Steps to Buying a Home - First, Call Alexis! 919-428-3160
Step 1: Assess Your Credit
You can check your full credit report free at https://www.annualcreditreport.com/. Lenders generally require about 620 credit score to qualify for a mortgage and prefer over 720 for better interest rates. There are programs for lower scores but with higher fees. Typically, the higher your score, the better loan rate you qualify for. Check your report for errors and if there are any, you can dispute them and it could help your score. You can check credit at creditkarma.com or most online banking or credit accounts, though these may not be full reports or exact scores that a lender gets when they do hard pulls, it will give you a good idea of where you stand. Having several lenders do hard pulls in a short period of time, whether for mortgages or any other kind of loan can cause your score to come down. Keep that in mind as you prepare to make any large purchases.
Step 2: Understanding Your Property Budget
Lenders generally use the 28/36 rule; they don't want your monthly mortgage payment (including property tax, insurance and HOA dues) to exceed 28% of your gross income or your mortgage payment plus other monthly debt payments combined to be more than 36%. You can use an online mortgage calculator to estimate monthly mortgage payments.
Consider the monthly cost for your mortgage, insurance & taxes as well as future maintenance and update costs. Keep in mind your initial downpayment and several thousand dollars for closing costs.
There are many kinds of mortgages, some require little to no down payment and others 10%, 20% or more. Interest rates fluctuate daily and depend on many factors. Two basic kinds of loans are fixed rate mortgages and ARM's (Adjustable Rate Mortgage). Fixed rate loans have the same interest rate throughout the life of the loan and ARM's typically have a lower introductory rate that change in future years depending on the market rate. An experienced loan expert can help you understand all of your options, closing costs, fees and pros & cons of different loan types. I refer my clients to excellent lenders that I have worked with over many years. A lender should provide you with a loan estimate for estimated monthly payments and closing costs for a property in your price range and scenario. Closing costs will be several thousand dollars and include things like finance charges, attorney fees, survey and inspections.
Step 3: Find A Great Agent and Lender
Make sure to find someone that you are comfortable with, who has market knowledge and experience. Ask questions and make sure they have answers that satisfy you. Years of experience, easy to communicate with and time for new clients are all important. I hope you reach out, call, text or email and that we have the opportunity to work together.
Many people choose their realtor first, who can provide options for lenders and other professionals. You can always choose who to work with. Compare agents, lenders and vendors! Work with who you feel can provide you the best service and product.
Once you choose a lender, they can provide a pre-qualification based on what you tell them but that is not a guarantee. A pre-approval letter has accurate loan terms you qualify for. For a pre-approval, the lender will pull your credit and get more thorough information from you. Knowing what you realistically qualify for and monthly costs is necessary for the home hunting process!
Step 4: Looking For A Property
The fun stuff! Make a list of the things you'll want in a home. How many bedrooms and bathrooms do you want? How much space, inside and out? How big do you want the kitchen to be? Do you want extra storage? A big yard for kids or pets? Is a garage important, proximity to schools, jobs, grocery, etc.? There is a lot to consider when we think about where we want to live. Get in touch for my list of questions to ask yourself & what you might want to consider and information on our variety of areas.
Once we have a clear idea of your budget and start narrowing the vision on what you are looking for, we can start taking home tours. It is never wasted time to go see properties! It often helps to cement different wants & needs and can bring things into focus you might not have thought of before. It's a process! People sometimes ask how many homes they should expect to see before a decision, but everyone is different in this regard. We just have to get started and see.
While we are touring homes and areas, we will continue to assess what you are seeing, likes and dislikes and narrowing your options. We are looking for all the red and green flags of a property, from the condition of improvements and slope of the land, to ownership history, environmental factors, disclosures, ages of systems and more. I am always looking out for potential pitfalls and exceptional qualities to point out.
Step 5: Making An Offer
Once we find the right property for you, we deep dive to find as much information about that property as available. I make sure you are aware of what might affect the value of the property, estimate future capital expenses and that you have a solid understanding of the current market. We need to put together a strategic offer with all of this in mind. Knowing your goals & challenges and having a good perspective on the market are important. I make sure you are aware of market values and movement to help guide your best offer. I know how to craft terms to help secure your choice and protect your interest. As your agent, I help you stay grounded and guide you to make solid choices. Buying a property can be very exciting, I am here to share in that and to keep you focused on important factors.
Step 6: While Under Contract
Home inspections are buyers choice in NC, and in my opinion paramount for buyers. My advice is it is well-worth the money to ensure you know more about a property's condition and to help with repair negotiations. The cost of a home inspection, along with pest, radon and others depending on the property will be several hundred to a few thousand dollars. We typically get through inspections within two weeks of contract. I have wonderful inspectors to refer you to and we get comprehensive written reports to reference.
Your lender will order an appraisal and will let you know as soon as the report is in. We do not generally have appraisal issues in our area but it can happen.
Closings are typically between 30 and 45 days from contract but can be less or more depending on the situation.
If repairs are negotiated, we will want to get invoices and check to be sure are completed. A final walk through before closing is important to be sure everything is as expected.
I have wonderful closing attorneys I refer people to as well. I am the main point of contact with the attorney until a week or so before closing when they start producing paperwork for client review.
Step 7: Getting to Closing
If you are getting a loan, your lender will be in touch for sending and signing paperwork throughout your transaction.
At least three days before closing, lenders are required to provide a closing statement to you.
With a cash offer, the attorney provides the closing statement.
Your closing statement provides your 'cash to close' dollar amount; the amount of cash you need to close. You will send to the closing attorney. Closing attorneys collect and distribute all funds from you, your lender, the seller, contractors, etc.
At the attorneys office on closing day you will sign copies of the closing disclosure and the lender package. It generally takes less than 30 minutes to sign all of the necessary documents for your closing.
Almost there! You won't get your key at the table! The property isn't yours until the attorney records the deed with the register of deeds. This typically takes a few hours from signing. That is when the home is officially all yours.