How Much Will You Really Have to Put Down to Buy a Home?

There are plenty of financing options available that allow you to put down less than 20% to buy a home.

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As a buyer, how much down payment money do you really need in our market?

The majority of all buyers put down less than 10%.

Many still believe they have to put down at least 20% or more, but that’s simply not the case. According to the National Association of Realtors, from October 2016 to November 2017, the average down payment amount for first-time homebuyers was just 6%. Also, 61% of first-time homebuyers put even less than 6% down. The majority of all buyers put down less than 10%. 

Here in the Wilmington market, we have some really great homes that qualify for 100% financing, USDA financing, and other forms of low or no down payment financing. We also work with some really great lenders in the area who specialize in loan programs that require a low down payment or no down payment at all. 

If you have any questions about what kind of down payment you can expect to pay in our market or you need help buying or selling a home, don’t hesitate to reach out to me. I’d love to help you.

Why Pre-Approval Is Critical to Any Home Search

Today I’m here to tell you about why getting pre-approved is so important as well as what lenders will look at when you go to do so.

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In any real estate purchase, pre-approval should be one of the first steps you take.

Here in Wilmington, we’re currently experiencing a trend that is common throughout the country—the number of buyers is outweighing the number of available properties. Getting a pre-approval for a mortgage will give you not only a starting point in terms of what to search for, but it will also show the seller that you’re serious. In fact, most sellers won’t even consider an offer without an attached pre-approval letter.

Pre-approval will make you and your offer stronger from the very start.

So what does a lender look at when you go to get pre-approved? We can break the factors down into Freddie Mac’s four C’s. The first C stands for “capacity,” which denotes a buyer’s ability to pay the monthly mortgage.

Pre-approval will make you and your offer stronger from the very start.

The next C is your credit score. This number will help indicate to the lender how diligently you’ve paid your debts in the past.

Next are capital or cash reserves. A lender will look at sources from which you can draw money, such as savings accounts or investments, to have a better understanding of how stable your finances are.

Finally, the last C stands for “collateral.” Collateral depends upon the property you’re purchasing, which will also affect the appraisal.

If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.

Busting 2 Home Buying Myths

Home buying isn’t as scary or expensive as you probably think. Here’s what we mean.

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In a recent Realtor.com survey, 46% of prospective homebuyers didn’t think they would qualify for a mortgage, so they didn’t even bother applying. There are two common myths behind this way of thinking, and we’re going to bust both of them today.

1.  You need 20% for a down payment. That’s not true at all. In today’s market, you can get a loan for 5%, 3%, or even 0% down. We can find a program that works for you.

2. You need a credit score of 780. This is another complete falsehood. In the same survey mentioned above, 53.2% of homebuyers had a credit score between 600 and 750. That gives you a pretty good idea right there.

You don’t need a credit score of 780.

Hopefully, this debunks those myths for you if you were under the impression that they were true.

If you have any other questions about buying a home or need any other help, feel free to give me a call or send me an email anytime. I look forward to hearing from you.

3 Ways to Reduce Your Closing Costs

Is there any way to lower closing costs? There are three different strategies that you can use.

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How can you reduce your closing costs?

Unfortunately, closing costs generally are what they are. However, you can shop around with different closing attorneys and lenders to determine what their rates are. Whenever you talk to a lender, I recommend asking for a good faith estimate. That way, you can determine what their fees and rates are. Then, you can compare apples to apples.

While you may not be able to reduce the closing costs themselves, we do have three strategies you can use to reduce the amount of money you have to pay out of pocket:

1. Close on the home toward the end of the month. Doing so will reduce the interim interest you would pay on the closing. Let’s say you closed on the 25th of June. You would owe interim interest from the 25th to the 30th of the month. Plus, instead of having to make a July payment, you wouldn’t have to make a payment until August. Basically, closing toward the end of the month reduces the amount you have to pay out of pocket.

Your agent can negotiate for the seller to cover a portion of the closing costs.

2. Ask the seller to pay a portion of the closing costs. We can ask the seller to pay a specific amount, like $3,500 or $4,500. The seller’s portion comes out of the proceeds of the sale, which reduces the seller’s net. You need an expert agent to negotiate for you if you want the seller to cover part of the closing costs.

