A Step-by-Step Guide to Buying a Home

A Step-by-Step Guide to Buying a Home

Thinking of Buying?

For those with experience buying Wilmington, North Carolina real estate, the fact that owning a home provides a wealth of benefits compared to renting is not exactly news.  The interest portion of a mortgage payment can be tax deductible, and home owners build equity with each monthly mortgage payment.  Rent prices are almost certain to increase, but most monthly mortgage payments will remain at approximately the same amount as the day you purchased the home. 

In an economic climate where inflation is an issue and the purchasing power of the dollar is declining, the continual increase of rent prices can make it harder and harder to find suitable housing.  Home owners have the potential to create an effective hedge against inflation by obtaining a mortgage with a stable monthly payment.  Having the freedom to customize and modify a home is another point in favor of buying a home instead of renting.

Many often cite a lack of liquidity and a higher admission price as two of the reasons why they would choose to rent instead of purchasing Wilmington real estate.  However, it is almost always a more effective wealth building strategy to buy a home than it is to rent, especially when the cost to rent is about the same price or more expensive than it is to buy.  The rent versus buy calculator linked to here offers an informative look at the hard numbers, to aid in the decision making process.

Establishing a Budget

It is important to note this step should come before starting the search for a home.  Aside from location, price is typically one of the most important factors that buyers consider when searching for a home.  Starting the home shopping process from an informed position is essential.  Whether you would rather delve into your financing options online or call a local mortgage broker, it is important to understand the difference between a letter of preapproval and a letter of prequalification.

Letters of prequalification are good for getting a ball park idea about your budget, but that is about it.  Basically, a letter of prequalification is based on trust and a preliminary conversation.  On the other hand, a letter of preapproval is based on the actual numbers and a thorough analysis of your finances.  Having a letter of preapproval will provide you with a real idea of what you can afford, and many sellers will ask for one prior to considering an offer.

Down Payments & Closing Costs

Down payments and closing costs also have an impact on what home buyers can afford to purchase in Wilmington, North Carolina and the surrounding real estate markets.  It is no longer required for a buyer to have a 20 percent down payment.  Nowadays it is not uncommon for a buyer to purchase with a 3.5 percent down payment.  Some buyers may even be able to purchase a home with 100 percent financing.

As noted previously, a higher price of admission can be a barrier to home ownership.  Closing costs can be substantial and may even cause some buyers to get cold feet if unprepared for the news.  These costs can vary significantly but are often between two and five percent of the contract price.  The good news is that there is a possibility that closing costs could be rolled into the loan or even paid for by the seller.  For a confidential discussion about how to negotiate for a reduction of closing costs, contact Fritts Causby today.

Finding a Home

The fun part finally comes when all the items on the checklist have been crossed off and you have a solid grasp on your budget.  The home shopping process is very exciting, though it is usually not as fast and easy as it is portrayed on television. 

Location is the single most important factor to consider for many buyers, as the well-known cliché would indicate.   Of course, location can have a lasting impact on your quality of life and the future market value of your home.  As this is a very important phase of the buying process, it’s critical to work with a local market expert such as Fritts Causby, a long-term resident of Wilmington, who can provide you with useful guidance and relevant information.

Once you have successfully targeted a specific neighborhood, subdivision or zip code that fits your needs, it will be necessary to ask yourself some important questions, such as:  How many bedrooms do I need?  What style home is my favorite?  How close do I need to be to friends and family?  Do I want a large lot and a quiet setting or would I rather be close to the conveniences of the city?  What school district would be best for my family?    

When you are working with an experienced agent such as Fritts Causby, sifting through these options and deciding which factors are most important to you is a lot easier.

Making an Offer/Negotiations 

After you have found a home that is the best fit for your individual needs and goals for the future, the next step is to make an offer.  Determining a good starting point in the negotiations can be somewhat complicated.  There are many factors to consider prior to making an offer, such as recent comparable sales in the neighborhood.  After a purchase price has been successfully negotiated with the seller and their agent, the process gains even more complexity.  There are many other pieces of the transaction that have to be negotiated and managed effectively during this phase of the contract period, such as repairs, contingencies and timelines.

To ensure your interests are protected, it’s vital to work with an expert.  A highly skilled negotiator with a thorough understanding of North Carolina real estate laws and the purchase contract, Fritts Causby is backed by the support team at Coldwell Banker.

Closing Day!

Bringing a transaction to a successful resolution on closing day is not as easy as it sounds.  The period that begins when the home officially goes under contract and the date of closing is the contract period, and the timeline can vary significantly.  During this period many items will have to be taken care of and coordinated, such as the home inspection, appraisal and loan application. 

Working with a knowledgeable, trusted advisor like Fritts Causby can be the difference between a stressful experience and a positive, seamless transaction.  If you have questions or would like to have a comprehensive discussion about your search for a Wilmington, North Carolina home or investment property, contact Fritts Causby at 858-692-5120 or email frittscausby@gmail.com.