Why Choose The NC Real Estate Firm?
We understand you have many choices when choosing a Realtor and the impact that decision has on your future. The NC Real Estate Firm was founded upon the idea that everyone deserves a reputable, honest and knowledgeable Realtor representing them in their home buying and home selling endeavors. As an instructor of Realtors in the state of North Carolina, Carolyn Hriso understands the fine details of the often very complicated real estate industry, and how to break those rules down into easy to understand concepts for the average home buyer. With so many options available, don’t you want a team backing you that can help protect your investment and get the most for your money? Choose The NC Real Estate Firm, LLC.
Home Buyer Tips
1. Select a Realtor
This is a very important first step in the home buying process. Enlisting a Realtor will create a positive influence in the home buying process. A Realtor will be your partner, your confidant, your guide, and will provide advice and recommendations for your best interest. They will deal with any problems encountered along the way and help relieve some of the stress often associated with the home buying process.
For these reasons, it is important that you are selective when searching for a Realtor. Choose someone who makes you feel comfortable and listens to your needs. If necessary, ask the agent to provide references. Most agents are accustomed to this request and will not object to your asking. Once you select an agent, be sure to sign a buyer’s agent agreement. This will insure that the agent you’ve selected is working for and representing you exclusively.
2. Consult with your Realtor
This is where the groundwork is laid for the search for your new home. There are several points you should cover in your initial consultation. For example:
- Define your needs; the number of bedrooms and bathrooms, size of the kitchen, where you want to live, your price range, timeline, etc.
- Determine when and how often you can look at prospective homes.
Verify your contact information and how you want to be contacted (email, phone, etc.)
- Ask your agent about financing. They can explain the different types of available loan programs, and refer you to lenders that can answer specific questions.
- Review the paperwork. While not necessary at this point, reviewing paperwork will allow you the advantage to ask questions about documents before it’s time to sign them.
3. Create a List of Amenities
When shopping for a home, list the Top 10 features (fireplace, fenced-in yard, new appliances, etc.) that are most important to you. Establishing this criteria early will save time shopping for inappropriate homes and keep you from buying a home on a whim. Your top reason for buying a home should be the value you are getting. That being said, some of your top 10 amenities could be sacrificed if an incredible value becomes available.
4. Look for a Home
This is often the most thrilling part of the process. But, if you’re not careful, it can get out of hand. The best way to proceed is limit the number of homes you look at in a single day. Visiting too many homes back to back will make it difficult to remember one house from another. It’s a good idea to create a checklist of homes to look at, and check them off as you visit them. Not only is this helpful in reminding you of which homes you visited, it allows you to eliminate homes from your search more quickly. Remember, communication is crucial. Explain to your agent why you like or don’t like a particular house. The more you communicate with your agent about your preferences, the better he/she will be able to find exactly what you’re looking for.
5. Select a Home
After narrowing the search to 2 or 3 homes, your agent will do whatever research is necessary to aid you in making your decision. Ultimately, however, it is your decision. Some tools that can help you make that final decision include school reports (if you have or are planning on having children), statistical information from the local chamber of commerce, future zoning or road expansion from local planning offices, etc. Whatever the factors of importance are to you, have your agent help locate that information.
Once you have selected a single home to focus on, your agent will conduct a comparative market analysis on that property. This involves determining “fair market value” by looking at what other buyers were willing to pay for properties similar to yours in the same neighborhood or area.
6. Develop A Mortgage Shopping Chart
One of the biggest decisions to make before putting a contract on a home is how to finance the purchase. Lenders aggressively compete for your mortgage business in a variety of ways. Today, you can apply for a loan over the Internet or even use a mortgage broker to shop for your loan with hundreds of lenders. When choosing a lender, compare fixed rates to fixed rates, not fixed rates to ARM’s, etc. Create a chart that lists different types of loans, fees, and at least five mortgage providers (including a mortgage broker).
7. Select a Lender
Selecting a lender is a matter of personal preference. Many people often shop around, looking for a lender that offers the lowest rate. More often, however, people will choose a lender based on a referral from an agent or friend. Most lending institutions will offer the same basic programs, such as FHA, VA, conventional fixed rate, etc.; and most will meet or beat another lender’s rates. What usually separates one lender from another is their “niche” product. An example would be a lending institution that specializes in low down payments, as compared to another that specializes in self-employment financing. Most agents will be able to point you in the right direction based on your particular situation.
