1. Why should I buy, instead of rent?
2. I’ve had bad credit, and I don’t have much for a down-payment. Can I become a homebuyer?
3. I’m a single mother. How would I go about buying a home?
4. Should I use a real estate broker? How do I find one?
5. How much money will I have to come up with to buy a home?
6. How do I know if I can get a loan?
7. How do I find a lender?
8. In addition to the mortgage payment, what other costs do I need to consider?
9. What will my mortgage cover?
10. What do I need to take with me when I apply for a mortgage?
11. I know there are lots of types of mortgages – how do I know which one is best for me?
12. When I find the home I want, how much should I offer?
13. What if my offer is rejected?
14. What will happen at closing?
15. What is the difference between a REALTOR and a real estate agent?
16. What is the MLS?
17. What is the difference between a Buyer’s Agent and a Seller’s Agent?
18. How do I choose a REALTOR?
19. What’s the difference between a condo and a townhome?
20. What is Earnest Money?
21. How do I make an offer after I find the right property?
22. Do I need a lawyer if I have a REALTOR?
23. What is the difference between an appraisal and a home inspection?
24. How much will my mortgage be?
1. Why should I buy, instead of rent?
You can deduct the cost of your mortgage loan interest from your federal income taxes and usually from your state taxes too. And interest will compose nearly all of your monthly payment for over half the number of years you’ll be paying your mortgage. This adds up to hefty savings at the end of each year. And you’re also allowed to deduct the property taxes you pay as a homeowner. If you rent, you write your monthly check and it’s gone forever. Another financial plus in owning a home is the possibility its value will go up through the years. On average the value of a home doubles every 10 years. Most family’s personal wealth is directly tied to their home.
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2. I’ve had bad credit, and I don’t have much for a down-payment. Can I become a homebuyer?
You may be a good candidate for one of the federal mortgage programs that are available. Contact us, as REALTORS we know Mortgage Specialists that will take the time to find the very best program for you.
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3. I’m a single mother. How would I go about buying a home?
Although you won’t have the benefit of two incomes on which to qualify for a loan, there’s no reason that you can’t become a homeowner. To become familiar with the process, one of our real estate brokers will help you get started and help you get pre-qualified for a loan. Single parents buy homes every day, why not you?
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4. Should I use a real estate broker? How do I find one?
Using a real estate broker is a very good idea. All the details involved in home buying, particularly the financial ones, can be mind-boggling. A good real estate professional can guide you through the entire process and make the experience much easier. A real estate broker will be well acquainted with all the important things you’ll want to know about the area you are considering. He or she will help you work within the price range you have set and search the multiple listing services for homes you’ll want to see. With immediate access to homes as soon as they’re put on the market, the broker can save you hours of wasted driving-around time. When it’s time to make an offer on a home, the broker can point out ways to structure your deal to save you money.
Your REALTOR will guide you through the paperwork, and be there to hold your hand and answer last-minute questions when you sign the final papers at closing. And you don’t have to pay the broker anything! The payment comes from the home seller – not from the buyer.
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5. How much money will I have to come up with to buy a home?
Well, that depends on a number of factors, including the cost of the house and the type of mortgage you get. In general, you need to come up with enough money to cover three costs: earnest money – the deposit you make on the home when you submit your offer, to prove to the seller that you are serious about wanting to buy the house; the down payment, a percentage of the cost of the home that you must pay when you go to settlement; and closing costs (cost associated with processing the paperwork to buy a house).
When you make an offer on a home, your real estate broker will put your earnest money into an escrow account. If the offer is accepted, your earnest money will be applied to the down payment or closing costs. If your offer is not accepted, your money will be returned to you. The amount of your earnest money varies, your deposit generally will range from $500-$2,000.
The more money you can put into your down payment, the lower your mortgage payments will be. Some types of loans require 10-20% of the purchase price, some require 5% and sometimes you will qualify for a 100% loan, which means no down payment at all. It’s important to talk to your REALTOR and Lender to find the right program to fit your needs.
Closing costs – which you will pay at settlement – average 3-4% of the price of your home. These costs cover various fees your lender charges and other processing expenses. When you apply for your loan, your lender will give you an estimate of the closing costs, so you won’t be caught by surprise. Your REALTOR can help negotiate these costs into your offer... you may not have to pay any of them!
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6. How do I know if I can get a loan?