3. Ask the lender to wrap the closing costs into your mortgage. This option could increase the interest rate on your mortgage as well as your mortgage fees, but you would still reduce the amount that you have to pay out of pocket.

If you have any questions about these strategies or would like to learn more about buying a home, give me a call or send me an email. I would be happy to help you!

A Look at the Due Diligence Period

After you’ve made an offer on the home, the deal isn’t finalized yet. The next big hurdle is getting through the due diligence period.

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If you’re buying or selling a home, there will be a period of time after the offer is accepted but before the deal is finalized called the “due diligence period.”

The due diligence period is a length of time in which you can complete your home inspection, home appraisal, and any other surveys or appraisals that are needed before the sale closes. Basically, it’s a time to take a real close look at the home and make sure its condition is up to par.

If an inspection report comes back with a lot of surprises and the seller isn’t willing to negotiate repairs, you can back out of the contract at any point for any reason during this time period. After the due diligence period is over, that earnest money isn’t refundable.

The due diligence period gives you the ability to back out at any time.

In certain cases, you will have to pay a due diligence fee. It’s another non-refundable fee, but it will count toward your deposit if the deal does close so if you’re sure about a home, there is little risk involved. The due diligence period can last anywhere from one to three weeks.

If you have any questions about the due diligence period or anything else relating to real estate, give me a call or send me an email. I would love to hear from you.

What Do Buyers Do If the Appraisal Comes in Low?

If the appraisal of the home you’re trying to purchase comes in low, you have four options in which to proceed.

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Here in Wilmington, most price ranges in most locations are in a seller’s market. With high demand and low supply, we’re starting to see a lot of multiple offer situations. Sellers are pricing properties aggressively, and buyers have to make high offers to get the home they want. Sometimes appraisers can’t keep up with market conditions like these, leading to issues with low appraisals.

What do you do if the appraisal comes in low for a home you’re trying to purchase? You have a few different options. 

As a buyer, there are four ways you can handle a low appraisal.

The first is to ask the seller to lower the price of the home to the appraised value. Some sellers are willing to do this because they know the buyer won’t pay more than the appraised value.

Your second option is to make up the difference between the appraised value and the purchase price. Your lender will only lend a certain percentage based on your loan amount for the actual appraised value or the contract price—whichever is lower. If the contract price of the home is $200,000 and it appraises at $190,000 and you’re doing an 80/20 loan, the lender will only lend 80% of $190,000. Therefore, you’ll have to make up the difference between the 80% of $190,000 and the $200,000 purchase price.

The third option is to meet the seller somewhere in the middle, with you going up in price a little bit and them going down in price a little bit.

If the low appraisal comes back during the due diligence period—which we highly recommend—your fourth option is to terminate the contract and find another house to buy.

Before you make an offer on a property, make sure you’re making a reasonable offer that’s above what others are offering but isn’t also overpaying for the property. If you have any questions about appraisals or are looking to buy or sell a home, feel free to give me a call or send me an email. I’d be happy to help you.

Our Top Tips for Navigating Multiple Offer Situations

If you are a homebuyer, you have probably noticed that the market is very competitive in certain price points. How can you get the home that you want when competing against multiple offers?

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Certain price points in our area have extremely competitive markets. There are more buyers than there are homes for sale, and demand is simply outpacing supply. Whenever that happens, we start to see multiple offers on homes.

If you are a homebuyer competing with other buyers for a property, there are a couple of things you can do to get the home.

First, you need to make sure that you work with an agent to represent you throughout the process. Why? There are more than 80 variables in the home buying process and if any one of them is mishandled, it can end up costing you thousands of dollars. You may even lose out on your dream house. So, it’s incredibly important that you have an expert agent representing you.

In a multiple offer situation, the key is to make sure that you do not overpay for the home. Make the offer you are comfortable with. Pick a number that won’t make you kick yourself if you lose out on the property and won’t give you buyer’s remorse if you do get the home.

Make sure that you do not overpay for the home.

It’s also important to submit your best offer right from the start. In multiple offer situations, you will not get a chance to submit a counteroffer. Include the best terms you can because sometimes the seller may be looking for certain terms.