8. Meet the Lender
Once you select a lender, you should speak with a loan officer as quickly as possible. At this point, there is one thing you should know. Pre-qualifying means absolutely nothing. All pre-qualifying does is determine the amount of the loan you could qualify for based on factors such as your credit, salary, etc. It does not guarantee that a lender will actually loan you the money. It’s more important to get PRE-APPROVED. Pre-approval means that your application has been submitted to a lender who is willing to extend you a specific loan amount, pending a property and appraisal. Being pre-approved lets you know that you won’t be denied for a loan, and it also provides you with leverage to negotiate the purchase price of a home with the seller. From the seller’s standpoint, a buyer who’s been pre-approved is a buyer with “cash-in-hand”, who’s serious about purchasing the home with little worry about the deal falling through. Just be sure that once you’ve been pre-approved, you have a clear understanding of what your total estimated payment will be and the estimated cash you will need to complete the loan (from beginning to closing).
9. Put Yourself In The Seller’s Shoes
You are about to make one of the most important decisions that will affect your life and the life of the seller. If you take time to understand the reasons the seller bought the home, their reasons for selling, and the home improvements they have or have not made, you’ll be in a better position to evaluate the home and negotiate a better deal. In the end, the home buying process excludes the professionals and comes down to the individuals buying and selling the home. A closer look at the seller may help you decide how much to pay for a particular home.
10. Make an Offer
Now that you know the “fair market value” of the home you like, it’s time to determine how much you are willing to pay. Establishing this prior to making a formal offer helps define your personal limits. You should determine how much to offer, how much earnest money you will put down, how much of the closing costs you will ask the seller to pay, when you plan to settle, and what inspections you plan to have conducted. Your agent will offer great advice for structuring your offer. Remember to ask your agent about contingencies and their importance. If you don’t fully understand something, be sure to clarify it.
After presenting your offer, a seller will do one of three things: Accept your offer outright, reject it, or counter it. It’s possible for the counter process to go back and forth several times, so be flexible during this phase. Determine what’s negotiable and non-negotiable. Be willing to give a little on things of lesser importance to you. This will help the negotiating process immensely. The main thing to remember is to stay cool and objective. Everyone has the same goal in mind: to complete the transaction.
11. Sign A Contract That Protects You
Make sure that the contract you put on a house allows you to arrange financing, inspect the home and negotiate any problems that you uncover. Ensuring that the contract you sign will minimize potential legal battles will let you swim in your new pool with your family and neighbors instead of with the sharks.
12. Get a Home Inspection
This is a very necessary process, used to ensure that your new home is free from defects that could potentially cost you thousands of dollars later to repair. Home inspections will often reveal problems that you can have the seller correct before agreeing to purchase the home. This is known as a contingency.
Most offers are usually contingent offers. This means, that the offer is contingent on another factor, such as a favorable home inspection or the ability to obtain insurance. In general, contingencies are safeguards for both buyers and sellers, but should not be overdone. In addition, it is important to meet all deadlines and that all contingencies are met exactly the way the offer describes. Your agent is responsible for making sure contingencies are written correctly.
13. Determine the Right Mortgage Plan
Which type of loan fits your particular needs? Are you a first home buyer or are you moving to a larger home? If you’re planning to own for a short time, an ARM may be the best type of loan. If you’re shopping for your dream home or you plan to raise a family, a fixed rate mortgage may be more suitable for you. If you choose an ARM, the index should be based on the Cost of Funds Index if rates are increasing, and Treasury Bills if they are decreasing. The COFI’s are less volatile over time than T-Bills. Find out what the teaser rate is and what the real rate would be.
Whichever loan you choose, make sure that you examine closing costs. If you are required to have a mortgage escrow account and private mortgage insurance, make sure you understand the terms and cancellation procedures. Also, make sure there are no prepayment penalties so that you can utilize an accelerated mortgage plan. A good mortgage reduction plan can save you tens of thousands in interest costs, and shorten your loan term, with only small extra principal payments. If you experience negative changes in your job, health, or marital status, you can revert to the standard payments in your mortgage contract.
14. Select an Attorney
The sales contract will decide who gets to choose the attorney to represent the sale. This is normally the buyer’s decision. If you don’t have a particular attorney or title company in mind, your agent can recommend one. The attorney is responsible for ordering a survey, title insurance, conducting a title search, and drawing up all of the documentation. They will also conduct a settlement. It is important to note that the attorney does not represent the buyer or the seller. They represent the transaction itself. Their job is to make certain that all of the terms previously agreed upon have been met. If any problem(s) were to arise, the buyer and seller would need to retain separate attorneys to resolve the issue(s).
