The Smart Way to Choose Options on Your New Home

Saturday, February 8, 2014

Buying a newly built home can be both exciting and challenging. While it’s great to have the ability to personalize your home with all the features and finishes you prefer, it can be daunting to make a multitude of decisions at once and to fit those choices into your budget. Happily, you’re not on your own when it comes to deciding on your flooring, cabinets, appliances and paint colors: while the final decision is yours, the experts in the sales office and the design center can help you identify the most valuable optional features and show you the differences between various finishes.

Establish your budget
Before you enter a design center and start acting a like a kid in a candy store and grabbing everything in sight, it’s crucial to establish your budget. You should have been preapproved for a loan before you started shopping for a new home, which should give you an idea of your maximum budget. However, you don’t necessarily want to borrow up to the maximum. Instead, go over your finances personally and look at your budget so you can have a clear understanding of your comfort level with your housing payment. Don’t forget to include the principal and interest on your loan, homeowner association dues, property taxes, homeowners’ insurance and possibly mortgage insurance.
If you finance an additional $30,000 in options on a $300,000 home, your mortgage payments on a 30-year fixed-rate loan at 5% will be $162 more per month, so make sure you can comfortably afford that payment difference.
The cost of the optional features you choose will be wrapped into your mortgage unless you add on so many options that your home doesn’t appraise for the cost to build it. In that case, you may be required to pay for the difference between the amount you can finance (appraised value) and the purchase price. The sales consultants at the development can help you evaluate how much you can spend on options within the range of other homes in the community.
Consult your partner
If you’re buying a home with a spouse or partner, you should spend time together making a wish list and discussing your priorities in terms of optional features to avoid conflict in the design center. In a dream world, you’d have an unlimited budget, but in reality most people have to compromise and decide which features to pay for now and which ones will have to wait for the future.
Set your priorities
Naturally, new homebuyers are focused on what they want right now in their new residence, but you should also think about the future both in terms of your changing needs and potential resale value. While you may love the idea of upgrading your appliances or your countertops, if you have limited dollars you may be better off spending them on additional living space or features that will be costly to retrofit in the future, such as finishing a basement or adding a sunroom.
Older buyers may want to configure their first floor with a bedroom and bath or a room that can be converted to use as a bedroom in the future. You may want to upgrade to a brick front now because that’s something that’s difficult to add at a later date.
Two phases of optional decisions
Most builders require buyers to decide about structural options, such as room extensions, patios, finished basements and attics or extra bedrooms and baths, at the time they sign a purchase contract. Some allow you to wait a few days, but generally these options must be determined before permits can be pulled and construction begins.
The second phase of choosing your options, often required to be complete within 10 to 14 days after you sign the purchase agreement, includes deciding on your kitchen and bathroom counters, cabinets, flooring, light fixtures and hardware. Some builders give you almost unlimited options, while others allow you to choose an “A”, “B” or “C” level of quality for things like granite counters or hardwood flooring.
Resources for your decisions
Hopefully you’ve been keeping track of features and finishes you like in different homes that you’ve seen as you’ve been house hunting. You can use sites such as Pinterest and Houzz to keep track of your ideas and look for inspiration. Some builders have all their options available online with prices to help you get an idea of what it will cost to get what you want.
Your best resource for making hard choices will be the design center staff and the sales consultants at the development because these individuals know the floorplan and available options better than anyone.
Almost any optional feature will have value, but choosing wisely now has a lasting impact on your new home as it ages.