First Time Home Buyers - The Ultimate Checklist

Posted by Larry Tollen on Wednesday, February 20th, 2019 at 10:08am

1st Time Home Buyers Ultimate Guide

If you're a first time home buyer then there's a good chance you are getting lots of conflicting information, from the Internet, your friends, family and co-workers. We hear things from when we're speaking to our buyer clients that never cease to surprise us as it's so often incorrect. There's a lot to consider and some prep work required. Here it is, a definitive guide to preparing to buy your first home.

Getting Ready: Mortgages and Financing

1. -  Start saving for your down payment.

It may seem obvious, but if you're going to buy a home you're going to need money and the sooner you start saving, the sooner you can start looking for a home in earnest. Saving for a down payment is frequently the biggest hurdle for first time buyers, so it pays to plan ahead. There are many financing options available to home buyers, some require no down payment though these aren't always available to every buyer. There are government backed loans starting with as little as 3% down payment but these require a buyer to pay for Private Mortgage Insurance (PMI) which raises your monthly mortgage payment. With 5% down there are programs that allow you to avoid PMI. While putting more down upfront has its advantages, {lower monthly payment, easier to qualify, better terms}, the average first time buyer puts 10% or less down, so just because you may not have 20% down, don't sweat it.

Some ideas: Ask your family for help. If you're getting married think about asking your friends/family for money that will be used for your down payment rather than a wedding gift. Be frugal; commit to not going out to eat or catch a show/movie for 6-12 months; Mortgage Moneyskip Starbucks, bring your lunch to work; you'll be amazed at how much money you can save if you put your mind to it. Check out: Want To Start Saving For A Down Payment? Try These 4 Money-Saving Hacks

2. -  Determine how much home you can afford. 

While you can  certainly use free online mortgage calculators, I personally recommend speaking with a mortgage lender as they can give you a much more accurate number. My NC Homes recommends that our buyer clients not push the envelope. Leave yourself some breathing room for unexpected expenses. When possible consider discounting the amount the lender says you qualify for by 10%-15%.

 

3. - Time to check your credit and avoid any new credit activity.

 

Figuring Things OutWhile a lender will do this once you request Pre-Approval, you can do this for yourself using sites like Credit Karma, FreeScoreOnline.com and others. With mortgages; the higher your score the better terms you'll receive. Currently in order to get an FHA loan at 3.5% down, you'll need a minimum score of 580. Keep in mind that the time to open up any new credit accounts, buy a new car or make any type of large purchase (including things for your new home) is not when you are buying a home. Wait until after you've closed. If you have a credit score of 700 or above and are putting down a substantial deposit this may not apply to you, but even then it's better to be safe than sorry.

 

4. - Explore mortgage options and any 1st time buyer assistance programs. 

Your Lender and your Realtor are excellent resources to check with and can let you know about local, state and federal home buyer programs and while you can  certainly use free online mortgage calculators, I personally recommend speaking with a mortgage lender as they can give you a much more accurate number. My NC Homes recommends that our buyer clients not push the envelope. Leave yourself some breathing room for unexpected expenses. When possible consider discounting the amount the lender says you qualify for by 10%-15%.

5. - Get Preapproved for your mortgage. 

Once you've decided you're ready to buy and have decided what lender you'll use, have them fully pre-approve you. This will require Mortgage Pre-Approvalyou to submit a certain amount of personal and financial information. Virtually every lender can send you a link where you can upload it to them securely. Pre-Approval is critical as you'll need to be ready to present an offer once you have identified the house you want and home sellers expect evidence that a buyer can get a mortgage. With the market favoring sellers as it is now, this is more important than ever.

 Your First Home: Things to Consider

6. - Where do you want to live? What type of home do you want? How long will you live there?

These questions seem obvious but statistics indicate that the single biggest regret homebuyers in general have is often location. When talking about location with our buyers here’s 3 essential questions we ask them to think about: Where do you work and how much time are you prepared to drive back and forth to work each day? Where do most of your friends/family live? If you buy a home 30 or more minutes away from them, how will you and they feel about getting together? Do school districts matter?

In terms of what type of home, price may be the biggest dictator, but if there's plenty of options in your price range, think about whether you want to live in a neighborhood where there is an HOA and HOA fees. This applies to townhomes and condos as well which will always have HOA fees. At today's mortgage rates: consider this fact; every $5 a month in HOA fees is roughly the same as another $1000 on your mortgage. In other words; if your HOA fees are $100 a month you'll need to deduct $20,000 from the amount the lender said you qualify for. This doesn't mean HOAs are bad, simply that you need to factor this in. If you are buying a property that has well and/or a septic system there will be additional inspection expenses to budget for and while you won't have a water and sewer bill you may need to replace a pump, well, septic tank, septic field etc.

