7 Smart Steps to Buying a Home
in Blowing Rock, Boone, Valle Crucis, Banner Elk, Seven Devils, Deep Gap or Ashe County
Buying a home or any type of real estate in Blowing Rock, Boone, Valle Crucis, Banner Elk, Seven Devils, Deep Gap or Ashe County can be & should be a painless process. The transaction can go smoothly with very little stress, if any. However, the difference between a smooth transaction versus a rocky transaction laden with bumps & challenges can lie in the information level of the parties involved. Are they aware of the actual terms of the purchase contract? Are they knowledgeable about what steps are involved in their transaction? Are they placing all the responsibility of initiating the gathering of information on their Realtor or Loan Officer?
The real estate & loan agents can be a great shock absorber to the challenges that occur during & before a transaction if they are able to fully communicate what can and when things happen to their client. By keeping the lines of communication open, agents can lessen their client's anxiety levels throughout the transaction. In addition, the buyers' stress level can be pro-actively decreased when they take the time to learn about what needs to be accomplished prior to beginning their house hunting. By understanding the 'pre-offer' steps that lead to finding that perfect home, Buyers will truly impress their Realtor.
Home buying step #1: Determine Your Budget.
Decide how much home you can afford. Generally, buyers can afford a home equal in value to between 2 and 3 times their annual gross income. By deciding how much home you can afford, you will help your Realtor narrow down - at least by price - and sift through the outrageous housing inventory available in today's real estate market.
Home buying step #2: Determine Your Need for a Down Payment.
Determine if you have enough down payment to qualify for a mortgage or if you really need a down payment to buy a home. Most loans today require that you have a 5-20% down payment, however, 100% financing may still exist for owner occupied home buyers with exceptional credit & income/debt ratios. Ideally, you should have 20 percent of the purchase price as a down payment. Contact your loan officer to help you find out if you should have a down payment based on the type of property you intend to purchase & your financial situation. Knowing ahead of time can help you prepare in locating sources for your down payment prior to hiring your Realtor; for example, you can tap into your IRA account, contact state & local government for down payment assistance programs for first-time buyers which can all take some time to access.
Home buying step #3: Ensure that Your Credit is in Order.
Get your credit in order. You can get a copy of your tri-merge credit report from your the loan officer that you've chosen to work with. By seeing your tri-merge credit report, you can see items that are affecting your credit in all 3 bureaus. You can begin to address any derogatories on your history or opt for credit repair services as needed to raise your credit score. The lack of credit can also affect your credit score; you may need to take the time to apply for credit cards first and establish a credit history prior to even considering buying a home. By knowing in advance what is the condition of your credit history, you can properly prepare your financing before enlisting the services of a Realtor.
Home buying step #5: Decide on Your Mortgage Comfort Level
Determine how large a mortgage you can qualify for; how much of a monthly payment are you willing to take on? Explore different loans options and decide what's best for you. Also, consider that you will also be taking on other household expenses like utilities, lawn maintenance, meals, furniture. For a more specific figure, your loan officer should be able to tailor a program specific for your financial situation, credit history & debt ratio. He can also help you calculate the other costs of homeownership, including property taxes, insurance, maintenance, and association fees, if applicable. If your mortgage comfort level does not match the quality of home you are in search for, then perhaps you may decide to readjust your search criteria or to not to purchase after all. Find a Realtor who will listen to what you need and who will help you stay within your proposed budget.
Home buying step #6: Organize Your Documentation.
Organize all the documentation a lender will need to preapprove you for a loan. The quicker you can bring the paperwork requested to your loan officer, the quicker you can expect a loan program to be found and/or the sooner your lender can provide you with an approval. By getting either one, your Realtor will be able to structure your offer to purchase and request for specific terms as needed (i.e. length of escrow to accommodate estimated time lender can close, contingencies regarding down payment verification, etc.)
Home buying step #7: Confirm if You Can Cover Your Closing Costs.
Determine if you have money to cover your closing costs which includes title fees, escrow fees, loan points, notary, loan processing, taxes & transfer fees. To calculate your estimated closing costs, multiply the home price by 2-7% which is the average rate for closing costs. Closing costs must be paid up front at escrow prior to the sale being recorded usually in the form of a cashier's check.
If you have question about this article or about real estate in either in Blowing Rock, Boone, Valle Crucis, Banner Elk, Seven Devils, Deep Gap or Ashe County, please give one of our professional Realtors a call today.
Ace Realty in Blowing Rock can help you with all your Blowing Rock area real estate needs. We can be reached at (828) 295-6165.