Ultimately, a good buyer’s specialist can get you the home you want for the price you are willing to pay and the terms that you desire. If you have any other questions about how to navigate this competitive market, give us a call or send us an email. We would be happy to help you!

How to Succeed as a Wilmington Homebuyer

As a homebuyer, you always want to work with your own agent rather than just talking to the listing agent at the home you want to buy. Here’s why.

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If you’re buying a home here in the Wilmington area, how can you be sure you get the best terms and price?

The first thing you want to do is hire an agent to represent you rather than talking directly to the listing agent for the home you want to buy. As Realtors, we’re bound by ethical guidelines to represent our client, so the listing agent works for the home’s seller to get them their best terms and price.

As a homebuyer, you should talk with a buyer specialist to get the best terms and price for the home. That buyer specialist represents you and has an ethical responsibility to get you the best terms and price to make sure you’re not overpaying or buying a home with a lot of problems. For that reason, I also always recommend getting a home inspection and an appraisal.

A buyer specialist has an ethical commitment to get you the best deal.

When you walk through the home, you want to make sure you’re not spending a lot of money up front. We want to take the time to go through the home and analyze it from our perspective to make sure it’s in good shape.

Also, know that if you receive property updates and new listing alerts from a real estate website, you might not be getting access to all the homes currently on the market. One of the great ways to get a better deal on a house is to beat other buyers to new listings. We have a buyer’s advantage program that gives you instant access and priority to homes as soon as they hit the market.

If you’d like to know more about this program or any more information about buying or selling a home in the Wilmington area, give me a call or send me an email anytime. I’d be more than happy to help you.

A Few Things for First-Time Homebuyers to Know

I’ve come to find that many first-time homebuyers simply don’t know a lot about the home buying process. Here are some things everyone should know about buying a home.

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When you’re looking to buy your first home, there are a number of things you need to keep in mind throughout the process.

The first thing you need to determine is if you are actually ready to buy. It’s a big step, and you’ve got to be sure you’re financially ready to do so. Extra costs can pop up during the transaction, so you’ll need to set aside some extra cash, probably more than you were planning on initially.

The next step you need to take is talking to a lender to make sure you qualify for what you want to buy. After that, you need to consider the resale value of the homes you are looking at. Even if you don’t have kids, the school district that your home lies in impacts your home’s value and may matter a lot to future buyers.

Pay special attention to your home’s structure.

The next thing to pay attention to is the overall structure of the home you’re looking at. If there are any major repairs that need to be done, those will come to light during the due diligence period when you have your inspection done. In North Carolina, you have the right to terminate the contract for any reason during the due diligence process and you’ll get your earnest money back.

Finally, you want an agent who is an expert in the areas you are looking in. Only then will you be able to find someone who can negotiate the best deal possible for you. At our office, we set our buyers up to succeed by providing them with updates directly from the MLS when a home that matches their specific criteria hits the market.

If you pay special attention to these things throughout the home buying process, you should walk away with a great deal on a great home. If you have any questions for us, don’t hesitate to reach out and give us a call or send us an email. We would love to hear from you.

How to Cut PMI From Your Mortgage Payment

Private mortgage insurance is a pesky expense. However, there are ways to get out of having to pay it.

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I’m here today to answer the question of “What is PMI?” and give you tips on how you can avoid having to pay it.

Private mortgage insurance, or PMI, is an insurance policy that you pay anytime you have less than 20% equity in your home. Basically, it protects the lender if you default on your mortgage.

This applies to any conventional loan in which you have less than 20% equity. However, paying PMI is not always necessary. Here are a few ways to avoid it:

1. Put 20% down on your home purchase. This will automatically get rid of PMI, but it’s not always a feasible option.

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The easiest way is to put 20% down on your purchase.

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2. Paying PMI up front in the form of closing costs and lender credits.

3. Build up 20% equity in your home. Once you do that, you can call your lender and ask them to remove the PMI from your monthly payment.

4. Look at other loan programs. There are options out there that don’t require a PMI payment each month or a 20% initial down payment.

If you have any questions, don’t hesitate to give me a call or send me an email. I would love to hear from you.

5 Things Every Buyer Should Know

If you’re thinking of buying a home in Wilmington, we’ve got some tips to share. In fact, we’ve got five of them.
 