Keep in mind, this is your first home, not your dream home. Statistically there is barely a 7% chance of your living in this home for more than 5-7 years. 

7. - You'll probably need more money than you think.

Besides the down payment, you will have closing costs. Typically in our area these run between 2-4% of the loan amount. Discuss these with your lender. By law within 3 days of your applying for a mortgage your lender must supply you with a Good Faith Estimate of your closing costs. These include things like your closing attorney’s fee, setting up escrow accounts to pay your property taxes and insurance, filing fees, lender fees, and others.

You'll have inspection expenses, home inspection, wood destroying insect inspection, possibly radon, water, well, and HVAC inspections. These are your responsibility. Your Broker can let you know what each of these typically costs. If you're hiring movers you will need to consider this expense as well

After closing there things you'll probably need money for, these could include, appliances, paint, floor coverings, repairs, having new locks installed, etc.

Seller paid closing costs:

Buyers are frequently encouraged by well meaning friends/family to ask for these, but as you've likely heard, "There's no free lunch." Sellers all have a bottom line number that they are prepared to take for their home, and these expenses are simply added on top. This can be helpful as it can give you several thousand dollars up front that you pay for in your mortgage. For buyers who have good income, but who are cash light, this can make all the difference in the world as it allows them to buy a home while only adding a very nominal amount to their monthly mortgage payment. Speak to your Broker about these as they can negatively impact your offer in a seller's mind. A good Realtor will help you strategize based on the market conditions at that time.

Who Doesn't Like: Paperwork

8. - To be honest; there's a lot of it.

 When I first sit down with a prospective buyer or seller, I give them a sample copy of all the standard paperwork they can expect to see. This includHead Explodinges: The Offer to Purchase and Contract, the Buyer Broker Agreement, Residential Property Disclosure, Mineral, Oil and Gas Disclosure, a Professional Services   Disclosure, and others. These are the forms used by North Carolina Realtors, your lender will have their own forms which you'll need to sign and they will require copies of tax returns, bank account statements and more. It's to your advantage to take a look at the Realtor forms and get any questions you may have answered before you make an offer, so that you're already aware of what you'll be signing. It is also smart to find out exactly what your lender will require so that you can start gathering it up.

 

 

This Is Not a DIY Project: Hire A Buyer Broker

9. - Why use a Buyer Broker? 

Most of us wouldn't represent themselves in a criminal case, or jump on WebMD to diagnose ourselves and prescribe treatment for a serious illness. Having an experienced professional who is responsible for representing your best interests in what is likely one of the most expensive and potentially complicated transaction you have done in your life so far, makes sense. The fact that this rarely costs you anything (it is most commonly paid for by the listing Realtor out of the commission the Seller is paying them) makes it a no brainer. A good buyer broker is invaluable. They will offer guidance, throughout the process, from vetted lenders, inspectors, attorneys and tradesmen, to making certain that the terms of the contract are honored by both you and the Sellers. They can take raw market data and actually turn it into useful insights you can use. Their experience and local expertise can save you time, money and energy. The best are master negotiators and if you find yourself in a situation where you're bidding with other buyers for the same property this expertise can be invaluable.

Under Contract, Now What: Inspections and Negotiations

10. - Congratulations, you've gone under contract what happens next?