15. Purchase a Home Protection Plan
To protect both yourself as well as the seller, it is a good idea to purchase a home protection plan. A home warranty, or home protection plan, is a service contract that protects homeowners against the cost of unexpected repairs or replacements on major systems and appliances that break down due to normal wear and tear. A negotiable contract between the buyers and sellers which do not overlap or replace homeowner’s insurance policy, this type of warranty can save the new homeowner lots of headaches, as well as put seller’s fears to rest. The warranty covers mechanical breakdowns, while insurance typically repairs the related damage, for example: if a hot water heater bursts and destroys a wall in your home, the warranty would repair the water heater and your insurance would pay to fix the wall.
16. The Walk-Through
Most sales contracts allow the buyer, a pre-settlement inspection of the home. This is the last chance you have before signing to ensure that everything is satisfactory. Read your contract carefully, and make sure that all electrical systems, plumbing, appliances, heating, and air conditioning units are in good working order at the time of settlement. Pay close attention to anything the seller agreed to repair or replace as part of the sales contract. If for some reason, the seller has not repaired or replaced a particular item, you have several options. The seller can do one of three things:
- 1. Remedy the issue prior to settlement
- 2. Credit you the amount of money it would take for you to have it fixed/replaced, or
- 3. Promise to correct the issue and place into escrow with the attorney the amount of money needed to resolve the problem, should the seller fail to make good on the promise.
On new home purchases, a pre-settlement walkthrough works differently. The builder will perform a walk-through with a buyer 1 to 2 weeks before closing to create a punch list of items that need to be corrected. Hopefully, everything would be completed by the settlement date. If not, most new-sales contracts allow the builder to complete any remaining repairs within a reasonable period of time after closing (usually 90 days).
17. Closing Day
This is the day you “sign your life on the dotted line”. At this point, you will be signing all of the loan documents, which can seem never-ending. During the settlement, the attorney should be able to explain every document to you in a satisfactory manner. Do not ever feel intimidated. If you come across something you don’t understand, don’t sign. Your agent will help you understand everything. If you like, you can request blank copies of the documents you will be signing in advance so that you can carefully review them. You will decide at the settlement whether your want owner’s title coverage or just lender’s. You will have to present whatever down payment and closing-cost funds you were expected to pay. This check must be certified as personal checks are not accepted.
18. Moving Day
This is the last and probably the most daunting part of the home buying process. Be sure to plan wisely, and provide yourself with a timeline and checklist to follow. You’ll want to decide whether to hire a moving company or rent a truck and go it alone. It’s usually best to compare the cost of moving your items yourself, with quotes from a couple moving companies. Most movers will usually ask to come to your home, so they can get an idea of how much they will have to move and the distance they will need to travel. Don’t forget to submit your change of address forms with the post office, your banks, and any creditors at least 30 days in advance. Call to confirm receipt of your new address information to reduce the chances of late payments. Also, it’s usually a good idea to notify your utility companies of your move at least 10 days prior to your scheduled move-in date. This will allow them time to schedule disconnects and hookups that coincide with your moving schedule. If you planned well, everything should go smoothly.
Finding the Right Home
1. GETTING STARTED. PRIORITIZE.
What words come to mind when you think about finding a new home? Exciting? Scary? Overwhelming? Finding a new home can be all of those things. The way you feel about finding a new home can depend on why you’re moving and how much time you have to find a home. Perhaps you’re just beginning to think about moving. Maybe you have to move quickly because of a job transfer or needing to downsize. Whatever your reason, there are a few things to consider that will help make the process easier. Focus on the things you must have and compare them to the things you would like to have in a home and a neighborhood. Ask yourself things like how many bedrooms and bathrooms are necessary? Do we need a lot of storage? What size yard do we prefer? Will we need to expand?
2. THINK ABOUT THE NEIGHBORHOOD
Would you prefer to be in an area with young families or a community of single professionals? How long do you think you’ll live in your new home? It’s important to consider, because you might want different things if you’re planning to live in a home 5 years compared to 15 or 20 years. Are you willing to take on a longer commute or do you want to live close to work? If you have children, or are planning to, how are the local schools? How do the local property taxes compare across neighborhoods you’re considering? Once you determine your list, you will be better prepared when looking for that new home. Be realistic. Where you choose to live and what you choose to buy is going to affect you for as long as you live in the house.
3. CONSIDER SCHOOLS
People with children have additional considerations. If you plan to send your children to private schools, you are not as limited on where you can live providing you can easily arrange transportation. If your children will attend public schools, then you should visit the schools and look at their scores. You should also compare the tax structures of the different school districts when weighing your decision. Often times a lavish public school system can indicate high local real estate taxes.