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If you’re thinking of buying a home in this market, we’ve got great news. We have compiled a list of five of our best tips for buyers. It never hurts to have more information about the market and what you can expect. Here’s what you should keep an eye on:

1. Check your credit. You can do this for free at annualcreditreport.com. It’s a good idea to make sure that any issues or mistakes you have in there are addressed.

2. Get pre-approved early. Talk to a lender before you go out looking for homes so you know what you qualify for and what you should buy.

3. Establish a budget. You may actually qualify for more than what you’re comfortable spending, so establish a budget and a monthly mortgage payment that you are comfortable with.

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Buying a home is a process of elimination.

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4. Make a list of your must-haves and your deal-breakers. Buying a house will be a process of elimination. We can eliminate some properties right off the get-go by crossing of the ones that have deal-breakers as identified on your list.

5. Think about resale. Even if you don’t have kids going to school in your school district, it’s still important for future buyers. If you establish a good location in a good district, you will have good resale value down the road and won’t be stuck with a home you don’t want in the future.

If you have any other questions for us, don’t hesitate to give us a call or send us an email. We look forward to hearing from you.

4 Tips for Making an Offer This Fall

We are still in a strong seller’s market this fall, so as a buyer, how can you make sure that your offer stands out? Today, I have four tips to help you do just that.
 

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If you are thinking about buying a home this fall, I have four tips to help make your offer stand out:
 
1. Find out how much home you can afford. This is a little different than just figuring out how much you are pre-approved for. You need to be comfortable with the down payment money, your monthly mortgage payment, and all of the other minor repairs that come into play after you purchase the home.
 
2. Act fast. If you find that perfect home, meet with your agent and put in an offer on that house ASAP. We are still very much in a seller’s market right now. Buyers are still competing for the same houses, so you need to get your offer in right away!

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Low inventory and high demand make fall a great time to sell.

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3. Make a solid offer. Work with your agent to determine what you can do to make your offer stand out. Some buyers write a personal letter to the seller while others shorten the due diligence period. There are many things you can do to make your offer stronger from the get-go, so talk to your agent in order to determine how to submit your best offer.
 
4. Be prepared to negotiate. Whenever we negotiate offers, you need to be prepared to negotiate on a couple of different fronts. Of course, you will need to negotiate the purchase price. You also need to negotiate terms such as the closing date, which appliances will stay in the home, whether or not you pay for a home warranty, and all kinds of things. Even after you are under contract, you will have to negotiate repairs with the seller after the home inspection report comes back.
 
These four tips will help you make a successful home purchase. If you have any other questions about the home buying process or about real estate in general, give me a call or send me an email. I would be happy to help you!

Top 6 Mistakes First-Time Home Buyers Should Avoid

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Buying your first home is an exciting time and it can be a bit overwhelming. There are six common first-time buyer mistakes you should avoid:

1. Buying what you want and not what you need. Avoid this mistake by starting out with a list of everything you need in a home. Give that list to your agent so he or she can find a property that meets your needs.

2. Picking the wrong agent. You may have a buddy or cousin who just got their real estate license, or you might be friends with a part-time agent. These are not the best people to help you find a home. Ask your family and friends for referrals, and go to online review sites to find an agent who will work best for you.

3. Not setting a realistic budget. Just because you’re pre-approved for $200,000 does not mean you should actually spend $200,000 on a home. I recommend looking at your current monthly expenses and figuring out a budget. Your monthly home payment should not exceed one third of your gross monthly income. 

4. Falling in love with the first property you see. You should at least look at three properties in the same area to get a good idea of what properties are selling for in that location. Comparing price and condition of similar homes will help you know whether to buy that first property or not.

5. Not researching the neighborhood properly. You can’t always pick your neighbors, but you can pick your neighborhood. Be sure that you look at amenities, school systems, and more. School systems might not be important to you now, but it will matter when it comes time to sell that property again.

6. Overlooking the hidden costs of buying a home. Even though buying a home has some great financial benefits, like creating equity, there are hidden costs to watch out for. Things like property taxes and insurance can increase your monthly payments. Plus, you should also be prepared for unexpected repairs or maintenance you will have to do for the property.

If you avoid these six mistakes and work with a good real estate agent, your first-time home buying experience will be a success. If you have any questions for me, give me a call. I would be happy to help you!