Here in North Carolina, buyers pay a due diligence fee directly to the seller as soon as the sellers sign the offer making it a contract.The diligence fee basically buys a period of time where you the buyer have the opportunity to basically "kick the tires" and inspect anything you wish in regards to the property. Time is of the essence during the due diligence period and the first 10 days of your diligence period are the most critical. As soon as your contract is received by your buyer broker they'll send a copy of it to your closing attorney and your lender to get them started. You need to promptly contact your lender and make sure they have everything they need from you in terms of paperwork and application / appraisal fee. Remember the one thing your buyer broker can't help you with is the financing, this is something you need to take care of yourself. Your Broker can and should help you schedule all your inspections and we recommend that you have them all lined up and done on the same day. Typically you'll get their reports the following day. You'll want to let your Inspectors know that they may share your reports with your Broker. Once your inspection reports come in you will want to review them with your Broker. It's important to bear in mind that the inspectors were hired to find problems, and it's very likely your report will have dozens if not a hundred or more "defects" listed. Generally speaking out of all of these "defects" there only a few that are really significant and while you may wish they were all taken care of, unless it's a strong Buyers Home InspectionsMarket the likelihood of this happening is almost zero. All of us at My NC Homes have extensive experience in reviewing these reports and we can help you understand what is really significant and what's not. Our focus is on the significant and our suggestion in the current Sellers Market is to forget about the minor stuff. We also suggest not asking the seller to make repairs, they will be focused on doing it as inexpensively as possible which may or may not be the best way to do it. We suggest asking for money which will come as a closing cost credit; this way you can hire the people you want to make the repairs to your satisfaction. Remember, it's a negotiation and this generally means neither you or the Seller will get everything you want. Ideally both buyer and seller understand and accept this so that each ultimately feels that whatever is negotiated is fair and that they can live with it. During the diligence period you the Buyer have all the power, you may terminate the contract (and forfeit your diligence fee) for any or no reason at all. If you're not happy with the way things are going, speak with your agent and if necessary, have them terminate the contract. Once all Diligence requests are negotiated and paperwork signed, if you haven't given an Earnest Money Deposit you will be required to do so. Typically this is in the range of 1-2% of the contract price and is held in escrow either by your closing attorney or the listing firm. This along with the diligence fee and any closing costs that may have been included or negotiated into the contract are credited against the total purchase price at closing. Once the Diligence Period is over; if you fail to close for any reason, then the earnest money is also forfeit to the Sellers.

The Closing!

11. - YOUR FIRST HOME!

If things work out the way they should the closing is almost anti-climatic except for the fact that you've just bought YOUR FIRST HOME! Four to five days prior to closing, you’ll receive a secure email from your lender with your Closing Statement attached to review and sign. It is critical that you do as the Government requires them to have this back signed no less than 3 business days prior to closing. Note, the amount shown as needed for closing may or may not be exactly correct, depending on whether the closing attorney got to review all the numbers. A day or two after you've received this, the closing attorney will send the one that you and New Homethe seller will be signing at closing. Your agent should receive a copy of this as well and we always call our clients and run through it with them to answer any questions they might have. At closing you will be signing both this accounting statement (known as the ALTA Settlement) as well as your mortgage documents which have been sent by the lender to your attorney. You should bring a picture ID (drivers license or passport is best) as the attorney is required to make a copy and submit along with everything else. Once everything has been signed, the closing attorney will be recording it, nowadays this is typically done electronically, once it's been recorded (usually within a few hours at most) they will call your agent and let them know and we'll call you and let you know the house is yours and you can officially move in.

Owning a Home

12. - Congratulations, you're homeowner.

Regardless of your age, or the home you've bought, you are to be congratulated. You have invested in your own financial success and future and stopped paying for your landlord's home. Now that you own the home there may be improvements you want or need to make and you'll want to have some money set aside for these. We encourage you to talk with us, we can help you both with reputable resources as well as letting you know where your money is best spent in terms of resale value. All of us on the My NC Homes Team hope that you will love your home and stay in touch. We value our clients and would like nothing more than to hear from you whenever you have a real estate related question. Now that you are a homeowner, check out our article Four Home Safety Issues Every Home Owner Should Know About.

 

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March 31, 2019
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If you’re a first time home buyer then there’s a good chance you are getting lots of conflicting information, from the Internet, your friends, family and co-workers. We hear things from when we’re speaking to our buyer clients that never cease to surprise us as it’s so often incorrect. There’s a lot to consider and some prep work required. Here it is, a definitive guide to preparing to buy your first home.
Getting Ready: Mortgages and Financing
1. –  Start saving for your down payment.
It may seem obvious, but if you’re going to buy a home you’re going to need money and the sooner you start saving, the sooner you can start looking for a home in earnest. Saving for a down payment is frequently the biggest hurdle for first time buyers, so it pays to plan ahead. There are many financing options available to home buyers, some require no down payment though these aren’t always available to every buyer. There are government backed loans starting with as little as 3 down payment but these require a buyer to pay for Private Mortgage Insurance (PMI) which raises your monthly mortgage payment. With 5 down there are programs that allow you to avoid PMI. While putting more down upfront has its advantages, {lower monthly payment, easier to qualify, better terms}, the average first time buyer puts 10 or less down, so just because you may not have 20 down, don’t sweat it.
Some ideas: Ask your family for help. If you’re getting married think about asking your friends/family for money that will be used for your down payment rather than a wedding gift. Be frugal; commit to not going out to eat or catch a show/movie for 6-12 months; skip Starbucks, bring your lunch to work; you’ll be amazed at how much money you can save if you put your mind to it. Check out: Want To Start Saving For A Down Payment? Try These 4 Money-Saving Hacks
2. –  Determine how much home you can afford. 
While you can  certainly use free online mortgage calculators, I personally recommend speaking with a mortgage lender as they can give you a much more accurate number. My NC Homes recommends that our buyer clients not push the envelope. Leave yourself some breathing room for unexpected expenses. When possible consider discounting the amount the lender says you qualify for by 10-15.
 