Talk to your REALTOR they will point you to a Mortgage Banker or Broker that will help you evaluate your loan potential. A broker will know what kinds of mortgages the lenders are offering and can help you choose a lender with a program that might be right for you. Another good idea is to get pre-qualified for a loan. It’s always best to go to a lender AND BE PRE-APPROVED for a mortgage before you actually start looking for a home. Then you’ll know exactly how much you can afford to spend, and it will speed the process once you do find the home of your dreams.
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7. How do I find a lender?
You can finance a home with a loan from a bank, a savings and loan, a credit union, a private mortgage company, or various state government lenders. Shopping for a loan is like shopping for any other large purchase: you can save money if you take some time to look around for the best prices. Different lenders can offer quite different interest rates and loan fees; and as you know, a lower interest rate can make a big difference in how much home you can afford. Your REALTOR will give you the names and numbers of several lenders. Shop around, your REALTOR wants to help you get the very best deal on your home loan, AND to make the process run smoothly from contract to closing. Most lenders need 3-6 weeks for the whole loan approval process. Your real estate broker will be familiar with lenders in the area and what they’re offering.
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8. In addition to the mortgage payment, what other costs do I need to consider?
Well, of course you’ll have your monthly utilities. If your utilities have been covered in your rent, this may be new for you. Your real estate broker will be able to help you get information from the seller on how much utilities normally cost. In addition, you might have homeowner association or condo association dues. You’ll definitely have property taxes, and you also may have city or county taxes. Taxes can be included in your mortgage payment. Homeowners insurance is also a factor. Again, your REALTOR will be able to help you anticipate these costs.
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9. What will my mortgage cover?
Most loans have 4 parts: principal: the repayment of the amount you actually borrowed; interest: payment to the lender for the money you’ve borrowed; homeowners insurance: a monthly amount to insure the property against loss from fire, smoke, theft, and other hazards required by most lenders; and property taxes: the annual city/county taxes assessed on your property, divided by the number of mortgage payments you make in a year.
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10. What do I need to take with me when I apply for a mortgage?
Good question! If you have everything with you when you visit your lender, you’ll save a good deal of time. You should have: 1) social security numbers for both you and your spouse, if both of you are applying for the loan; 2) copies of your checking and savings account statements for the past 6 months; 3) evidence of any other assets like bonds or stocks; 4) a recent paycheck stub detailing your earnings; 5) a list of all credit card accounts and the approximate monthly amounts owed on each; 6) a list of account numbers and balances due on outstanding loans, such as car loans; 7) copies of your last 2 years’ income tax statements; and 8) the name and address of someone who can verify your employment. Depending on your lender, you may be asked for other information.
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11. I know there are lots of types of mortgages – how do I know which one is best for me?
You’re right – there are many types of mortgages, and the more you know about them before you start, the better. Most people use a fixed-rate mortgage. In a fixed rate mortgage, your interest rate stays the same for the term of the mortgage, which normally is 30 years. Remember, interest rates are at a historical low... Take advantage of these great low interest fixed rates. The advantage of a fixed-rate mortgage is that you always know exactly how much your mortgage payment will be, and you can plan for it. Another kind of mortgage is an Adjustable Rate Mortgage (ARM). With this kind of mortgage, your interest rate and monthly payments usually start lower than a fixed rate mortgage. But your rate and payment can change either up or down, as often as once or twice a year. The adjustment is tied to a financial index, such as the U.S. Treasury Securities index. The advantage of an ARM is that you may be able to afford a more expensive home because your initial interest rate will be lower. There are several government mortgage programs that might interest you, too. Most people have heard of FHA mortgages. FHA doesn’t actually make loans. Instead, it insures loans so that if buyers default for some reason, the lenders will get their money. This encourages lenders to give mortgages to people who might not otherwise qualify for a loan. Talk to your real estate broker about the various kinds of loans, before you begin shopping for a mortgage.
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12. When I find the home I want, how much should I offer?
Here is one place where your REALTOR becomes your most valuable asset. There are several things you should consider: 1) is the asking price in line with prices of similar homes in the area? 2) Is the home in good condition or will you have to spend a substantial amount of money making it the way you want it? 3) How long has the home been on the market? If it’s been for sale for awhile, the seller may be more eager to accept a lower offer. 4) What will be your monthly mortgage payment? Make sure you really can afford whatever offer you make. 5) How much do you really want the home? Your REALTOR will answer all of these questions and others. The research that a Buyer’s agent does for the buyer saves them both time AND MONEY.
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13. What if my offer is rejected?
They often are! But don’t let that stop you. Now you begin negotiating. Your broker will help you. You may have to offer more money, but you may ask the seller to cover some or all of your closing costs or to make repairs that wouldn’t normally be expected. Maybe changing the closing date might turn the tide your way. Often, negotiations on a price go back and forth several times before a deal is made. Your REALTOR is an expert at these kinds of negotiations. Just remember – don’t get so caught up in negotiations that you lose sight of what you really want and can afford!
