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April 7, 2023

10 Considerations For First Time Home Buyers In North Carolina


Tim Clarke

10 Considerations For First Time Home Buyers In North Carolina

Buying a home for the first time is one of the greatest feelings.

Closing on a house for the first time is an exciting life milestone that goes along with graduating college, getting married and having kids.

It is an exciting process but it can also seem like one of the most stressful and confusing processes.

A house purchase is the biggest purchase most Americans make in their life and like experiencing anything else for the first time, you should be well informed before engaging in any real estate activity.

Unfortunately, many facts that seem like common knowledge aren't readily known by most buyers jumping into the real estate market for the first time.

Throughout my career, I've found myself becoming more passionate about first time home buyers than my other clients — despite the increased workload first time home buyers bring.


Parents' Influence On Your First Home Purchase

Unless mom and dad are actively buying and selling in the same area and at the same time as you, then there are limitations on the expert advice they can give you.

It is perfectly fine for a parent to want to protect their children and as a first time home buyer, it is important to get assistance from someone you trust.

The biggest killers in any residential real estate purchase however, are buyer and seller emotions.

I get it, your mom probably has bought a million properties and was featured on HGTV’s interior design series last week.

Your dad may have built an entire community with a hammer and five pieces of plywood and your parents insist on assisting you with your home purchase.

One of the things your parents won't tell you is that every builder is different, every market is different and market conditions change often.

Circumstances within your purchase transaction could remind mom or dad of an unrelated past horror story and they can ultimately end in giving the wrong advice.

As real estate professionals, it is very difficult to deal with multiple decision makers in a transaction especially when the person that is mostly affected by the decision is silent.

Outside parties to a transaction can really affect the outcome and limit a thorough exploration of all options presented along the way. 

Do You Need a Realtor to Buy a House? 

Many ask, “can I buy without a real estate agent?”. The short answer is yes.

This question most commonly arises when a buyer walks into a builder’s office and assumes that the agent on site will work solely in the buyer’s best interest.

That is not true. Moreover, buyers would assume that they could get a discount on the purchase price for waiving their right to be represented by a professional.

That is also not true.  Denying legal representation when building a house is a mistake, especially when the cost of that support is paid for by the seller.

As licensed real estate agents, we are obligated by means of a “fiduciary responsibility” to protect our client’s interests as a consumer– and only their interests.

In most circumstances, the seller pays both buyer and seller agent commission, so to a buyer, to have a legal representative is essentially free as you are assisted to navigate through  the home-buying process. 

You can indeed sell or buy real estate without hiring a real estate agent. However, in many cases, you may hurt yourself financially by engaging in a real estate transaction without an agent's help. 

Unexpected Expenses When Buying a Home

As a first time home buyer in North Carolina, you have a lot to consider. First and foremost, you need to make sure you budget for unexpected expenses.

As you budget for your home purchase, just make sure you are considering more than just the price of the house and your potential down payment.

There are many additional expenses other than down payment that you must take into account to aid in a smooth purchase transaction.

Other expenses may include closing costs, inspection fees, appraisal fees and any repair or renovation costs if any and these costs can add up quickly.

If your purchase transaction makes it to the closing table, you would have to consider moving expenses and  furniture purchases.

Keep in mind that North Carolina residential real estate purchases do not include personal property such as a refrigerator, washer and dryer.

If the seller wishes to take any of those items, you will have to budget for new appliances as well. 

Which Questions to Ask When Buying a Home for The First Time

One of my top rules I have with my clients is to ask as many questions as possible.

I always tell my clients “there is no such thing as a dumb question”. 

It is of most importance for a consumer to understand what they are buying, which means you should ask as many questions as you need to make the best decision for you and your family. 

As a first time home buyer, there are a lot of important considerations to make. From budgeting to location to finding the right home, it can be an overwhelming process.

The good news is, there are a few key questions you can ask to make the process easier. The first is "what is the condition of the home?" You'll want to make sure it meets your standards for safety and comfort.

You should also ask about the neighborhood and if it's in a safe area. You'll also want to consider the size and layout of the home, and whether it will fit your needs.

You should also ask questions about the home itself, such as how old is it, what type of heating and cooling system does it have, and is there room to expand in the future.

Other questions to ask include: How long has the house been on the market? Are there any special amenities included? Are there any restrictions or covenants?

Next, you should ask about the local amenities. What kind of stores, restaurants, and entertainment are in the area?

Asking the right questions and doing your research will help ensure that you make a wise decision when buying your first home.

Finally, you should ask yourself if this is really the right home for you.

Buying a house is a big decision and it's important that you make an informed decision. Asking the right questions can help make the process easier and ensure you get the perfect home for you and your family.

Can You Buy a House With Less Than 20 Down?

One of the most common questions first time home buyers ask is “Can I buy a house with less than 20% down?” The answer is yes!

Depending on your credit score and other factors, you may be able to purchase a home with a lower down payment.

However, if you don't have a large down payment saved, you can still qualify for a loan, but may need to pay private mortgage insurance to cover the lender in case you default.

