Where Do You Begin?
If you’ve never been shopping for a home before, then you may be perplexed as to where to start when you’re ready to kick off the process. It may seem overwhelming, but it doesn’t have to be. Especially with REALTY WORLD® / CAROLINA PROPERTIES guiding you from start to finish. We’ll walk you through finding the right home, understanding mortgages, determining what you can afford, making an offer, and every contract you’ll have to sign. Our goal is to keep your sights set on what matters, and that’s your future as a North Carolina homeowner.
Let’s Talk Mortgages
For most homebuyers, a mortgage is unavoidable. While you may understand the basics of what a mortgage is, there is more than one type available to buyers. It all just depends on your personal circumstances and the lenders you’re looking to work with. Before you get too deep into the homebuying process, it’s important to understand what mortgage options are available to you and which offers the best deal.
Types of Mortgages
There are four basic types of mortgages used by the majority of home buyers.
This is the standard loan used by buyers with good to excellent credit who make down payments of at least 10%. However, there are programs that offer options for lower down payments based on buyer credit and location.
These loans often apply to buyers with lower credit scores, as they offer a down payment as low as 3.5% and lower interest rates. However, FHA mortgages do also require mortgage insurance premiums, which can result in higher overall costs.
All veterans and active military members qualify for VA loans. These offer up to 100% financing, simplified loan approvals, and lower interest rates. They can be much lower than conventional loans.
These loans are available to buyers in rural or low-density areas and offer up to 100% financing and below-market interest rates. Their ideal buyers are of average means, have lower credit scores, and are buying modest homes. Additionally, because of the government's loose definition of the term "rural," some of the buyers in the smaller communities surrounding Chatham County will qualify for this loan.
What Do Mortgages Include?
There are four main components to a mortgage payment, often abbreviated as "PITI."
This is the repayment of the initial amount you borrowed from your lender (in other words, the price of your home).
This is a payment to the lender for the money borrowed (and is then added on to the initial price of your home).
Your annual city and county taxes assessed on your property are divided by the number of mortgage payments you make in a year and added into your mortgage.
Your monthly homeowner's insurance payment covers you against various hazards and is added to your mortgage payment.
Going Loan Shopping & Understanding Your Options
Before you decide on any particular loan or lender, it's important to do your research. That means meeting with AT LEAST two different lenders to ensure that you're getting the best rate possible. It's also important to understand two different types of interest rates offered by mortgage lenders.
The interest on an FRM will not change, so your monthly payments won't change, making them very predictable.
The interest rate on an ARM will often be lower initially, but as interest rates do fluctuate with the market, they can be somewhat unpredictable or even result in higher payments.
What Can You Afford?
This may be the most intimidating question you have to answer, but we’re here to help you determine your monthly budget before you start looking for your home. As you learned above, your mortgage includes the principal cost of the home and interest, so your monthly budget has to factor both.
We will help walk you through budgeting, but keep in mind that interest rates are always changing. What was affordable one day may be too expensive the next if the market fluctuates. That’s one reason why it can be important to act fast on a home, to ensure your budget isn’t stretched too thin.
Finding a Real Estate Agent You Can Trust
Your real estate agent is your guide through a very important, life-changing process. They should be someone you can trust, an expert in placing new homeowners in the neighborhoods and areas you’re interested in. With REALTY WORLD® / CAROLINA PROPERTIES, you have access to a team of trusted professionals with years of experience working with new homebuyers.
Shopping Chatham County New Homes for Sale
The best part of buying a new home is actually shopping for one. At this stage, you’ll sit down to determine what it is you want from your first home, from the type of housing to the fixtures and finishings. Are you looking for a townhouse with an open concept? Or maybe you want a more traditional ranch that you can really add your personality to. You’ll want to think of every minor detail, but keep in mind that finding a home with everything you want is tough. So, consider items that you can do without. As you start to tour homes, take photos and make pros and cons lists to compare each property.
Tip: When determining the neighborhoods you want to look at, remember to determine the selling price of homes, not the listing price. If there’s a high demand in that area, the sale price may be higher than the listing.
It’s Time to Make an Offer
Once you’ve found the perfect home, you and your agent will sit down to determine what price to offer. Taking into consideration the selling price of homes in the area, you’ll work out an offer that you’re comfortable with and can afford without worry each month. The trick is to find a number that you like and is realistic enough for the seller to consider. Your offer needs to be competitive, fair, and within your budget.
What Will I Pay Upfront?
Think of this as your security deposit. It's paid when you submit your offer to show the seller that you are serious. When your offer is accepted, it is applied to your down payment or closing costs.
This is determined by your loan, or possibly any government programs or assistance you have requested.
These are typically low for buyers and represent the fees associated with paperwork and lender charges.
Don’t Forget the Home Inspection
It’s exciting when the seller accepts your offer, but the process doesn’t stop there. Before you go to closing, you need to have the home inspected by an experienced professional. They’ll do a thorough walkthrough of the home and check for issues that may need maintenance. Inspectors should catch anything that’s not immediately visible to prevent any surprises after you move in. If an inspector finds problem areas, you and the seller can negotiate who will cover the costs and if it will affect the final sale price.
With your offer accepted and the inspection completed, it's time to close. This final step to the homebuying process just puts the finishing touch on everything, from finalizing your mortage to signing contracts, so that you can walk away with the keys to your new home.
Steps to Closing
Review Your Contract
Before you sign any paperwork, it's important that you carefully read over the contract with your agent or lawyer to ensure there are contingencies - that is, if something falls through with Your mortgage, you aren't still obligated to buy the home.
Finalize Your Mortgage
Work with your chosen lender to submit your mortgage application, have your home appraised, and review predicted closing costs. There are many costs commonly associated with closing, including attorney fees, title insurance, appraisal fees, home inspection fees, courier fees, government recording fees, and taxes.
Pay, Close, and Get Keys!
It's time to close! Meet with your agent, lender, and the seller to finalize the paperwork, sign your contracts, and pay your down payment and closing costs. Finally - the keys to your new home!
Have Questions About Buying Your First Home in Chatham County?
It’s okay to still have questions about buying your first home in Chatham County! In fact, we encourage you to sit and really think about the process. We’re sure you’ll come up with a question or two, and we’re here to answer them all! Contact us today to talk more about the homebuying process and for more resources that may help you feel comfortable moving forward with purchasing your first home.