Do You Need a Home or Pest Inspection Before Closing?

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Are you required to get a home inspection or pest inspection before purchasing a house? The answer is technically no, but we highly recommend having those inspections done.

Home and pest inspections will cost you a bit of money up front: home inspections run about $350 to $450, and pest inspections run from $70 to $125. However, these inspections can reveal heating issues and structural problems that we can’t see with the naked eye. Those problems could cost you thousands and thousands of dollars, so it’s a good idea to invest in some inspections before purchasing a home. 

In North Carolina, you have a due diligence period to schedule all of your inspections. Once the inspection report comes back, you can negotiate with the seller on repairs. Remember, the seller is not required to fix everything, but you may be able to get them to cover some of the major repairs.

If you have any questions, give us a call or send us an email. We would be happy to help you!

What Determines Buying Power in Wilmington?

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There are a few things that affect your buying power. There are four in particular that are important to keep in mind.

• Credit score: Your credit score determines your credit worthiness. It provides supplemental information on whether or not you qualify for a loan.
• Down payment number: This is the amount of money to put down initially when purchasing a new home. It also could include closing costs. Generally, the more you’re able to put down, the better off you are.
• Debt-to-income ratio: This number determines whether you even qualify for a loan. The lower the debt, the better off you will be! Pay off the most debt you possibly can before entering a real estate transaction.
• Assets: This pool includes your most valuable items, such as cars or other expensive things. Lenders want to see where your income is coming from and going to. 

Reach out to us if you’re interested in buying or selling a home in the surrounding Wilmington area. We’d be happy to answer any real estate concerns you might have, and we can even help find the true value of your home. We look forward to hearing from you!

Why Is Renting a Home Not as Affordable?

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According to a recent report from Trulia, buying a home is still about 35% less expensive than renting one. How is this possible? We are going to explain that to you today.

Here are the facts that come into play. Obviously, you need a 30-year fixed rate mortgage to get the best rate. The rates right now are historically low, making homes more affordable than they have been in quite some time.

Another factor to consider is prices. Home prices are still relatively affordable and reasonable, even with the recent appreciation that has come into play. 

The bottom line is this: owning a home is still less expensive than renting and it makes sense financially to do so. A housing payment is something you will have whether you own your own home or not, and you are going to be paying off a mortgage whether you buy or rent. Why not pay off your own mortgage by purchasing a home, and build up that equity for the future?

If you have any questions for us, or are interested in buying a home, we would love for you to give us a call or send us a quick email. We look forward to hearing from you!

Should You Sell Your Wilmington Home Now?

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Sell now before the spring! Supply currently outpaces demand. Nationally, there is approximately 5.2 months worth of inventory. However, in several areas of the Wilmington market, we notice a lower supply comparatively.

Based on supply and demand, a balanced market has an inventory of about six months. Since certain neighborhoods experience less than 5.2 months and much more demand, many areas of Wilmington are in a seller's market. If you list now, you have less competition to sell.

Additionally, many homeowners wait to list in the spring. Although these homeowners think they won't be able to sell during the winter, demand is still high now. List this season before the market floods in the spring.

If you have any questions, please give us a call or send us an email. We look forward to hearing from you!

How Can Our Buyer Specialist Help You Accomplish Your Goals?

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Have you considered buying in the Wilmington area? If so, you should know about the benefits of working with a home buyer specialist from our team versus a single agent.

On our team, home buyer specialists only work with home buyers - they don't work with sellers or do anything else. This allows us to provide a specialized service for our buyer clients. Our unique program is a multiple step process that starts with meeting with the buyer.

After an initial consultation, our specialists will take the buyer out to show them homes from all over the Wilmington area that fit the wants and needs of the particular buyer. We are negotiating experts, and once we find you the right house, we will negotiate with the seller or builder to get you the best possible price.

Once the home is under contract, our home buyer specialist will help you through the home inspection, loan approval, and appraisal processes. Once those things are taken care of, our closing coordinator will schedule a closing time with the attorney's office and before you know it you'll have your new set of keys.

Bottom line: the process won't be as smooth, stress-free, and streamlined with a single agent. If you have any questions about how our team gets the job done, give us a call or shoot us a quick email. We would love to hear from you!