3. – Time to check your credit and avoid any new credit activity.
 
While a lender will do this once you request Pre-Approval, you can do this for yourself using sites like Credit Karma, FreeScoreOnline.com and others. With mortgages; the higher your score the better terms you’ll receive. Currently in order to get an FHA loan at 3.5 down, you’ll need a minimum score of 580. Keep in mind that the time to open up any new credit accounts, buy a new car or make any type of large purchase (including things for your new home) is not when you are buying a home. Wait until after you’ve closed. If you have a credit score of 700 or above and are putting down a substantial deposit this may not apply to you, but even then it’s better to be safe than sorry.
 
4. – Explore mortgage options and any 1st time buyer assistance programs. 
Your Lender and your Realtor are excellent resources to check with and can let you know about local, state and federal home buyer programs and while you can  certainly use free online mortgage calculators, I personally recommend speaking with a mortgage lender as they can give you a much more accurate number. My NC Homes recommends that our buyer clients not push the envelope. Leave yourself some breathing room for unexpected expenses. When possible consider discounting the amount the lender says you qualify for by 10-15.
5. – Get Preapproved for your mortgage. 
Once you’ve decided you’re ready to buy and have decided what lender you’ll use, have them fully pre-approve you. This will require you to submit a certain amount of personal and financial information. Virtually every lender can send you a link where you can upload it to them securely. Pre-Approval is critical as you’ll need to be ready to present an offer once you have identified the house you want and home sellers expect evidence that a buyer can get a mortgage. With the market favoring sellers as it is now, this is more important than ever.
 Your First Home: Things to Consider
6. – Where do you want to live? What type of home do you want? How long will you live there?
These questions seem obvious but statistics indicate that the single biggest regret homebuyers in general have is often location. When talking about location with our buyers here’s 3 essential questions we ask them to think about: Where do you work and how much time are you prepared to drive back and forth to work each day? Where do most of your friends/family live? If you buy a home 30 or more minutes away from them, how will you and they feel about getting together? Do school districts matter?
In terms of what type of home, price may be the biggest dictator, but if there’s plenty of options in your price range, think about whether you want to live in a neighborhood where there is an HOA and HOA fees. This applies to townhomes and condos as well which will always have HOA fees. At today’s mortgage rates: consider this fact; every $5 a month in HOA fees is roughly the same as another $1000 on your mortgage. In other words; if your HOA fees are $100 a month you’ll need to deduct $20,000 from the amount the lender said you qualify for. This doesn’t mean HOAs are bad, simply that you need to factor this in. If you are buying a property that has well and/or a septic system there will be additional inspection expenses to budget for and while you won’t have a water and sewer bill you may need to replace a pump, well, septic tank, septic field etc.
Keep in mind, this is your first home, not your dream home. Statistically there is barely a 7 chance of your living in this home for more than 5-7 years. 
7. – You’ll probably need more money than you think.
Besides the down payment, you will have closing costs. Typically in our area these run between 2-4 of the loan amount. Discuss these with your lender. By law within 3 days of your applying for a mortgage your lender must supply you with a Good Faith Estimate of your closing costs. These include things like your closing attorney’s fee, setting up escrow accounts to pay your property taxes and insurance, filing fees, lender fees, and others.
You’ll have inspection expenses, home inspection, wood destroying insect inspection, possibly radon, water, well, and HVAC inspections. These are your responsibility. Your Broker can let you know what each of these typically costs. If you’re hiring movers you will need to consider this expense as well
After closing there things you’ll probably need money for, these could include, appliances, paint, floor coverings, repairs, having new locks installed, etc.
Seller paid closing costs:
Buyers are frequently encouraged by well meaning friends/family to ask for these, but as you’ve likely heard, “There’s no free lunch.” Sellers all have a bottom line number that they are prepared to take for their home, and these expenses are simply added on top. This can be helpful as it can give you several thousand dollars up front that you pay for in your mortgage. For buyers who have good income, but who are cash light, this can make all the difference in the world as it allows them to buy a home while only adding a very nominal amount to their monthly mortgage payment. Speak to your Broker about these as they can negatively impact your offer in a seller’s mind. A good Realtor will help you strategize based on the market conditions at that time.
Who Doesn’t Like: Paperwork
8. – To be honest; there’s a lot of it.
 When I first sit down with a prospective buyer or seller, I give them a sample copy of all the standard paperwork they can expect to see. This includes: The Offer to Purchase and Contract, the Buyer Broker Agreement, Residential Property Disclosure, Mineral, Oil and Gas Disclosure, a Professional Services   Disclosure, and others. These are the forms used by North Carolina Realtors, your lender will have their own forms which you’ll need to sign and they will require copies of tax returns, bank account statements and more. It’s to your advantage to take a look at the Realtor forms and get any questions you may have answered before you make an offer, so that you’re already aware of what you’ll be signing. It is also smart to find out exactly what your lender will require so that you can start gathering it up.
 
