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Existing vs Proposed/New Construction Previous Page | Next Page

 

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Existing or resale homes are the most common type of sales. Proposed/new construction is a valuable resource for locating a home. In the case of proposed construction, certain financing programs offer assistance with the down payment and other costs, which can be gained through sweat equity. The borrower’s labor may be considered as the equivalent of cash if the borrower can demonstrate his or her ability to complete the work in a satisfactory manner. The lender must document the contributory value of the labor through either the appraiser’s estimate or through a cost estimating service. However, delayed work, clean up, debris removal and other general maintenance cannot be included as sweat equity. There can be no cash back to the borrower in these transactions. Sweat equity on a property other than the property being purchased is not acceptable. Compensation for work performed on other properties must be in cash and be properly documented.

If materials are furnished by the borrower, evidence of the source of funds used to purchase and the market value of the materials must be provided. The sales contract must indicate the tasks to be performed by the homebuyer during construction.

Finding A House

First-time homebuyers are often eager to buy a house and frequently fail to take the time to do a thorough job of evaluating each prospect. The average homebuyer looks at approximately 16 to 25 homes before selecting one to buy. Homebuyers should be well prepared for each viewing so that features of various homes are not confused and the possibilities narrowed. Below is a list of "things to remember" when the homebuyer tours each house:

  • Take a tape measure, flashlight and camera.
  • Take down notes about the features of each room.
  • Use the flashlight to see into dark areas, such as the attic or basement.
  • Check for water damage and inquire about recently repaired areas.
  • Find out what is included in the purchase price and what is not. Some sellers will include some of their appliances, others will not.
  • Measure the room sizes: This will be beneficial in determining the amount of space a buyer may need.
  • Inspect the interior and exterior items.
  • Take pictures of each house if possible and the surrounding homes. The pictures can be valuable later as the homebuyer narrows the purchase possibilities.
  • Take a look around the neighborhood because it is just as important as the house and property.
  • Ask the seller or agent questions about the condition of the roof, appliances, heating and cooling systems, electrical and plumbing systems to determine if the house and property have been well maintained.

When you look at houses, use the Homebuyers Check Sheet below to keep track of their features. It is easy to become confused after looking at a number of houses. Don't assume a feature can be added to any house later. Items such as public sewer and public water can likely not be connected if they are not there already. Homes too far from others may never get cable TV or DSL service. Prior to viewing the property, identify your needs on the check sheet. As you view each property, be sure to include the property address, asking price, yearly taxes and any features that it has. This will allow you in the comfort of your home to perform a comparative analysis on each property.



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Table of Contents | Homebuyer Course Start Page | Find A Realtor | Budgeting To Buy a Home | Neighborhoods | Find Your First House | Inspect Before You Buy | Shop For a Mortgage Loan | Mortgage Home Loan Process | Credit Score and Credit Report | Home Mortgage Loan Closing | Being a Home Owner


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Edited and suplimented by Mory Brenner, Esq. For more information read our terms of use and privacy policy.