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14. What will happen at closing?
Basically, you’ll sit at a table with your broker, the broker for the seller, probably the seller, and a closing agent. In North Carolina, the closing agent is a real estate attorney. The closing agent will have a stack of papers for you and the seller to sign. While he or she will give you a basic explanation of each paper, you may want to take the time to read each one and/or consult with your attorney to make sure you know exactly what you’re signing. After all, this is a large amount of money you’re committing to pay for a lot of years! When you chose your lender, they were required to give you a booklet explaining the closing costs, and a “good faith estimate” of how much cash you’ll have to supply at closing, and a list of documents you will need to complete the mortgage process. If you don’t get those items, be sure to let your REALTOR know. One of their jobs is to make sure your closing goes smoothly with no surprises. Don’t hesitate to ask questions.
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15. What is the difference between a REALTOR and a real estate agent?
“Real estate agent” is a general term that refers to a variety of real estate professionals, including salespeople, property management professionals, appraisers and home inspectors. In North Carolina, real estate license laws require that any of these real estate professionals hold a real estate license. The term “REALTOR®” refers exclusively to real estate professionals who are members of the National Association of REALTORS® (NAR), the largest real estate trade organization in the United States. Why is this small distinction important? All REALTORS® must adhere to a strict code of ethics designed to protect the interests of consumers and to elevate the standards of the industry. While all real estate professionals must adhere to applicable laws, REALTORS® voluntarily agree to hold themselves to a higher standard.
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16. What is the MLS?
MLS stands for Multiple Listing Service. Whenever an agent lists (offers for sale) a house, they are required to put information about that house into the MLS. This allows all other MLS member agents to view and show that property. Working together in this way allows sellers to show their homes to many more interested buyers and allows them access to many more available homes. REALTOR.COM is a popular search tool that clients use to search for homes. Although REALTOR.COM and HOMES.COM are able to search almost any MLS listing in any state, www.Looking4RealEstate.org has EVERY LISTING IN BOTH CRAVEN AND CARTERET COUNTIES. This is a great way to find out more about possible areas and the price ranges of homes that interest you.
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17. What is the difference between a Buyer’s Agent and a Seller’s Agent?
The North Carolina Real Estate Commission requires all real estate professionals, when working in the sale or purchase of a home, to disclose ‘agency’. In layman’s terms, this means that the real estate professional you are working with must tell you whether he or she is working on behalf of the buyer or on behalf of the seller.
Look at this scenario: Buyer A is driving down Any Street, NC and sees a wonderful two story home, with a wrap around porch – the house of her dreams. To get more information she calls the number of the agent on the real estate company sign. Agent1 answers the phone and tells Buyer A the price and other basic information about the home. Liking what she hears, Buyer A tells Agent1 that the home is in her price range and that she wants to buy the house ASAP, even if it means she has to pay more.
What Buyer A didn’t realize is that the person listed on the real estate company’s sign in front of the house was actually a SELLER’S AGENT or the agent who’s job is to help the seller sell their home quickly and at the best price possible. In fact, it is Agent1’s duty to tell their client, the SELLER everything that Buyer A said about wanting to move in quickly. Clearly, this puts Buyer A at a distinct disadvantage when she puts in an offer for the home.
What Buyer A needs is an agent of her own, or an agent whose sole job is to protect Buyer A and make sure she gets her dream house at the best price possible.
North Carolina law does allow for one agent to act on behalf of both the Buyer and the Seller, called a DUAL AGENT. But most people prefer to know that there is an agent looking out specifically for their best interests.
The North Carolina Real Estate Commission produces a brochure entitled: “Working with Real Estate Agents”. This details agency in North Carolina, specifically the differences between Buyer’s and Seller’s Agents. The Real Estate commission requires all agents to give this brochure and explain it to potential clients “at first substantial meeting”. You will be asked to sign it so the REALTOR can keep it on file. Remember, this is not a contract of any kind. It is for your protection. If a REALTOR shows you property and does not give you this information... you probably need to find another agent. We have attached this brochure to this site for your information, make sure to look it over and ask any questions you might have.
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18. How do I choose a REALTOR?
There are many wonderful REALTORS® available to assist you in the sale or purchase of your home, so locating a REALTOR® is not difficult. But how do you find the right REALTORŪ for you?
Word of mouth or personal referrals are an excellent start to finding a great match. Try asking a friend or a co-worker for a REALTOR® they would suggest.