 
This Is Not a DIY Project: Hire A Buyer Broker
9. – Why use a Buyer Broker? 
Most of us wouldn’t represent themselves in a criminal case, or jump on WebMD to diagnose ourselves and prescribe treatment for a serious illness. Having an experienced professional who is responsible for representing your best interests in what is likely one of the most expensive and potentially complicated transaction you have done in your life so far, makes sense. The fact that this rarely costs you anything (it is most commonly paid for by the listing Realtor out of the commission the Seller is paying them) makes it a no brainer. A good buyer broker is invaluable. They will offer guidance, throughout the process, from vetted lenders, inspectors, attorneys and tradesmen, to making certain that the terms of the contract are honored by both you and the Sellers. They can take raw market data and actually turn it into useful insights you can use. Their experience and local expertise can save you time, money and energy. The best are master negotiators and if you find yourself in a situation where you’re bidding with other buyers for the same property this expertise can be invaluable.
Under Contract, Now What: Inspections and Negotiations
10. – Congratulations, you’ve gone under contract what happens next?
Here in North Carolina, buyers pay a due diligence fee directly to the seller as soon as the sellers sign the offer making it a contract.The diligence fee basically buys a period of time where you the buyer have the opportunity to basically “kick the tires” and inspect anything you wish in regards to the property. Time is of the essence during the due diligence period and the first 10 days of your diligence period are the most critical. As soon as your contract is received by your buyer broker they’ll send a copy of it to your closing attorney and your lender to get them started. You need to promptly contact your lender and make sure they have everything they need from you in terms of paperwork and application / appraisal fee. Remember the one thing your buyer broker can’t help you with is the financing, this is something you need to take care of yourself. Your Broker can and should help you schedule all your inspections and we recommend that you have them all lined up and done on the same day. Typically you’ll get their reports the following day. You’ll want to let your Inspectors know that they may share your reports with your Broker. Once your inspection reports come in you will want to review them with your Broker. It’s important to bear in mind that the inspectors were hired to find problems, and it’s very likely your report will have dozens if not a hundred or more “defects” listed. Generally speaking out of all of these “defects” there only a few that are really significant and while you may wish they were all taken care of, unless it’s a strong Buyers Market the likelihood of this happening is almost zero. All of us at My NC Homes have extensive experience in reviewing these reports and we can help you understand what is really significant and what’s not. Our focus is on the significant and our suggestion in the current Sellers Market is to forget about the minor stuff. We also suggest not asking the seller to make repairs, they will be focused on doing it as inexpensively as possible which may or may not be the best way to do it. We suggest asking for money which will come as a closing cost credit; this way you can hire the people you want to make the repairs to your satisfaction. Remember, it’s a negotiation and this generally means neither you or the Seller will get everything you want. Ideally both buyer and seller understand and accept this so that each ultimately feels that whatever is negotiated is fair and that they can live with it. During the diligence period you the Buyer have all the power, you may terminate the contract (and forfeit your diligence fee) for any or no reason at all. If you’re not happy with the way things are going, speak with your agent and if necessary, have them terminate the contract. Once all Diligence requests are negotiated and paperwork signed, if you haven’t given an Earnest Money Deposit you will be required to do so. Typically this is in the range of 1-2 of the contract price and is held in escrow either by your closing attorney or the listing firm. This along with the diligence fee and any closing costs that may have been included or negotiated into the contract are credited against the total purchase price at closing. Once the Diligence Period is over; if you fail to close for any reason, then the earnest money is also forfeit to the Sellers.
