You've been shopping among Southport homes for sale, and you've got a home in your sights. Maybe this is your first home, and you're not sure about the ins and outs of buying. Our real estate agents have some valuable advice for first-time buyers, so read on.
- Get your funds together.
Before you start shopping for a home, you should get your finances in order. Among the expenses you'll incur when buying a home are the down payment (with good credit, a first-time home buyer can make a down payment as low as 3 percent down); closing costs (typically 2-5 percent of the loan); and move-in expenses). Start saving money long before you go house shopping.
- Calculate how much mortgage you can afford.
Use an online home affordability calculator to figure out just that, based on income, debt, down payment, credit score, and where you plan to live. There are many available; here's one from zillow.com.
- Shore up your credit.
Before you make an offer on a home, ensure your credit is in A-1 shape. Pay down your balances, and keep them low. Pay bills on time. Keep cards open, as closing cards increases how much available credit you use, which lowers your score. Keep track of your credit score with an app. Lots are available.
- When you find a house, ask yourself if you're ready to commit to a loan and to live in this house for at least five years.
Average mortgage loan terms run from 15 to 30 years. You won't need to stay in that home that long; nevertheless, buying a home is a huge commitment. Be sure you understand all that's entailed before you get a mortgage. Some questions to ask: Is my income stable? Do I have emergency funds for three months of expenses? Do I want to commit to this home and this place for a minimum of five years?
- Study mortgage options.
There are several types of mortgages available: Federal Housing Administration-insured loans allow down payments as low as 3.5 percent; the U.S. Department of Agriculture guarantees loans for rural homes buyers; conventional mortgages — not guaranteed, but some target first-time buyers with very low down payment of as little as 3 percent; and VA loans for current/veteran military service members, guaranteed by DVA, with usually no down payment.
- Preapproval letter vs. prequalification letter: know the difference.
A prequalification letter is an informal estimate of the amount you can get for a home loan based on income and other data. A preapproval letter comes from a lender and states how much loan money they will give you, based on financial information, including bank statements, credit score, and W-2s. A preapproval letter tells your real estate agent and you what you can afford so you stay within your budget.
- Look into state, city, or county first-time homebuyer programs.
These programs frequently combine low-interest-rate mortgages with down payment assistance. They also help with closing costs. Sometimes tax credits are available through certain programs. That's good news for North Carolina residents; look here for help for first-time buyers.
- Take care when engaging a real estate agent.
Find a real estate agent who knows the neighborhood you want to live in. Ask for referrals from friends, neighbors, work colleagues, or search online. Interview at least a few of them, and then ask for references. Ask if they have experience with first-time home buyers.
Our knowledgeable real estate staff can help first-time homebuyers and others find just the right home in Southport. Contact us today.