Types of Mortgages
There are dozens of mortgages out there, but these are some of the most common ones we see here in the Triangle area.
Conventional loan
The most common type of loan, this "standard" mortgage often requires a down payment of 10% – 20%, as well as excellent credit and steady income.
FHA loan
Targeted at moderate-income buyers or those with less-than-excellent credit, this loan offers lower qualification requirements and as little as a 3% down payment.
VA loan
Available to most active and veteran military personnel, the VA loan offers lower qualification requirements and down payments of as little as 0%.
USDA loan
This loan is targeted at moderate-income buyers searching specifically in more rural areas. Like the FHA loan, it offers lower income, credit, and down payment requirements.
What Do Mortgages Include?
Your monthly mortgage payment doesn't just include the repayment of your loan. A few things are bundled into that payment to simplify the payment process. Here's what's typically included.
Principal
This is the repayment of the initial amount you borrowed (typically the price of your home, less the down payment).
Interest
When you borrow money, your lender charges you interest. The interest is calculated for the duration of the loan and divided into monthly payments.
Taxes
Your annual property taxes are also typically bundled into your mortgage payment. Your lender will collect a payment monthly, then pay your bill annually.
Insurance
Like property taxes, your homeowner's insurance is often collected from your lender monthly and paid to your insurance company annually or bi-annually.
Going Loan Shopping and Getting Prequalified
Well, now that you know a little more about mortgages, it's time to start talking to lenders!
Ask for referrals
One of the best things you can do when starting the loan process is to ask around for referrals. Working with a lender you trust is essential to feel secure during the process.
Start calling
Once you find a few lenders who look promising, pick up the phone or send some emails. You want to talk to a few lenders before committing to anyone.
Discuss options
Lenders will likely be eager to talk to you about what they can offer. They'll set up a phone meeting to discuss loan options, as well as what you might expect to pay.
Get prequalified
During your meetings, it's likely your lenders will ask if you want to get prequalified, and your answer should be yes. Getting pre-qualified is an important first step to buying.
Shopping Homes for Sale in the Triangle
Once you've got your agent and prequalified for a loan, it's time to start shopping! Here are a few things you may want to know before you start your search.
The Shopping Process
Make a list
Before you head out to explore, take some time to think about what's important to you in a home. Once you get some ideas, decide which of those things you need versus things you want or would like to have.
Be choosy
Touring a lot of homes can quickly become tiring. That's where your wants and needs list comes in. Before you schedule any showings, make sure a home fits all your needs and at least a few of your wants. Don't waste your time on a home that doesn't fit your needs!
Take notes
Before you find the perfect home, you'll probably take a look at quite a few homes. After a while, they can start to run together. It helps to take notes, or photos, of each house to remind you of the things you liked, or didn't like, about each one.
Making an Offer
Once you find a home you love, you and your agent will sit down to formulate an offer. This contains quite a bit of information—like the purchase price of the home, as well as your closing date and any contingencies you request. Commonly, buyers request an inspection, appraisal, and mortgage contingency. Your offer is an official document called the Purchase & Sale Agreement. Here's what happens after you submit your offer.
What Happens Next?
Negotiations
Once you submit the offer, the seller has three options. They can accept the offer as-is. They can decline the offer. Or they can submit a counteroffer with modified terms. Once the ball's back in your court, you have the same options. This back-and-forth is called negotiating.
Under contract
Once you and the seller reach terms, you will both sign the modified and updated Purchase and Sale Agreement. Once you've both signed, the home is officially under contract, and the next phase begins.
Due diligence
Now you have some time to do a little research. During this time, you'll have a home inspection to root out any potential issues and an appraisal to ensure the home is worth the value of the loan. Should any problems arise, you likely have the ability to walk away from the sale (depending on the contingencies outlined in your contract).
Closing
Once the due diligence period has ended and you and the seller have worked out any potential issues or price adjustments, it's time to close! During the last few weeks, you'll work with your lender to finalize your loan, determine your closing costs, and finally, arrive at the closing table.
Finalize your loan
Be prepared to submit lots of financial and personal paperwork. This part of the process can be a little tedious, but it's fairly short-lived and ensures your lender can do a full background check.
Sign & pay
Your lender will tell you know ahead of time, what your closing costs will include and what the total will be. Before you reach the closing table, you'll have to obtain a cashier's check or wire your closing costs.
Get your keys!
At last! You've signed all the paperwork, paid your closing costs, and now the keys to your first home are in your hands! Congratulations!
Still Have Questions About Buying Your First Home in the Triangle?
Are you dreaming about your first home purchase here in the Triangle? We'd love to help! Contact Reeves Realty today to learn more about how we can help make your home-buying dreams a reality.