The Closing
11. – YOUR FIRST HOME
If things work out the way they should the closing is almost anti-climatic except for the fact that you’ve just bought YOUR FIRST HOME Four to five days prior to closing, you’ll receive a secure email from your lender with your Closing Statement attached to review and sign. It is critical that you do as the Government requires them to have this back signed no less than 3 business days prior to closing. Note, the amount shown as needed for closing may or may not be exactly correct, depending on whether the closing attorney got to review all the numbers. A day or two after you’ve received this, the closing attorney will send the one that you and the seller will be signing at closing. Your agent should receive a copy of this as well and we always call our clients and run through it with them to answer any questions they might have. At closing you will be signing both this accounting statement (known as the ALTA Settlement) as well as your mortgage documents which have been sent by the lender to your attorney. You should bring a picture ID (drivers license or passport is best) as the attorney is required to make a copy and submit along with everything else. Once everything has been signed, the closing attorney will be recording it, nowadays this is typically done electronically, once it’s been recorded (usually within a few hours at most) they will call your agent and let them know and we’ll call you and let you know the house is yours and you can officially move in.
Owning a Home
12. – Congratulations, you’re homeowner.
Regardless of your age, or the home you’ve bought, you are to be congratulated. You have invested in your own financial success and future and stopped paying for your landlord’s home. Now that you own the home there may be improvements you want or need to make and you’ll want to have some money set aside for these. We encourage you to talk with us, we can help you both with reputable resources as well as letting you know where your money is best spent in terms of resale value. All of us on the My NC Homes Team hope that you will love your home and stay in touch. We value our clients and would like nothing more than to hear from you whenever you have a real estate related question. Now that you are a homeowner, check out our article Four Home Safety Issues Every Home Owner Should Know About.
 If you’re a first time home buyer then there’s a good chance you are getting lots of conflicting information, from the Internet, your friends, family and co-workers. We hear things from when we’re speaking to our buyer clients that never cease to surprise us as it’s so often incorrect. There’s a lot to consider and some prep work required. Here it is, a definitive guide to preparing to buy your first home.
Getting Ready: Mortgages and Financing
1. –  Start saving for your down payment.
It may seem obvious, but if you’re going to buy a home you’re going to need money and the sooner you start saving, the sooner you can start looking for a home in earnest. Saving for a down payment is frequently the biggest hurdle for first time buyers, so it pays to plan ahead. There are many financing options available to home buyers, some require no down payment though these aren’t always available to every buyer. There are government backed loans starting with as little as 3 down payment but these require a buyer to pay for Private Mortgage Insurance (PMI) which raises your monthly mortgage payment. With 5 down there are programs that allow you to avoid PMI. While putting more down upfront has its advantages, {lower monthly payment, easier to qualify, better terms}, the average first time buyer puts 10 or less down, so just because you may not have 20 down, don’t sweat it.
Some ideas: Ask your family for help. If you’re getting married think about asking your friends/family for money that will be used for your down payment rather than a wedding gift. Be frugal; commit to not going out to eat or catch a show/movie for 6-12 months; skip Starbucks, bring your lunch to work; you’ll be amazed at how much money you can save if you put your mind to it. Check out: Want To Start Saving For A Down Payment? Try These 4 Money-Saving Hacks
2. –  Determine how much home you can afford. 
While you can  certainly use free online mortgage calculators, I personally recommend speaking with a mortgage lender as they can give you a much more accurate number. My NC Homes recommends that our buyer clients not push the envelope. Leave yourself some breathing room for unexpected expenses. When possible consider discounting the amount the lender says you qualify for by 10-15.
 
