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what new home buyers need to know

WHAT FIRST TIME HOME BUYERS NEED TO KNOW

First-time home buyers don’t need to be afraid of the current real estate market. These tips will help you make the best decisions for you and your family.

Buying a home for the first time can make you anxious. The process can feel so demanding, and with every decision you may be afraid you’ll make a mistake. But it can also be an amazing and very rewarding experience!

You just need to get the right details to set realistic expectations about the Raleigh, NC market. Let’s start with what you’re probably hearing with every mention of home buying:

WHY DO PEOPLE SAY IT’S SCARY TO BUY A HOME THESE DAYS?

No matter when you buy, there’s likely to be some degree of fear factor involved. A home is a big-ticket item, there are countless financial questions, long checklists of to-do’s, and… a long-term commitment!

But the situation that’s causing stress right now is that there are more people who want to buy than there are homes for sale. And that means more people than usual are putting in offers for the most desirable homes (and even some not-so-desirable ones).

You’ll need to brace yourself for:

  • the possibility that you’ll put in many offers, which means you may see lots of homes you love, but have to keep looking (so try not to get your heart too set on any one home);
  • a long search—from weeks to months, depending on how particular you are;
  • competition—which might tempt you to offer more than you really want to spend, and could get you in hot water if the home appraisal comes back lower than the offer price (covering that gap is up to you as the buyer);
  • larger due diligence deposit than in the past—often $5,000+ (and sometimes as much as $20K or more on higher end homes) depending on your neighborhood and home price;
  • the very likely possibility of having to buy a home as-is (without being able to request repairs from the seller, even after the home inspection.

While these may not be ideal situations, they shouldn’t discourage you from buying a home, it’s just helpful to be able to be well informed, so you set realistic expectations of how the process could pan out.

HOW IMPORTANT IS THE CREDIT REPORT, REALLY?

Your credit report says a lot about your financial lifestyle. Borrowers want to evaluate your credit information when reviewing your home loan application. With your financial history on their table, your lenders can pick a reasonable interest rate for you.

You get a lower interest rate if your credit score is high. If you know you’re going to want to buy a home, it helps to get financial planning advice if you have lifestyle factors that will lower your credit score, such as:

  • having a high amount of credit, or open credit lines (e.g., credit cards; auto, boat, or student loans);
  • late payments, or defaults on payments;
  • frequent changes of employment, or self-employment.

Make it a habit to check your credit report to see how yours is progressing—and to catch and take action against errors that could lower your score.

Your income, savings, and debt also determine what home loan you can get. Regardless of your weekly earnings, you’ll need to prove that you have a stable source of income.

WHAT SHOULD WE EXPECT TO PAY FOR A STARTER HOME IN THE RALEIGH AREA?

Starter homes mean different things to different people of course, but in general, first-time buyers in Raleigh and its surrounding towns are spending around $200,000 to $450,000.

HOW DOES THE HOME SALE PRICE CONNECT TO FIGURING OUT OUR BUDGET FOR HOUSING?

Deciding how much you want to spend (and what mortgage lenders agree you can spend), on a house is key to buying your new home.

You’ll want to get pre-approved before seriously looking, but even before diving into all that paperwork, you can do a quick check to see roughly what you can afford—try this calculator from the NC Housing Finance Agency. (Doing this before you even start to look at homes can save you some grief, in case your budget doesn’t quite match your initial dreams.)

Be realistic about your budget, too:

  • Being house-poor (where all your cash goes to cover the roof over your head, and you have nothing left for clothing, entertainment, travel, education…), is no fun. Remember, getting approval from your bank doesn’t mean you can afford to live well.
  • Make sure you consider the cost of house maintenance and other unforeseen expenditures. A rule of thumb is to expect to pay at least 1% to 3% of a home’s value, yearly, on maintenance.

FIRST TIME HOME BUYERS CAN SUCCEED IN SETTLING IN RALEIGH, NC

Getting a house in Raleigh, NC as a first-time buyer may be a little more challenging than it used to be. But the area gets high marks as a place to settle for good reason! With a little planning, you can overcome the hurdles.

Check out our other posts to test your mental and financial preparedness to buy a home. And give us a call; we love to make it easier for first-timers to own their dream homes.

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