Home Buyer Guide
So you’ve finally decided to invest in a property in The Triangle, NC area. This is not a decision to be made lightly and with a significant amount of money involved, it is of absolute importance that you take your time. Before moving forward, you may want to ponder the following questions:
WHY DO YOU WANT TO BUY A HOME?
What made you choose to finally purchase a home? Do you need to move to a new neighborhood? Are you building a property investment portfolio? Has your family grown? Knowing what your reasons are will help you in making the right choice. Map out your short term and long-term goals and look at your situation from a practical standpoint. Be realistic about your finances.
Let’s talk about your income.
If it has grown or you want to grow it further, consider the fact that real estate is one of the more stable investments you can make as it helps build equity. One of the first steps you should take before embarking on any long-term investment is identifying the potential for growth – and the Triangle area’s growth potential is tremendous.
Before browsing through the myriad of real estate options available out there, here are just some of the things you have to get out of the way first.
Organize your financial portfolio.
Get organized and gather all your important financial documents into what we call a “Green File.” This will contain all the documents you need to help you secure your property. It should contain the following:
– Financial statements
– Bank accounts
– Credit cards
– Auto loans
– Recent pay stubs
– Tax returns for the past two years
– Copies of leases for investment properties
– 401K statements
– Life insurance, stock bonds and information on mutual accounts
Manage and Boost your Credit Score
If you need help checking your credit score, we can recommend experienced lenders who will pull information from the top three credit reporting agencies namely Equifax, Experian and Trans Union so you can make sure that all information there is true and correct. You may also visit websites like freecreditcheck.com to monitor your latest credit status and health.
One of the first things you can do before applying for a loan is boosting your credit score. This allows you to have better chances at getting a loan balance enables you to have wider choices.
You can do this by paying down all your credit cards and checking your credit report. As much as possible, always pay off your credit balance on time and never go beyond 25 percent of the allowed limit. It is advised not to make any large purchases on credit as well. The ultimate goal is to be in a position of financial stability.
CHOOSING A REAL ESTATE AGENT
Getting in touch with an experienced real estate agent who’s been working in the area you’re interested in is highly recommended. They will help you go through the entire process of buying a home, from accomplishing all the paperwork and understanding complex issues that may arise to knowing all the pros and cons of living in each neighborhood. The right agent can also provide you with access to property listings before anybody else.
Here are some more helpful points to remember when choosing a real estate professional:
1. Look for a full-time agent. Your agent should be experienced in handling properties you wish to purchase.
2. Interview several agents. Talk to your prospective agents. How much do they know about the area? What are their strengths? Talking to them will also allow you to determine if they truly try to understand what you want and if they can understand your concerns. Remember, you’ll want to be comfortable working with them in the future.
3. Availability. Is the real estate agent you’re working for working on a schedule that’s convenient for you? Is he available on weekends? Does this agent get back to your queries on time?
4. Research their background. An agent who’s driven to gain knowledge of the latest trends and updates in real estate is an ally you want by your side. Having a real estate agent who also holds distinctions in their respective field of expertise is also ideal.
5. Check their portfolio and ask for references. Look at properties the agent has sold before and talk to some of their former clients. This is important as it will help you assess their work ethic and let you know if they’ve dealt with the same kind of properties you’re interested in.
TIME TO GO SHOPPING
By now, you’ve probably made the necessary preparations and you’ve got a reliable and knowledgeable agent by your side. Now it’s time to find the right property.
Take a drive around the neighborhood.
Taking a drive around the area you’re interested in helps you get a good feel of the neighborhood. Observe the people and the existing properties to get a good sense of the area.
Narrow your search.
Take note of the properties that have caught your eye and communicate them to you real estate agent so he or she can make the arrangements. Discuss the history and resale potential of these properties to be able to make an informed decision on which ones you should pursue.
TIME TO BUY
Once you’ve decided on which property you’re going to purchase, talk to your real estate agent so you can discuss how you’re going to go about making an offer. The best practice among real estate agents is to do a comparative market analysis and estimate the potential costs and expenses of the property. A good agent will be able to help you come up with an offer that will stand out against all other offers.
