10 Steps to Buying a Home in Holly Springs, North Carolina
1. Start with your credit
Credit reports are kept by the three major credit agencies, Experian, Equifax, and TransUnion. They show whether you are habitually late with payments and whether you have run into serious credit problems in the past. A low credit score may hurt your chances for getting the best interest rate, or getting financing at all. Getting a copy of your credit report and knowing your credit scores will help you stay informed! If you find any errors, contact the agencies directly to correct them, which can take two to three months to resolve. If the report is accurate but shows past problems, be prepared to explain them to a loan officer.
2. Set your budget
Next, you need to determine how much house you can afford. For an accurate figure, ask to be pre-approved by a lender, who will look at your income, debt and credit to determine the kind of loan that’s best for your situation. The rule of thumb is to aim for a home that costs about two and half times your gross annual salary. Another rule of thumb: all your monthly home payments should not exceed 36% f your gross monthly income. The size of your down payment will also determine how much home you can afford.
3. Line up cash
You’ll need cash for your down payment and closing costs. Lenders like to see 20% of the home’s price as a down payment. If you have less, there are loans that can accommodate you. Once you have your down payment amount, make sure you’ve got enough to cover fees and closing costs. These may include the appraisal fee, loan fees, attorney’s fees, inspection fees, and the cost of a title search. They can easily add up, so talk these costs over with your real estate professional before committing to a contract.
If your available cast doesn’t cover your needs, you have several options. First-Time homebuyers can withdraw up to #10,000 without penalty from an Individual Retirement Account (IRA) if you have one, though you must pay taxes on the amount. You can also receive a cash gift of up to $14,000 a year from each of your parents without triggering a gift tax. You can also tap into a 401(k) or similar retirement plan for a loan from yourself.
4. Find a Real Estate Professional
Most sellers list their homes through a real estate professional; but those agents work for the seller, not you. You need an exclusive buyer agent. A buyer’s representative has the same access to homes for sale that a seller’s agent does, but his or her allegiance is to only you. A Buyer Agent is there to protect your best interest, and help negotiate on your behalf to help you get the best deal for your dream home.
5. Search For a Home
You need to figure out what city or neighborhood you want to live in. Look for signs of economic vitality: a mixture of young families and older couples, low unemployment and good incomes. Pay special attention to districts with good schools, even if you don’t have a school age child. (When it comes time to sell, you’ll find that a strong school system is a major advantage in helping your hoe retain or gain value). Be wary of choosing search criteria that are too restrictive. For example, select a price range 10% above and 10% below your actual range (this leaves room for negotiation). Add a 10 mile radius to the location you specify (a few extra minutes of drive time, might be a huge difference in price).
6. Make an Offer
Once you find the house you want, be prepared to move quickly. If you’re working with a Buyer’s Agent, then get advice on an initial offer. Ask for a Comparative Market Analysis (CMA) that shows at least three houses that have sold recently in the neighborhood. If you really want the house, don’t lowball. Remember that your leverage depends on the pace of the market.
7. Secure a Loan
Now call your mortgage broker or lender and move quickly to agree on terms of the loan (if you haven’t already done so). This is when you decide whether to go with a fixed rate or adjustable rate mortgage and whether to pay points. Expect to pay $50 to $75 for a credit check at this point, and another $150-$30 on average for an appraisal of the home. If you don’t already have one, look into a homeowner’s insurance policy. Most lenders require that you have homeowner’s insurance in place before they’ll approve your loan.
8. Enter Contract
Have your Buyer’s Agent review the Purchase Contract to make sure the deal is written the way you want it. In the state of North Carolina, you will need to make a Due Diligence deposit. This gives you an amount of time to conduct any and all inspections of the home and property to make sure there are no hidden surprises. (If there are surprises, your Buyer Agent can help negotiate a repair request). You will also need to make an Earnest Money Deposit that will be held in an escrow account. This deposit is credited to you on the purchase price of the home.
9. Get an Inspection
In addition to the appraisal that the mortgage lender will make of your home, you should hire your own home inspector. An inspection costs about $300 on average and takes two hours or more. Ask to be present during the inspection, because you will learn a lot about your house, including its overall condition, construction materials, wiring, and heating. Other inspections to consider are Termite Inspection, Radon Inspection, Well and Septic Inspection (If present on the property).
10. Close the Deal
About two days before the actual closing, you will receive a Preliminary Closing Disclosure from your lender that lists all the charges you can expect to pay at closing. Review it carefully. It will include things like the cost of title insurance that protects you and the lender from any claims someone may make regarding ownership of your property. The actual closing is a celebration. You will have many documents to sign that an attorney will go over with you, and when it is all done, you receive the keys to your new home!
Team Anderson Realty, located in Holly Springs, NC, has a team of buyer’s agents that are ready to help you find your next home. If you are looking to move to the Holly Springs/Triangle area in North Carolina, visit our website to start your free home search or call Team Anderson Realty today at 919-610-5126. If you need to sell your home before you can buy a home, call Erica Anderson to learn about our marketing strategies that will get your home sold!
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