kitchen Laundry room Basement (finished or unfinished) Attic Fireplace Spa in bath Flooring (what type) View Light (windows) Shade

6 pros and cons of condominiums Condominiums and townhouses offer an affordable option to single-family homes in most areas. But consider these facts before you buy. Storage Some condos have storage lockers, but usually there are no attics or basements to store belongings. Outdoor space Yards and outdoor areas are usually smaller in condos, so if you like to garden or entertain outdoors, this may not be a good fit. However, if you hate yard work, this may be the perfect option for you. Amenities Many condo properties have swimming pools, fitness centers, and other facilities that would be very expensive in a singlefamily home. Maintenance Many condos have onsite maintenance personnel to care for common areas, do repairs in your unit, and let in workers when you re not home. Security Many condos have keyed entries and or even door attendants. Plus, you ll be closer to other people in case of an emergency. Reserve funds and association fees Although fees generally help pay for amenities and provide savings for future repairs, you will have to pay the fees agreed to by the condo board, whether or not you re interested in the amenity or not. Resale The ease of selling your unit is more dependent on what else is for sale in your building, since units are usually fairly similar. Single-family homes usually are more individual. Freedom Although you have a vote, the rules of the condo association can affect your ability to use your property. For example, some condos prohibit home-based businesses. Others prohibit pets. Read the covenants, restrictions, and bylaws of the condo carefully before you make an offer. Proximity You re much closer to your neighbors in a condo or town home. If possible, try to meet your closest prospective neighbors before making a decision.