Also, the internet is an excellent way to search and find out information about a REALTOR®. In today’s market internet services and tools are an important part of any buyer’s search or seller’s sale of a home. Surfing the web is a great way to find a REALTOR® whose internet services will enhance your real estate transaction.
The best way to find a great REALTOR® is to actually sit down and meet with the REALTOR® one on one. This is the only way to see how comfortable you feel with the person you are trusting to guide you through what can be one of the biggest decisions of your life. Knowing that you can communicate openly and honestly with your REALTOR® helps ensure that your experience will go as smoothly as possible.
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19. What’s the difference between a condo and a townhome?
A person who owns a condo owns the inside of their unit. A person who owns a townhome owns the complete unit, including exterior surfaces and the land on which the unit sits.
Another way to think about this is to say that someone who owns a condo owns “the paint, but not the walls”. So the walls and the structure of which the condo is made is not actually owned by the unit owner.
In a townhome, a unit owner owns everything, but shares some aspects of the structure such as shared walls and the roof or crawlspace.
Any common areas, such as pools, sidewalks, parking lots, etc. are managed by the development’s HOA or Home Owners Association.
What are HOA dues? What does HOA mean?? HOA stands for HOME OWNERS ASSOCIATION. If you are purchasing or are living in a home with an HOA, more than likely you will be required to pay HOA dues.
HOA dues are funds collected by the Home Owners Association to help pay for different community costs that should be shared by community members.
For those living in a condo or townhome HOA dues pay for the management of ‘common area’, like parking lots or sidewalks. Also, condo and townhome HOA dues will cover common areas insurance premiums and property taxes.
For those living in a detached home in a neighborhood with a Home Owners Association, any HOA dues are determined by the functions the HOA. For example, if a HOA only manages a large sign at an entrance to a neighborhood, the HOA dues should be relatively low. However, if your HOA manages a neighborhood pool or playground, you can expect to pay a bit more.
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20. What is Earnest Money?
Earnest money is money given to the Seller from the Buyer to show the Buyer’s good faith when making an offer to purchase the seller’s property. Usually this money is held by the Seller’s agent in an escrow account.
The amount of escrow is agreed upon by the Buyer and the Seller. At closing, earnest money is applied towards the purchase price of the home.
If your real estate agent is using the ‘Standard Offer to Purchase and Contract’ form provided by the NC Real Estate Commission, the ‘rules’ regarding the earnest money are clearly stated. Your agent will go over with you in depth the circumstances in which earnest money is held.
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21. How do I make an offer after I find the right property?
When you have found the property you would like to purchase, you should sit down with your REALTOR® to discuss how much you would like to offer to the seller. Once you decide on a price and/or special terms for purchase, your REALTOR® will help you fill out the “Standard Offer to Purchase and Contract” form that has been approved by both the North Carolina Real Estate Commission and the North Carolina Bar Association.
The Standard Offer to Purchase and Contract was designed to protect both the Buyer and the Seller, making sure that provisions for many to the common ‘problems’ that can occur during a real estate transaction have been addressed.
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22. Do I need a lawyer if I have a REALTOR?
Your REALTOR’S® job is to help guide you through the home buying and/or selling process. In other words, the REALTOR controls the process and the client controls the decisions.
Your lawyer’s job is to protect your legal interests in the property you would like to purchase. This can include items such as making sure there are no liens on the property, creating deeds, and recording your new ownership in the proper government offices.
Like your REALTOR®, you want to choose a lawyer whom you can trust and communicate with openly. The lawyer will act as your closing agent. Ask your REALTOR for suggestions, the price varies by attorney and it is part of those closing cost.
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23. What is the difference between an appraisal and a home inspection?
An appraisal is when a licensed appraiser reviews a house in order to provide the buyer an unbiased opinion on the market value of the house. The appraiser gives a dollar amount that he or she feels the house should sell for in the current market.
A home inspection is when a licensed home inspector inspects a home, looking for any problems and gathering information about the quality of the house and all of its systems. Inspectors report their findings to the buyer in writing. This report is then used by the buyer when requesting the seller to make repairs.
The costs of both the appraisal and the home inspection are charged to the buyer, as the information that both give are generally for the buyer’s knowledge. A buyer can not arrange for an appraisal or home inspection until they are under contract with the seller. These services can vary greatly in price. Since your REALTOR works with so many of these professionals, their input could save you money and provide you with the best service.
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24. How much will my mortgage be?
Visit
www.MortgageCalculator.org to calculate you monthly payment.
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