Starting Your Search

Once you have thought about the type of house you want, Where should you look for a builder? Your local home builders association, through their annual Parade of Homes books and directory of Builders, has a list of greater Quad City area builders. 

Ask friends and relatives for recommendations. Ask about builders they have dealt with directly or ask them for the names of acquaintances who have recently built a new home. Many of these builders are also members of the Homebuilders Association of Quad Cities

Making the Right Choice

Once you develop a list of builders, find out about their companies. Record all information as well as your own impressions about specific builders and homes. Do this in a notebook to make comparisons later.

The best way to learn about builders is to visit homes they have built and talk to owners. Ask builders on your list for the addresses of their recently built houses or subdivisions. Look at homes that are the same style as you plan to buy.  If you are interested in a two-story home, look at two-story homes rather than split levels. 

Visit on a Saturday morning when people are outside doing chores or yard work. Just introduce yourself and say you are considering buying a home from the builder that built their home. Consult more than one home buyer for each builder. The more people you talk to, the better the cross section of opinions you will receive. Ask people if they are happy with their homes and if the builder did what was promised. Ask is they would buy another house from this builder. Usually people will tell you if they are pleased with their homes. If they are not, they will probably want to talk about it.

Be Thorough

When choosing a builder, be thorough and ask a lot of questions, Get as many specifics as possible. If you receive the answers orally rather than in writing, take notes. Never hesitate to ask a question for fear of sounding uninformed. What seems like a silly question might yield an informative answer. One of the main issues to consider is how well you communicate with the builder and if you feel comfortable with him. Keeping the lines of communication open between you and your builder will help make your building experience pleasant and enjoyable.

Buying a new home is one of the biggest and most important purchases you will make in your lifetime. By doing your homework, you will be able to shop for a home with a sense of confidence and knowledge that will help you make the right decision.

Warranty/Service After the Sale

Make a special effort to learn what type of customer service and warranty the builder offers. Don't wait until after you have purchased a new home to learn what is covered under the warranty and what is considered as maintenance. Most builders offer some form of a written warranty in which they back their own workmanship and materials, typically for one (1) year. Make sure you understand what the warranty covers and what your alternatives are if you have a disagreement with your builder. Other builders offer warranties backed by an insurance company. To obtain an insured warranty, you must buy a home from a builder who belongs to an insured warranty program. You cannot simply select a home then ask a builder who does not belong to a program for an insured warranty.

In I 981, Interest rates on mortgage loans soared to more than 18 percent. Some economic forecasters predicted that we would never again see single digit mortgage rates.
As is usually the case, the prophets of doom were wrong, In the past year we saw mortgage rates plummet to their lowest point in over 40 years! Interest rates for adjustable rate loans were at levels that have not been seen since the 1950's. Although there have been some increases in recent months, the rates remain at near historic low levels.
Low interest rates make borrowing money easier for consumers since two key factors in calculating a monthly payment on a home are the price and the interest rate. The moderation in home prices combined with low mortgage rates is making now one of the best times in recent memory to buy a new home.

How much difference does the decline in interest rates make? Suppose you want to buy a new home with a $100,000 mortgage. If interest rates were still at 10 percent, the monthly payment of principal and interest on a 30-year, fixed rate loan would have been $878. If the interest rate on the same loan were, however, 6.5 percent, the monthly payment would be only about $632. This comes to a savings of $246 a month and close to $3,000 a year. Over the life of the loan, the saving in interest payments exceeds $88,000, which is greater than three-fourths of the original loan amount!

Another way of evaluating the effect of lower interest rates is by looking at how much greater a loan you could afford with the same monthly payment. Suppose you could afford the monthly payment of $878 for the 10 percent fixed-rate loan for $100,000. How much more of a loan could you afford by paying 6.5 percent? You could afford a loan of more than $140,000, which is nearly one-and-a-half times as much. This will allow you to buy more home, more land or choose a higher-end neighborhood to live in.

One other important consideration with the drop in interest rates is that 15-year mortgages become more affordable. With a 15-year loan, the monthly principal and interest payment is somewhat larger than that for the 30-year loan, however the loan is paid off in half the time, and that gives a substantial savings in interest costs.

For example, remember how the monthly payment for 30-year loan at 6.5 percent for $100,000 was $632? The same loan with a 15-year term would be about $871. The added expense per year for the 15-year loan would be more than $2,800, however, after 15 years you would have paid off the loan. Over the life of the two loans, you would pay about $71,000 less in interest with the 15-year loan.

A buyer, who is stretched to the limit to qualify for a mortgage loan, might be better off with a 30-year loan with lower monthly payments. For buyers who prefer to build up equity more quickly and can handle higher payments, a 15-year loan might be an attractive option. The monthly payment of 15-year loan at 6.5 percent is nearly identical to 30-year loan at 10 percent.