Escrow Inspections & Appraisals
The Initial Agreement and Deposit
For the agreement to be effective, the legal arrangement between the potential purchaser and the seller of the property should take place. So everything’s smooth sailing, make sure to keep these things in mind:
- Written records are your friend. Keeping signed records of everything, including transcribed copies of verbal agreements, is a good way to make sure both parties are aware of all addendums and counter offers made during the whole process. Your agent will assist you with all the paperwork that has to be accomplished as well as make sure that all your records are complete.
- Stick to the schedule. Follow the timeline that outlines the specific processes and stages of the real estate contract. This is one of the ways to make sure that everything’s as efficient as possible. It also allows both parties to know what to expect from each other and to avoid any breach of contract. At this stage, your agent will be constantly updating you regarding the contract’s status so you’ll be prepared and ready for the next step.
The Closing Agent.
In North Carolina, your closing agent will be an attorney. They will make sure that the title is free and clear by the closing date and hold the deposit in escrow.
How to Hold Title.
You should also consider how to take title to your new home. It’s best to consult an attorney or tax advisor about this since different methods of holding title have different legal, estate and tax implications. The different ways include sole ownership and holding title in a revocable living trust.
Once you and the seller have signed off on your offer, getting the property inspected by a licensed property inspector is the next step. Remember that this must be done within the timeframe specified in the contract. You can also choose to have specialized inspectors inspect the property; some specialize in HVAC inspections, roof, etc.
After the inspections are completed, either of these may happen depending on the results:
1. Contingencies will be removed, bringing you one step closer to the close, or
2. You can request a renegotiation of the contract’s terms.
Appraisal and Lending.
Keep following up with your lender. They may need additional documents before they can release the funds for your loan and you may need time to get those together. An agreement is typically conditional upon financing and if this is the case then your lender will have the property appraised by a licensed appraiser. This is because they want to confirm the accuracy of the property’s value and pricing.
Double-check with your lender when you are within two weeks of closing. You want to be sure that the loan will go through smoothly and on time.
Need to get association approval? Request the rules, regulations, and other important documents from the seller as soon as you have an effective purchase agreement. Submit the application documents and processing fees to the appropriate person at the association by the required time. If a meeting with the association is required, make an appointment as soon as possible. Most associations require a certificate of approval before move-in. The original copy of this approval letter should be brought to the closing as it needs to be recorded with the deed in the county public records.
Your lender will require you to purchase property insurance, the value of which will depend on the property’s price as well as your lender’s policy. Shop around! You can save hundreds of dollars a year on homeowners insurance if you make the right choice. Here are other money-saving tips:
- Consider increasing your deductible. A higher deductible can make a big difference in your premium.
- Ask about discounts. Does the property have plenty of safety features? Then you may be able get a lower premium. If you’re over 55 or a long-term customer, the insurance agent may also offer you discounts.
- The land doesn’t need to be insured. When deciding how much homeowner’s insurance to buy, subtract the value of the land. After a disaster, the land will still be there.
Ask your agent to recommend experienced knowledgeable insurance agents.
Be sure to tie up loose ends so you can enjoy a smooth, stress-free closing.
Final Walk-Through Inspection.
This takes place either a day before closing or on the day itself. While this is really just a formality, when you do the walk-through make it a point to check that everything is where it should be and that there are no extra items left behind.
Home Services and Utilities.
Be ready to activate home services and utilities after closing. Ask your agent for a list of useful numbers.
Problems can occur even at this last stage – there can be an issue with something at the property, etc. If you have a good agent, there’s no need to panic. They will know how to handle these problems efficiently.
You’ll get a settlement statement from the closing agent. This document summarizes and details the financial transactions enacted in the process. You and the seller(s) will sign this statement, as will the closing agent, who will certify to its accuracy. If you have financing, you will also have to sign all of your lender’s required documentation.
Can’t make it to the closing? Arrangements can be made, but it’s best to let your agent know ahead of time so they can help you prepare. If you are bringing funds, you can choose to have them wired into the escrow account, or you can bring a certified bank check. You should be getting all the property keys as well as other important information from the seller.