As the spring season blooms across North Carolina's Research Triangle, the real estate market comes alive with opportunities for homeowners and potential buyers alike. Whether you're a seasoned homeowner looking to make a move or a first-time buyer eager to plant roots in this vibrant region, this article serves as your comprehensive guide to the spring buying process. We'll explore the importance of working with a real estate agent who understands the nuances of the Raleigh-Durham area, decipher the differences between pre-approval and pre-qualification for a mortgage, and provide invaluable tips for avoiding common pitfalls along the way. So, let's embark on this journey together, armed with knowledge and prepared to make informed decisions as we delve into the exciting world of buying a home in North Carolina's Research Triangle.
Working with a Real Estate Agent: Why it is so Essential to Choose Wisely
Unless you are brand new to the Raleigh-Durham area, you know that this can be a very fast-paced, high-stress housing market. Finding the right real estate agent is crucial for a successful home-buying journey. When selecting an agent, consider their expertise in the Research Triangle area and their track record of helping clients find their dream homes.
Most importantly, Diane Florio says, trust yourself and those who have your best interest in mind. “When people are either relocating to the area or have newly come to the area and have interest in buying a home it is a good step to ask friends and family for referrals as well as research agents who are in the area they are considering moving to or buying in. Unless they have gotten a very strong agent referral, it is always a good practice to interview a couple of agents before making a decision to hire someone to help you with the biggest purchase you make.”
In the past, the agent held all the cards, so to speak — possessing exclusive knowledge, inventory, and market access. However, now the emphasis has shifted towards skills, competency, and access to resources that may elude the average buyer. While anyone can navigate online listings and schedule home tours, the true value of a skilled agent lies in their deep understanding of the local market dynamics and their adept negotiation and interpersonal skills. As Diane said, “We are a buyer beware state, meaning the majority of the work falls on the buyer to discover and identify as much as possible about the property. We have something called Due Diligence money that goes direct to the seller as a deposit when an offer is accepted and contract signed, and it is nonrefundable, should a buyer decide to terminate the contract (only 9 or 10 states have that).” Unfortunately, many people start looking at homes and getting excited about properties before they really know what they can do. Putting an offer down with due diligence attached before knowing that you can afford it is a costly mistake to make. A great agent will be there to talk through that with them, and to help them understand the potential rewards versus the risks (and also to explain that it is always best to know what your finances and funding options will be and to then prepare a strategy in advance.)
Pre-Approval vs. Pre-Qualification: Knowing the Difference
Before diving into the home buying process, it's essential to understand the distinction between pre-approval and pre-qualification. While both involve assessing your financial situation, pre-approval carries more weight as it involves a thorough review of your credit history, income, and assets by a lender. To gain a better understanding of this, we spoke with Ron Klabunde, Mortgage Broker with Atlantic Coast Mortgage (check out our Facebook page to see some of the interview footage with Ron).
"For a pre-qualification, I ask questions like: how much of a house do you want to buy? What’s your monthly income? What are your monthly expenses? What do you think your credit score is? Based on those answers, a person can be pre-qualified. The questions could be asked verbally or written, but usually the person is filling out an application online,” said Ron. “A pre-approval goes another step; it says, here are the questions but please also provide us the documentation to back-up the answers. We build the loan app and get it pre-approved through underwriting.” When asked if it is necessary to take the extra steps before making an offer on a home, Ron added, “With a pre-qualification, a person can receive a false hope because it’s just based on what they told us with no documentation to back that up.” With a pre-approval letter in hand, you'll have a competitive edge when making offers on properties.
Ron also wanted it to be understood that there are other advantages of taking the time to do a pre-approval: “It might be that a family comes back, and their credit score is a little bit lower than it should be, so I put them through a credit strategy to increase that score and help them get into the next lower rate bracket.” On the other hand, he warns, “imagine that a family finds a home they love, they go under contract with pre-qualification and $5,000 down, then the lender who gave that pre-qualification says the loan doesn’t work… that family is very likely out $5,000.”
In summary, it is faster to get a pre-qualification, but it does not provide the same level of certainty as a pre-approval. Eventually, you will have to push an application through underwriting, so getting the pre-approval is just saving an extra step.
Avoiding Common Home Buying Mistakes: Tips for First-Time Buyers
For first-time homebuyers in North Carolina, navigating the real estate market can be overwhelming. To avoid costly mistakes, it's essential to educate yourself about the process and seek guidance from professionals.
In an article by Money.com, the number one most common mistake was listed as ‘skipping the financial prep’. The truth is that a lot of new homeowners (or even those who haven’t changed homes in many years) don’t realize that there are expenses beyond the down payment. In NC, when making an offer, for instance, the buyer will give due diligence and earnest money to help make the offer more attractive to the seller. If the contract falls through and it isn’t the fault of the seller, that money is generally lost to the buyer. For that reason alone, it is a good idea to have a bit of a cushion in your savings before buying home. There are also closing costs, insurance and property tax fees to be considered. However, on the other hand, depending on the buyer’s situation, a 20% down payment may not be necessary. In many situations, just 5% (or even less) is sufficient. Before you start looking, be sure you understand those numbers.
Other mistakes that are commonly made are failing to recognize the HOA fees and rules, putting an offer on a home in an area that isn’t a good fit for the buyer, not getting a proper building inspection, and buying too much home to be supported by a feasible monthly budget.
So, how do you avoid all of these mistakes? Get educated and get yourself backed by a trustworthy team. Experienced real estate agents will be able to advise you away from neighborhoods that won’t suit you or your family, can provide information about local school districts, commute times, and job markets. Mortgage brokers can help to make sure you’re set up for a financially stable buying experience. A good inspector can help identify potential problems before they become disasters.
Buying a home in North Carolina's Research Triangle is an exciting journey filled with opportunities and challenges. By working with a knowledgeable real estate agent, getting pre-approved for a mortgage, and avoiding common pitfalls, you can navigate the spring buying process with confidence. Whether you're a seasoned homeowner or a first-time buyer, remember to stay informed and enlist the support of experts to make the most informed decisions.
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