So you’re ready to move out on your own, and Kiss Your Landlord Good-bye? CONGRATULATIONS! Real Estate Is Cheap! That’s not just a saying, for many places in NC, that’s a F-A-C-T! And, while there are “Deals” available right now… the lower end, first time home buyer properties are seeing prices go higher.
There’s more demand for these properties, and first time home buyers are especially having to work hard to negotiate an approved contract for their dream home. We’ve talked to so many who are making offers on 4 or 5 homes before they are getting a deal to go through, we thought it would be a good idea to do a little “NC First Time Home Buyer Program Education.”
7 Things NC First Time Home Buyers Should Know
Before you go out to look at houses in NC you need to think about these important facts:
- When you buy a House – you get a Raise! Uncle Sam definitely sees benefits in having homeowners, so you get to “write off” the interest you pay each month on your taxes! There are other items you get to write off too, including PMI and property taxes. There are 2 ways to really see this savings. If you are a first time home buyer who qualifies, we offer the NC Mortgage Tax Credit (yes, they are still available!). This tax credit could mean a $10,000 savings for you in the first 5 years of owning your home! Not all NC Loan Officers provide this program – and once you close on your home, you can’t go back and claim it – it must be part of the initial loan application process. (please call us if you are just starting to look for a home so we can help with this) You can also independently (not part of the NCHFA Program) change your W-4 withholding when you buy a house, to adjust for the tax advantage you might get. We advise First Time Home Buyers to see a tax professional, and THEN get them to help you in changing your W-4 when you purchase! This way, instead of the government giving you a $2400 refund… you get a $200 RAISE every month! (seriously, you can bring home more each month and not owe on April 15!)!
- Be Realistic about buying a house, versus waiting and renting a while longer. There’s no question that right now, you can probably buy a house cheaper in NC than renting one. Many times people go out to see homes, and then they are tempted to go above their “budget” amount. This often happens because they go look at houses before they talk to a mortgage lender, and understand exactly what the mortgage payment will be (including taxes and insurance). Before you ever start looking for homes – we think it’s important to know what your budget is. How much do you feel comfortable paying each month for housing? None of us want to be house poor, because that doesn’t leave any room for the unexpected.
- You CAN get into a house with NO money – but it can be a struggle. We would suggest that you have at least $1200 if you want to buy a house. Yes, you can get the seller to pay closing costs (we can help you with no closing cost loans too!) … and yes, you can use you can use the USDA Home Loan, which requires no down payment at all, or your VA Home Loan benefits (if you have them) to buy with no money down. Realistically though, you’re going to want a Home Inspection, you will have to pay for your Home Owners Insurance, your part of the taxes… you need a LITTLE money! HOWEVER, having said that – we OFTEN have folks who get all of their Earnest Money back. You really (really) can buy a nice house in NC with as little as $1000 (or less) and if you need help with that, we also offer the NCHFA Grant Program, which provides up to 3% to cover down payment assistance and closing costs. It’s a FORGIVABLE loan from the State for folks who have not owned a home in the last three years. Again, not all lenders offer this program – so call us, don’t miss out on this FREE CASH!
- Go ahead and meet with a mortgage lender EARLY in the process! Let us peek at your credit, look at your pay-stubs and give you an honest assessment about your decision to purchase! You might think you have to wait 6 months – and we might be able to tell you NOW is the time! Let us HELP YOU get your credit in order – this is what we do all day, and we don’t charge for that help! We also find that many of the first time home buyers we talk to in NC have Student Loans. Often they are in deferment. Depending on the type of loan you are applying for, we might have to count some of those payments… or we might not. It’s good to know upfront, another reason to check with a lender EARLY.
- Use a Real Estate Agent (period). You will NOT get a better deal without one. Do NOT go to a new home Community and think that the sales person there is going to help you get the best deal… get a Real Estate Agent that is working for YOU. That does NOT mean that you have to pay for them – you don’t… but they work on YOUR behalf! (We know some GREAT ONES!) A for sale by owner sign does not mean that the seller will not work with a Real Estate agent – it’s really best to have your own Agent, who can help advise you and help you research all of the market conditions.
- Remember this… “First the Loan, then the home.” You should start the home buying journey by contacting us first. And… when you are shopping for a mortgage, remember, there’s more to this than just “what’s your mortgage rate.” If you are a first time home buyer, don’t miss out because you are working with loan officers who don’t understand or offer all of the First Time Home Buyer programs in NC!
- If you think you can REALLY low ball every offer, you might not get a signed contract. Housing sales slowed a couple of years ago, but now there are FEW “multi-thousand dollar deals” out there. That’s why we strongly suggest working with an Agent who knows the Real Estate Market. Yes, there are a few foreclosed homes still available (and you can buy some of them with as little as $100 in down payment!)… but for the most part, First Time Home Buyers are going to find that they are COMPETING for a home in their price range. There’s just not that much Inventory out there, and Sellers do not have to negotiate that much… plus, mortgage rates are likely going up more this summer. Johanna Brown, an agent with Re/Max United in Cary, said it would be pretty common for people sitting on the fence to get motivated by mortgage interest rates creeping up this summer.
So Relax! You can do this! Buying your First Home is FUN! Have some other suggestions or questions about 7 Things NC First Time Home Buyers Should Know / please leave me a comment below – or better yet, call Steve and Eleanor Thorne, NC’s First Time Home Buyer Experts 919-649-5058.
Here are a few more things you might be interested in, if this is your first home, and you want to be as prepared as possible for all of the “what-ifs.”