Additionally, you should also consider the current housing market and the type of home you'd like to buy.

Lending requirements change often. Some loan products would offer 95%, 97% or even 100% financing. There are several loan programs available with low down payment requirements, including FHA, VA, and USDA loans.

You will need to however, be aware of the restrictions and requirements that come with taking this route. For example, you might need to take out a mortgage insurance policy, and if you don't have a good credit score, you might not be able to qualify for a loan at all.

These programs are designed to make it easier for first time home buyers to purchase a home without having to come up with a large down payment.

Of course, you should also consider your budget and how much you can afford to spend. You should also get pre-approved for a loan before you start looking for a home, so you know exactly how much you have to work with.

The term “20% down” is common in residential real estate because when a homeowner has 20% equity in the home, that homeowner qualifies for no PMI (Private Mortgage Insurance) payments.

Therefore, some of the more common conventional loans require a 20% down payment but not all conventional loans require 20% down.

Many lenders accept lower down payment percentages while other loan programs may not ask for a down payment if the buyer qualifies. 

How Much Money Should I Have Saved to Buy a House?

One of the most important questions is, "How much money should I have saved to buy a house?" The answer to that question will depend on several factors, including the type of loan you qualify for, the size of the down payment, and the closing costs you'll need to pay.

Before you hop in a car to look at houses, you will need to get your finances in order. The best way to consolidate your financial data, speak to one or more lenders. 

Generally, it's recommended to have at least 3-5% of the home's purchase price saved to cover the down payment. On top of that, you'll also need to cover closing costs, which can range from two to six percent of the home's purchase price.

And of course, you'll also need to have enough saved to cover your monthly mortgage payments.

Your credit, debt to income ratios, your bank account balance, taxes filed and employment history all can influence your ability to successfully purchase a home.

You are allowed multiple hard inquires in 30 days for a mortgage, however more than 3 within that 30 days will negatively impact your score. In other words, speak to at least 3 different lenders and determine which one will work best for your financial situation.

While the exact amount will vary depending on the type of home, location, and other factors, there are some basic guidelines you should follow. Generally speaking, you should aim to have saved up at least 3-5% of the purchase price for a down payment.

You'll also need to factor in closing costs and other expenses, such as inspections and appraisals. Finally, you should have enough savings to cover at least three months of mortgage payments in case of an emergency.

Home Buying Deals Do Get Canceled

Despite the best efforts of everyone involved, one of the most important considerations in buying a home is that sometimes, home buying deals do get canceled.

From irreconcilable differences stemming from appraisals and inspections to issues with mortgage lenders, sometimes a residential real estate purchase transaction doesn’t always make it to the closing table.

It is important to know the potential risks and have a good plan in place to deal with them. It is also important to have a good understanding of the real estate market and the various financing options available.

Other considerations include the location of the home, the condition of the home, the neighborhood, and the price of the home.

Lastly, it is also important to research on home buying resources and programs to ensure that you are getting the best deal possible and that you are making a wise investment.

Don’t let this discourage you from buying your first home. This is just the natural reality of real estate.

There is No "Finding The Perfect House"

No house is perfect. They are all different and they all come with their own unique characteristics and flaws.

Frankly, a person won’t know what type of house is most ideal for their current lifestyle until they have already bought a house and lived in it for a period of time.

The "forever home" is rarely achieved on the first purchase and if it is, the buyer is typically unaware of the missed potential of a bigger home, a better location or better financial terms.

When you buy a home and experience your lifestyle in that new home, you'll begin to notice certain aspects of the house you don't enjoy.

Whether it is dead trees on your property dropping branches on your house and cars during heavy rainstorms or how the laundry room is located on a separate floor than the master, you won’t notice these flaws until you experience them on a daily basis.

Fortunately many of those imperfections can be fixed and make your home more to your liking.

The Importance of School Districts When Buying a House

There is a direct correlation between quality schools and the local real estate market in which it is located.

Many developers plan their next projects around the success of a school or school district.

Even if you don’t have any children, your property values are dramatically influenced by the school district it is located in.

The residential real estate markets around the best schools has the highest demand.

If you can, try purchasing a home within a district that has a history of high rankings.

There is No Real "Right Time to Buy" a House

The real estate market is a living and breathing thing. It has a mind of its own and it is often unpredictable. It is virtually impossible to time the housing market.

Although there are times when the market is generally more favorable to buy than others, there is no "perfect" time to buy.

If you’ve bought a home under the right circumstances (i.e. home damages repaired, fair mortgage terms) then its a very low likelihood that you can’t get a return on the purchase of your home. 

Even if you buy when the market conditions favor the buyer, the market could change by the time you're ready to sell.

The only right time to buy is when it feel right to you. 

Buying a home can seem like an overwhelming process but having the right information can make the process less stressful.

Learn as much as you can about the process before interviewing agents to help you.

Once you’ve selected the right agent and lender, lean on them to guide you through the process of home buying. 

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