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What to know about buying your first home

On Behalf of | Feb 23, 2021 | Real Estate

Buying a home can be an excellent way to build wealth and become a permanent part of a North Carolina community. However, the process of buying a home can be a complex one, and it’s important to ensure that you’re truly ready to purchase a property before submitting an offer. Let’s take a look at what you need to know before acquiring your first house.

Be ready for upfront costs

Closing costs such as document fees, property taxes and inspection fees are due before you take possession of your home. You can expect these costs to total as much as 5% of the home’s purchase price. There is a chance that the seller will offer concessions that reduce the amount due at closing.

You will also need to make a down payment of as much as 20% of the final sale price. Depending on the type of loan that you use, it may be possible to ask friends, family members or others to make this payment on your behalf.

Will you qualify for a mortgage?

Lenders are more likely to approve your loan application if your credit score is 640 or higher. They may also want to see proof of cash reserves that you can use to make mortgage payments if your financial circumstances change after the transaction closes.

If you’re self-employed, your qualifying income will typically be the average of what you made over the past two years. For instance, if you made $150,000 over the past two years, you would obtain approval for a loan based on an income of $75,000. A real estate attorney may provide more information about how your job status might impact your ability to get a mortgage.

An attorney may be able to take a number of actions to ensure that you get a favorable deal on your first home. For instance, he or she may review the terms of a purchase offer or explain the differences between various home loan products. Furthermore, legal counsel might make sure that all required property disclosures are made before the transaction closes.