Home Starts Here on the Crystal Coast
Feel like you’re leaping into unknown waters as a first-time homebuyer? It’s normal to not know where to begin when you’ve never purchased a home before—that’s when Linda Rike Realty comes to the rescue. We’re here to guide you through the process of getting a mortgage, finding your dream home and making an offer, and completing the closing documents to finalize your first home purchase! So take some time to familiarize yourself with the home-buying process, and feel free to contact us with any questions you may have about real estate on the Crystal Coast.
Understanding Your Mortgage
Purchasing a home comes with some seemingly complicated terminology, so we’re here to help you understand all the lingo. The first thing to have an understanding of are the various types of mortgages that can aid you in purchasing your first home.
This is a standard loan that’s typically chosen by buyers with good to excellent credit. Most buyers who decide on this loan are able to make a down payment of at least 10%. However, there are some programs that offer options for a lower down payment based on a variety of conditions.
These loans are ideal for buyers with lower credit scores, as they offer a down payment as low as 3.5% and lower interest rates. However, FHA mortgages do require mortgage insurance premiums, which can result in higher overall costs.
All veterans and active military members qualify for VA loans. These loans include lower interest rates, up to 100% financing, and a simplified loan approval process.
These loans are available to buyers in rural or low-density areas and offer up to 100% financing and below-market interest rates. Because of the government’s loose definition of the term “rural,” some of the buyers in the smaller communities on the Crystal Coast can qualify for this loan.
What Do Mortgages Include?
Let’s explore the four main components of a mortgage payment, often abbreviated as “PITI.”
- Principal – This is the repayment of the initial amount that you borrowed from your lender—in other words, the price of your home.
- Interest – This is a payment to the lender for the amount of money you borrowed, which is then added to the initial price of your home.
- Taxes – Your annual city and county taxes assessed on your property are divided by the number of mortgage payments you make in a year and added into your mortgage.
- Insurance – Homeowner’s insurance covers you against various hazards and is added to your monthly mortgage payment.
Determining the Best Loan Option for You
One of the most important steps in buying a new home is researching your loan options. Here at Linda Rike Realty, we recommend meeting with at least two different lenders before making your decision. To determine which lender can get you the best rate possible, you’ll need to understand the two different types of interest rates that are offered by mortgage lenders.
The interest on a fixed-rate mortgage will not change, so your monthly payments won’t change, making this a very predictable loan option.
The interest rate on an adjustable-rate mortgage will often be lower initially, but as interest rates fluctuate with the market, they can be somewhat unpredictable or even result in higher payments.
Create Your Monthly Budget
Now that you know what loan options are available, what you can expect to pay as a down payment, and what your likely interest rates will be, it’s time to determine how much you can afford to pay each month. Creating a monthly budget will provide an outline for the price range you should look for in your new home.
Remember that your mortgage costs will be based both on the price of the home and the local market’s interest rates. A home’s affordability can vary from one day to the next depending on the current rates.
Find a Real Estate Agent on the Crystal Coast
Your agent should be someone you can trust, an expert in real estate in your local area, and have experience working with first-time buyers.
Discover Your Perfect Place on the Crystal Coast
Here’s where all the hours of watching HGTV shows pays off—it’s time to start searching for your perfect home! During this step, be sure to carefully consider what you need (and want) in a home. Provide your agent with a list of your non-negotiable home features so that they can show you homes that check all your boxes. While searching for homes, we recommend keeping a detailed record of the things that you like and don’t like about each property you tour.
Pro tip: Before you start touring homes, determine the prices of recently sold homes in your preferred area by claiming one of our free neighborhood sold reports. This way, you’ll get a better idea of the actual affordability of the properties in your desired neighborhood.
Make an Offer
Have you found your dream home but aren’t sure how to proceed from here? Now’s the time to work with your trusted agent to come up with a competitive offer. You’ll want to strategically craft an offer that you can comfortably afford but will also be a realistic offer for the seller to consider.
What Will I Pay Upfront?
- Earnest money – Think of this as your security deposit—this is paid when you submit your offer to show the seller that you are serious. If they choose to accept your offer, it is then applied to the down payment or the closing costs.
- Down payment – This is determined by the loan option you chose, or possibly any government programs or assistance you have requested.
- Closing costs – These tend to be lower for buyers and represent the fees associated with paperwork and lender charges.
Request a Home Inspection
Before you sign on the dotted line, you will want to have an experienced professional walk through the home to ensure there are no lingering problems—you don’t want to deal with unexpected maintenance issues as a brand-new homeowner. If necessary, you can request that the seller resolve any issues prior to closing.
If everything looks good during your home inspection, then it’s time to sign the paperwork, make final negotiations and payments, and finally get your keys!
Review Your Contract
Before you sign any paperwork, it’s important that you carefully read over the contract with your agent or lawyer to ensure there are contingencies in place—this way, you won’t still be obligated to buy the home if something falls through with your mortgage.
Finalize Your Mortgage
Work with your chosen lender to submit your mortgage application, have your home appraised, and review predicted closing costs. There are many costs commonly associated with closing, including appraisal and attorney fees, taxes and title insurance, plus home inspection and government recording fees.
Pay, Close, and Get Your Keys!
It’s time to close! Meet with your agent, lender, and the seller to finalize the paperwork, sign your contracts, and pay your down payment and closing costs. Finally, take the keys to your new home and celebrate!
Ready to Dive Into Homeownership?
As your Crystal Coast real estate experts, we are ready to help you find the home of your dreams—reach out to our team today to take the next step toward buying your first home!