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Tips for first-time homebuyers in Raleigh

Posted February 28

Raleigh is consistently rated as one of the top cities for young families.

This story was written for our sponsor, Coldwell Banker Howard Perry and Walston.

With borrowing rates at all-time lows and Raleigh consistently rated as one of the top cities for young families, it's a fabulous time to be in the Triangle area home market.

"We're headed into this new year on the heels of the highest-performing Triangle real estate market ever," said David Jones, president and COO of Coldwell Banker Howard Perry and Walston. "The cities and towns that make up this area have what homebuyers seek: career opportunities, a low cost of living, cultural and recreational activities, and more. Now is the time start your house hunt and make the Triangle your home."

Although buying a home is one of the most exciting periods in a person's life, it can also be quite daunting, with complex financial problems and important long-term decisions to be made.

To ensure you are finding the best situation for your family, while also having a smooth and enjoyable first home buying experience, there are a few vital tips to consider.

Research: Needs, Wants, Location

Diving headfirst into real estate listings and looking at homes in your prospective area can be a lot of fun, but it's crucial to have a good idea of what you need and what you are looking for before actually contacting sellers.

"Purchasing a home will be one of, if not the, most important investments you will ever make, and you'll want to be prepared to make a good, sound decision for you and your family," said Coldwell Banker Howard Perry and Walston Real Estate Broker Lisa Lucius. "Consider all of the items you need and all those that you want. Take a look at your family, your lifestyle, your future goals and finances. This information will help your real estate agent find the best property for you."

A big backyard may look inviting, but do you have time for the lawn maintenance? Will you be able to afford to have this service performed? You may only need one or two bedrooms now, but could your family be expanding soon?

These are important questions to not only consider, but to account for in your house-hunting plan.

If you have kids or are planning to, you may want to take into account the local schools districts, and look into ratings and reviews for teachers or even PTA organizations.

If you want to live in a vibrant community, check out the local newspapers or homeowners associations to see if there are frequent activities and events that interest you.

The Raleigh area has multiple interconnecting cities and townships that share Wake County and the Triangle. While a "Raleigh" address is often coveted, don't be afraid to look around at Apex, Morrisville, Cary and the wider Wake County areas that closely share the region with Raleigh proper.

Financing: Credit, Documentation, Budgeting

Once you have a solid idea of the home you're looking for and where you're interested in living, it's time to begin preparing for the financial process of home buying. Having your credit, budget and documentation in order will expedite the process greatly.

One of the first steps is to secure a credit report to discover your credit score, which is the main tool lenders use to determine who qualifies for a loan. By looking into your credit score well beforehand, six months or even a year in advance, you'll be better prepared to address any problems that come to light, such as outstanding collections or other deficits.

And of course, knowing how much you can afford might be the most important piece of information for you as a prospective buyer. You'll want to closely monitor how much income you have coming in and out of your budget each month. A plethora of free online tools can calculate your ideal monthly mortgage payment and necessary down payment based on your financial information.

"You might qualify for a higher monthly payment than you feel comfortable making," said Denise Beatty, venture president for Towne Mortgage of the Carolinas. "Make sure you think long and hard about your monthly expenses, and how much you can realistically set aside for a monthly mortgage payment."

Beatty added, "An experienced loan officer can help you determine an amount that's right for you and your family, and can guide you through the pre-approval process. A pre-approval will help you understand how much you are qualified to borrow, and will also provide added assurance to the seller that you are qualified to purchase their home."

Other documentation that most lenders will request will include your last two W-2 tax forms, two recent pay stubs and two months of bank statements. Contractors, those in sales, on commission or the self-employed -- all common in the 21st century "gig economy" -- may find this part of the process more difficult and should take into account the time they might have to spend proving their financial history.

Finalizing: Pre-approval, Down Payment, Closing Costs

"Preapproval" is a great tool for buyers to jumpstart the process of entering the home market. To receive a pre-approval, a mortgage lender will ask for a preliminary list of financial information and documents -- like those listed above -- to consider to "pre-approve" you for a loan. This pre-approval process will allow you to avoid time-consuming official documentation or going through the full loan qualification process.

A pre-approval will go a long way with home sellers who now know you're likely to be approved for a loan.

You will also want to figure how much "down payment" you can afford, which is the lump sum paid when first purchasing a home and is separate from monthly mortgage payments. The size of the down payment you can make on a home will significantly affect your loan and mortgage rates.

It is ideal to put down around 20 percent of the total cost of the property, but some homebuyers opt to put down less and accrue private mortgage insurance (PMI) as required by their lender.

Lastly, don't forget closing costs.

Closing costs are the ancillary charges you'll earn while going through the home buying process.

Closing costs can include origination fees charged by the lender, title and settlement fees, taxes, homeowners insurance, homeowners association fees, and other related odds and ends that historically can range from two to five percent of the total cost of the home you buy.

This story was written for our sponsor, Coldwell Banker Howard Perry and Walston.

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