Are You Ready for Real Estate?       


No matter what is happening in the market, the dream never dies.  Homeownership is still the goal for many individuals and families.  While the real estate environment has definitely shifted over the last 6 months, it is still alive and well. Homes are still being bought and sold every single day.

There are many factors to consider when deciding to buy a home. Let’s explore some of the elements and how they may impact your ability to purchase a home.

  1. Timing is everything! If you are currently in a lease, when does it end? Consider the costs of breaking your lease early versus staying until the end. Most people do not readily know this information. When leases are signed, many only focus on what it takes to move in and don’t pay attention to what it could cost to move out. Unless you are in a month-to-month lease, there are also notification requirements. You want to make sure that you move out on good terms, as your rental history will be one of many things that will be checked during your mortgage approval process.
  • Credit scores matter! When it comes to getting approved for a mortgage, it’s more to it than how much money you make. It’s all about what you do with it and how you handle debt. Your credit history is a strong indicator of how you will manage a mortgage. If you pay your bills on time and you don’t have too much debt, your score will save you money when it comes to the terms of your loan. If your have late payments, collections, judgements, liens, bankruptcies or any other derogatory reporting, you will need to clean it up and/or provide explanations to the lender about those things. Some of these will prevent you from being able to obtain a mortgage altogether.  For most lenders, the minimum credit score requirement is at least 620.
  • Local agent, local lender! When you are ready to start looking at homes, it is important to find a good local agent to assist you. They will have knowledge of the area and resources to help you navigate through the process.  Finding a local lender is also very important. There are plenty of banks and large mortgage companies that will try to earn your business, but local lenders are more familiar with the loan products that are available in your specific area. Your agent should be able to recommend lenders to you if you don’t have one. The agent and lender will work together to get you to the closing table.
  • Money in the bank!  Buying a home has a long list of expenses that come with it. Looking is free, but everything you do after that will cost you. From the moment that you decide to make an offer until the day you close, each step has a cost associated with it. Depending on the state that you are in, you may have to put money up as an earnest money deposit with your offer to purchase a home. Be prepared to pay anywhere from 3% to 20% or more for your down payment, depending on the type of loan you get. After your offer is accepted, there are appraisal and home inspection fees that are normally paid out of pocket, prior to closing.

Down payments and closing costs are not the same thing.

Closing costs also vary by state. In North Carolina, it is roughly about 1% of the sales price. It can be higher in other areas like Washington, D.C. which is currently averaging at 3.9% of the purchase price. These fees are charged by the attorney or settlement agency to complete the sale and loan transaction.  These costs are usually split between the buyer and seller.

Now you’re ready! Always do your research, but don’t be afraid to rely on your realtor to guide you through your journey. You can do it!

Tiffany Brown