The best news about making your first steps to buy a home is that there is no “right” or “wrong” time to buy a home. It is all about when you are personally and financially ready. First time home buyers and those who don’t actively buy and sell real estate can benefit from the steps listed on this page to get you ready for the purchase of residential real estate in North Carolina!
1. Determine How Much Home You Can Afford
Identify a realistic budget for your home and then determine your debt-to-income ratio (DTI). You can calculate this by taking your Monthly Expenses (anything and everything paid on a monthly basis) and divide that figure by your gross Monthly income. Most lenders prefer you be in the 36-43% range.
Remember it is not advisable to max out your house budget. You want to always allow for unplanned expenses that come along with home ownership, and money to spend for entertainment, decorating, etc.
2. Save for a Down Payment
Depending on the type of Loan you secure, your down payment will vary. No matter what loan you choose, saving for the largest down payment you can afford is beneficial in many ways.
A down payment of 20% or more will exempt you from a private mortgage insurance payment added to your mortgage payment, and your chances of getting a lower interest rate are higher since you are reducing your loan to value ratio.
The larger a down payment, the less interest you will pay over the life of the loan which will greatly reduce your overall costs of the loan.
Bigger Down Payments = Smaller Monthly Payments = Better Borrowing Power in the Future by slimming your DTI.
3. Find a Real Estate Agent You Can Trust
Hint, you are in the right spot!
4. Get Pre-Approved For A Mortgage
Shop Around, Let Lenders Compete for your Business, Find the Loan that is most financially advantageous to you. Most competitive markets will require you to submit a pre-approval letter with your offer.
5. Find THe Perfect Home FOr You!
Factors to consider when making an offer include earnest money, due diligence money, due diligence date, and closing costs.
6. Submit An Offer
Your real estate agent will help you understand how each of these factors affect your offer, and where to come in at for each one to help make your offer stand out amongst others.
After submitting your offer, it’s time to wait for acceptance.
7. Do your Due Diligence
A home inspection will be scheduled by your real estate agent. An extremely detailed and thorough inspection of the home that reduces a buyer’s liabilities to those issues unseen during visits. It is important to do your research and pick a reputable home inspector that you trust will be by your side.
A home appraisal is scheduled by your lender and takes into account a variety of approaches to determine the fairest market value for the subject property.
Other factors to consider:
- Radon Test – While we don’t have to worry about radon here in Eastern North Carolina, buyers elsewhere do and need to be informed if they are in a risk area.
- Mold Test – Certainly a test to consider in our humid climate and low-lying areas of Eastern North Carolina.
- Termite Inspection – Look for homes that have a preexisting termite bond on them, and its always a plus to communicate with the pest control company of the sellers to ensure the home has been kept up to date from a pest management perspective.
A well-informed agent will help you take the issues found during due diligence, and use them to your advantage in negotiating a better position.
8. Get Ready for CLosing!
Make sure you have your closing costs estimated by your closing attorney via HUD statement and those are ready to go for closing day! In addition, take note of the following:
- 1. Do Not make any large purchases that would affect your DTI.
- 2. Do Not run up your credit card limit or any other activity that would affect your credit score.
- 3. Get Homeowners Insurance – Make sure to shop around get the best rate and coverage for your needs!
The big day is here! Remember these key items you will need on closing day:
- 1. Valid, In Date Government Issued ID
- 2. Proof of Insurance
- 3. Cashiers Check to cover closing Cost made out to Closing Attorneys Trust Account
- 4. Patience! There are a lot of papers to sign on closing day. Many things need to be explained to everyone involved to make this process as transparent and worthy of all those involved trusts.