3. – Time to check your credit and avoid any new credit activity.
 
While a lender will do this once you request Pre-Approval, you can do this for yourself using sites like Credit Karma, FreeScoreOnline.com and others. With mortgages; the higher your score the better terms you’ll receive. Currently in order to get an FHA loan at 3.5 down, you’ll need a minimum score of 580. Keep in mind that the time to open up any new credit accounts, buy a new car or make any type of large purchase (including things for your new home) is not when you are buying a home. Wait until after you’ve closed. If you have a credit score of 700 or above and are putting down a substantial deposit this may not apply to you, but even then it’s better to be safe than sorry.
 
4. – Explore mortgage options and any 1st time buyer assistance programs. 
Your Lender and your Realtor are excellent resources to check with and can let you know about local, state and federal home buyer programs and while you can  certainly use free online mortgage calculators, I personally recommend speaking with a mortgage lender as they can give you a much more accurate number. My NC Homes recommends that our buyer clients not push the envelope. Leave yourself some breathing room for unexpected expenses. When possible consider discounting the amount the lender says you qualify for by 10-15.
5. – Get Preapproved for your mortgage. 
Once you’ve decided you’re ready to buy and have decided what lender you’ll use, have them fully pre-approve you. This will require you to submit a certain amount of personal and financial information. Virtually every lender can send you a link where you can upload it to them securely. Pre-Approval is critical as you’ll need to be ready to present an offer once you have identified the house you want and home sellers expect evidence that a buyer can get a mortgage. With the market favoring sellers as it is now, this is more important than ever.
 Your First Home: Things to Consider
6. – Where do you want to live? What type of home do you want? How long will you live there?
These questions seem obvious but statistics indicate that the single biggest regret homebuyers in general have is often location. When talking about location with our buyers here’s 3 essential questions we ask them to think about: Where do you work and how much time are you prepared to drive back and forth to work each day? Where do most of your friends/family live? If you buy a home 30 or more minutes away from them, how will you and they feel about getting together? Do school districts matter?
In terms of what type of home, price may be the biggest dictator, but if there’s plenty of options in your price range, think about whether you want to live in a neighborhood where there is an HOA and HOA fees. This applies to townhomes and condos as well which will always have HOA fees. At today’s mortgage rates: consider this fact; every $5 a month in HOA fees is roughly the same as another $1000 on your mortgage. In other words; if your HOA fees are $100 a month you’ll need to deduct $20,000 from the amount the lender said you qualify for. This doesn’t mean HOAs are bad, simply that you need to factor this in. If you are buying a property that has well and/or a septic system there will be additional inspection expenses to budget for and while you won’t have a water and sewer bill you may need to replace a pump, well, septic tank, septic field etc.
Keep in mind, this is your first home, not your dream home. Statistically there is barely a 7 chance of your living in this home for more than 5-7 years. 
7. – You’ll probably need more money than you think.
Besides the down payment, you will have closing costs. Typically in our area these run between 2-4 of the loan amount. Discuss these with your lender. By law within 3 days of your applying for a mortgage your lender must supply you with a Good Faith Estimate of your closing costs. These include things like your closing attorney’s fee, setting up escrow accounts to pay your property taxes and insurance, filing fees, lender fees, and others.
You’ll have inspection expenses, home inspection, wood destroying insect inspection, possibly radon, water, well, and HVAC inspections. These are your responsibility. Your Broker can let you know what each of these typically costs. If you’re hiring movers you will need to consider this expense as well
After closing there things you’ll probably need money for, these could include, appliances, paint, floor coverings, repairs, having new locks installed, etc.
Seller paid closing costs:
Buyers are frequently encouraged by well meaning friends/family to ask for these, but as you’ve likely heard, “There’s no free lunch.” Sellers all have a bottom line number that they are prepared to take for their home, and these expenses are simply added on top. This can be helpful as it can give you several thousand dollars up front that you pay for in your mortgage. For buyers who have good income, but who are cash light, this can make all the difference in the world as it allows them to buy a home while only adding a very nominal amount to their monthly mortgage payment. Speak to your Broker about these as they can negatively impact your offer in a seller’s mind. A good Realtor will help you strategize based on the market conditions at that time.
Who Doesn’t Like: Paperwork
8. – To be honest; there’s a lot of it.
 When I first sit down with a prospective buyer or seller, I give them a sample copy of all the standard paperwork they can expect to see. This includes: The Offer to Purchase and Contract, the Buyer Broker Agreement, Residential Property Disclosure, Mineral, Oil and Gas Disclosure, a Professional Services   Disclosure, and others. These are the forms used by North Carolina Realtors, your lender will have their own forms which you’ll need to sign and they will require copies of tax returns, bank account statements and more. It’s to your advantage to take a look at the Realtor forms and get any questions you may have answered before you make an offer, so that you’re already aware of what you’ll be signing. It is also smart to find out exactly what your lender will require so that you can start gathering it up.
 
