El Paso is home to many homebuilders. Classic American, Zia, and Celtic are just a few of the builders that are currently involved in new home communities all around the city. From affordability to custom design, El Paso’s homebuilders have you covered.
Before you get started, the following are terms that you will hear as you go through the new home buying process.
- Closing Costs & PrePaids – Closing costs are various fees and expenses paid by both the seller and buyer at closing. PrePaids are amounts required at closing that are held in an escrow account. Usually, closing costs and prepaids can range anywhere from 3% – 4.5% of the loan amount but can also be higher or lower depending on the situation. Sometimes, builders will offer to cover closing costs and prepaids if you get your financing through the preferred lender.
- Landscaping -Depending on the builder, some will offer front yard landscaping or an allowance to use for landscaping after closing with one of their approved sub contractors. If it is a model home that you are purchasing, there may even be basic backyard landscaping completed as well.
- Appliance Package – Usually standard on most homes are the dishwasher and stove. In new homes, homebuilders will offer refrigerator/washer/dryer and sometimes microwaves and garage door openers as incentives. These packages are usually offered if you get your financing through the builder’s preferred lender.
- Preferred Lender – This is where a builder would like a potential customer to obtain their financing from. Usually, a builder will offer special incentives to customers who get their mortgage from the preferred lender. The incentives can range from closing costs & pre-paids taken care of to appliance packages to landscaping, to interest rate buy downs and even flat screen televisions.
- Insurance Binder – Evidence of property insurance coverage. Usually is a temporary document that serves until the policy is issued.
- Earnest Money – Also known as a “good faith” deposit. This is money that the builder/seller requires to be deposited and held in escrow at the title company. The earnest money is usually credited to the buyer’s down payment at the time of closing.
- Escrow - An agreement between two or more parties (buyer/seller) that certain items (i.e. earnest money) will be held by a third party (title company) until terms of the contract have been fulfilled.
- Non-Refundable Deposits - The difference between earnest money and non-refundable deposits is the NRD’s are not held in Escrow and are instead deposited with the seller. This is usually done to ensure that the potential buyer is serious in their intent to purchase a home.
- HUD-1 - This is the closing statement given to both the buyer and seller at closing. It details all of the costs and who paid what in the transaction.
- Appraisal – A professional opinion/estimate of the value of the property.
- Pre-Approval – When a lender will approve a buyer for a certain loan amount. The pre-approval gives the buyer valuable information that will help them narrow the field of homes they can afford and also offer proof to sellers/builders that they have the capability to buy a home in the price range targeted.
Of course it is also advisable to have a knowledgeable buyer representative assist you in purchasing new construction. There are a lot of steps to this process and a trusted buyers agent can not only help you navigate each of them, but make the whole experience as stress free as possible. After all, building your new home should have something of fun and excitement in it – and the paperwork, inspections, and a myriad of other things can take away from that. If you can have someone take on some of the mundane while negotiating the best terms on your behalf, and it won’t cost you anything, why wouldn’t you do that? It doesn’t have to be me, but I highly recommend having an agent who represents your best interest when buying new construction.
If you’d like to talk to me about building your new El Paso home – I am always here.