4. CONSIDER LIFESTYLES
People who frequently dine out, go dancing, or attend the theater are usually happiest in the city or a relatively close suburb. For others, being near family or friends is more important. Think about what matters most to you and your family and the home you choose will reflect those choices. This will make you happier with where you live, and the quality of life that you and your family maintain.
5. CONSIDER COSTS
It may well determine whether the home you buy is a new or an existing home. Old houses often have fine woodwork or interesting architecture not usually found in new homes. They generally sit on landscaped lots with mature trees and full-grown shrubbery. New homes usually cost more, but you have the flexibility to make more decisions on colors, carpeting, materials, fixtures, and in some cases, general layout. When considering new construction, make sure you’re dealing with a reputable builder. You may also want to have an attorney review all documents. Other factors may need to be considered when looking for a home that is right for you. As a buyer, you have many options and resources available to you. A real estate agent can assist you in your search.
Frequently Asked Questions
Buying a home can be very overwhelming and everyone from first-time home buyers to seasoned movers have questions. The questions below are some of the more common questions to let you know that you’re not alone.
Q: How much cash should a buyer use as a down payment and how much of a loan should they apply for?
There are several factors that affect the down payment. The type of loan applied for, your income, your available and your cash-on-hand. It also depends on your long-term goals for the home you are buying. It is typically recommended that you put 20% down. By doing this, you avoid paying private mortgage insurance (PMI) on the loan, which will save about $40 – $70 a month.
Q: What if I can’t put down 20%?
Most first time buyers won’t be able to put down 20%. Many loan programs offer buyers the ability to purchase a home with little or no money down. This allows you to save your cash for other expenses that are bound to come up. The other-side to putting less than 20% down is that lenders will require you to pay private mortgage insurance (PMI) which is a monthly fee a borrower pays if the loan exceeds 80 percent of the purchase price. Since a lower down payment results in a statistically higher risk to the lender, PMI insures a portion of the loan to reduce the risk to the lender. There are ways to put less than 20% down and still not have to pay PMI. You’ll want to check with your lender for these options to see if one is right for you.
Q: What is my “comfort level?”
This is probably the most important issue that will dictate how much cash you put down. If you have good credit and a solid income, most lenders will qualify you for a loan amount larger than you would ever want. Before speaking with a lender, take a good look at your personal finances and spending habits. Be sure to include all of your expenses, from the utilities to dinner and a movie. Then decide just how much you are willing to pay for a home each month.
Q: Can I deduct my mortgage payments on my taxes?
It’s important to understand the benefits of mortgage interest and the real estate tax deduction. Since you will own the home, you will be able to deduct all the interest and taxes you pay on the home. Consult a tax expert on these issues, but it’s important to get an idea of how much of a tax break you will receive if you own the home. This will also help you decide your mortgage amount.
Q: What am I giving up by putting 20% down?
If the purchase price of your home is $200,000, are you going to miss $40,000? What is that money currently doing? Is it earning a good rate of return? Will you have to sell securities and pay capital gains taxes to liquidate that money? Be sure to investigate the true costs associated with a large down payment.
Q: Should I worry about other debts?
You should take into consideration any other debt you may have. For example, if you have a substantial credit card debt, it would probably be better to pay the cards off instead of putting down a large down payment. Maybe you only owe $5,000 on your automobile. It would be better to pay off the car, and put the difference toward the down payment, thereby eliminating another expense.
Q: What items are covered on my home owners insurance?
Have you made any additions or improvements to your house that will need to be added to the policy? If you have, inform your agent in writing and send photographs to validate the improvements.
Q: What is the coverage level?
Has the value of your house risen in the last year? If you do not have a rider that automatically raises your coverage on an annual basis, you will need to adjust your level of coverage to match the increase in property value.
Q: How do I maximize my coverage and minimize my premium cost?
The following are a number of methods that you can use to potentially lower your annual premium for your Homeowners’ Insurance. Consult your agent to see which apply and how much you can save. In addition, most will add to the safety and security of your house.
- Install dead bolts on all exterior doors.
- Install a security system.
- Install smoke detectors on all living levels.
- Have operational fire extinguishers available in the house.
- Consider a higher deductible: If you are comfortable with the
- possibility of having to pay a bit more out of pocket in case of a loss, raising the deductible (the amount you will pay when there is a claim) will lower your annual premium.
- Multiple policy discounts: Have your homeowners’ policy and auto policy with same insurer: Many insurers will give you a discount if you maintain both policies with them.