 
This Is Not a DIY Project: Hire A Buyer Broker
9. – Why use a Buyer Broker? 
Most of us wouldn’t represent themselves in a criminal case, or jump on WebMD to diagnose ourselves and prescribe treatment for a serious illness. Having an experienced professional who is responsible for representing your best interests in what is likely one of the most expensive and potentially complicated transaction you have done in your life so far, makes sense. The fact that this rarely costs you anything (it is most commonly paid for by the listing Realtor out of the commission the Seller is paying them) makes it a no brainer. A good buyer broker is invaluable. They will offer guidance, throughout the process, from vetted lenders, inspectors, attorneys and tradesmen, to making certain that the terms of the contract are honored by both you and the Sellers. They can take raw market data and actually turn it into useful insights you can use. Their experience and local expertise can save you time, money and energy. The best are master negotiators and if you find yourself in a situation where you’re bidding with other buyers for the same property this expertise can be invaluable.
Under Contract, Now What: Inspections and Negotiations
10. – Congratulations, you’ve gone under contract what happens next?
Here in North Carolina, buyers pay a due diligence fee directly to the seller as soon as the sellers sign the offer making it a contract.The diligence fee basically buys a period of time where you the buyer have the opportunity to basically “kick the tires” and inspect anything you wish in regards to the property. Time is of the essence during the due diligence period and the first 10 days of your diligence period are the most critical. As soon as your contract is received by your buyer broker they’ll send a copy of it to your closing attorney and your lender to get them started. You need to promptly contact your lender and make sure they have everything they need from you in terms of paperwork and application / appraisal fee. Remember the one thing your buyer broker can’t help you with is the financing, this is something you need to take care of yourself. Your Broker can and should help you schedule all your inspections and we recommend that you have them all lined up and done on the same day. Typically you’ll get their reports the following day. You’ll want to let your Inspectors know that they may share your reports with your Broker. Once your inspection reports come in you will want to review them with your Broker. It’s important to bear in mind that the inspectors were hired to find problems, and it’s very likely your report will have dozens if not a hundred or more “defects” listed. Generally speaking out of all of these “defects” there only a few that are really significant and while you may wish they were all taken care of, unless it’s a strong Buyers Market the likelihood of this happening is almost zero. All of us at My NC Homes have extensive experience in reviewing these reports and we can help you understand what is really significant and what’s not. Our focus is on the significant and our suggestion in the current Sellers Market is to forget about the minor stuff. We also suggest not asking the seller to make repairs, they will be focused on doing it as inexpensively as possible which may or may not be the best way to do it. We suggest asking for money which will come as a closing cost credit; this way you can hire the people you want to make the repairs to your satisfaction. Remember, it’s a negotiation and this generally means neither you or the Seller will get everything you want. Ideally both buyer and seller understand and accept this so that each ultimately feels that whatever is negotiated is fair and that they can live with it. During the diligence period you the Buyer have all the power, you may terminate the contract (and forfeit your diligence fee) for any or no reason at all. If you’re not happy with the way things are going, speak with your agent and if necessary, have them terminate the contract. Once all Diligence requests are negotiated and paperwork signed, if you haven’t given an Earnest Money Deposit you will be required to do so. Typically this is in the range of 1-2 of the contract price and is held in escrow either by your closing attorney or the listing firm. This along with the diligence fee and any closing costs that may have been included or negotiated into the contract are credited against the total purchase price at closing. Once the Diligence Period is over; if you fail to close for any reason, then the earnest money is also forfeit to the Sellers.
The Closing
11. – YOUR FIRST HOME
If things work out the way they should the closing is almost anti-climatic except for the fact that you’ve just bought YOUR FIRST HOME Four to five days prior to closing, you’ll receive a secure email from your lender with your Closing Statement attached to review and sign. It is critical that you do as the Government requires them to have this back signed no less than 3 business days prior to closing. Note, the amount shown as needed for closing may or may not be exactly correct, depending on whether the closing attorney got to review all the numbers. A day or two after you’ve received this, the closing attorney will send the one that you and the seller will be signing at closing. Your agent should receive a copy of this as well and we always call our clients and run through it with them to answer any questions they might have. At closing you will be signing both this accounting statement (known as the ALTA Settlement) as well as your mortgage documents which have been sent by the lender to your attorney. You should bring a picture ID (drivers license or passport is best) as the attorney is required to make a copy and submit along with everything else. Once everything has been signed, the closing attorney will be recording it, nowadays this is typically done electronically, once it’s been recorded (usually within a few hours at most) they will call your agent and let them know and we’ll call you and let you know the house is yours and you can officially move in.
Owning a Home
12. – Congratulations, you’re homeowner.
Regardless of your age, or the home you’ve bought, you are to be congratulated. You have invested in your own financial success and future and stopped paying for your landlord’s home. Now that you own the home there may be improvements you want or need to make and you’ll want to have some money set aside for these. We encourage you to talk with us, we can help you both with reputable resources as well as letting you know where your money is best spent in terms of resale value. All of us on the My NC Homes Team hope that you will love your home and stay in touch. We value our clients and would like nothing more than to hear from you whenever you have a real estate related question. Now that you are a homeowner, check out our article Four Home Safety Issues Every Home Owner Should Know About.
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Posted on Monday, April 1st, 2019 at 2:13am

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