Buying a home

Preparing to Buy

Buying a home is one of the most significant investments you will make. At Allegro, we are dedicated to helping guide you through the process from start to finish. Before beginning to look for a home, we encourage you to consider this information:

Start Saving Money

When buying a home, you may need cash for a down payment, closing costs, and you will want money for moving expenses, décor, small repairs, etc.

Down Payment: The amount you will need for your down payment will depend on the type of loan product you use (see information about selecting a lender). Some loans offer a 100% loan option, others may require 3% or 5% down. If you buy a $200,000 home that requires 3% down, you will need $6,000 for a down payment.
Closing Cost: These are the costs and fees required to purchase your home. They include home inspections, appraisals, attorney fees, title insurance and tiling fees, loan origination fees, etc. You can expect closing costs to be between 2% and 5%. In some cases, you may be able to negotiate the seller to pay a portion of closing costs. However, in a strong, low inventory market, you should considering paying your own closing costs.
Odds and Ends: You just bought a home! Congratulations! You’ll want to spend some money to make it yours…window trimmings, furnishings, paint…and you’ll also want a rainy day fund for small repairs. Consider setting some funds aside for this.

Consult a Mortgage Broker/Lender

Unless you can afford to pay cash, which most cannot afford, you will need to select someone to help guide you through the mortgage process. When selecting a lender you will want to consider several things:

Loan Product options: options for lending are always evolving. What products does the lender offer? What are the credit, income, and down payment options of each? Are there first-time buyer incentives?
Local Mortgage Officer or Online/Distance? There are some online mortgage companies where you do most of your work by email or phone. If you prefer face-to-face contact, see someone in your local banks or credit unions.
Are they available and work for you? You need to trust your mortgage broker, and they should be responsive to you. Items in your process will be time-sensitive…you don’t want to work with someone who you have to annoy to get them to answer you!

Get a Pre-Approval Letter!!!

This is one of the most important steps in the process before you start shopping. You don’t want to fall in love with a house you don’t have the means to purchase! Once you have shopped lenders, products, and interest rates, have that person help you determine what you can best afford and ask them to provide you with a pre-approval letter.

Make sure to get your pre-approval letter you have provided the lender with income and debt information. Some lenders offer a “pre-qualification” letter where they have not researched your income and credit.

Once you’ve considered your options, saved some money, selected your lender, and have your pre-approval letter in hand – it’s time to start the hunt for a home!

The Buying Process

Selecting a Real Estate Agent

Having a real estate agent is not required, but would you want to represent yourself in court? You want to work with someone who is experienced and can expect and navigate the hurdles through your transaction.

Find a real estate agent who listens to you, pays attention to things you like, and helps you find a home that meets your list of wants and needs!

At Allegro, we offer professional, personal service throughout your entire process. We don’t assign or work with “teams” – the person you work with at the beginning is the same person working with you at the end!

Looking at Homes

You’ve got your pre-approval, you have found the best agent available at Allegro, and now it’s time to go shopping!

You will receive emails and find homes that you like and your agent will discuss those with you. When you decide there’s something you want to see, we will book a private showing and meet you at the home and look around! Have more than one you want to see? It is possible to set up a “tour” and we’ll go from home to home looking.

Working With Real Estate Agents

One thing you’ll find about the home buying process…be prepared to look at a LOT of paperwork! The NC Real Estate Commission requires that agents share with clients and potential clients a brochure called “Working With Real Estate Agents.” We encourage you to read this, as it gives you information about different agency types in NC. If you have shared any information with us about your motivation or means to purchase, we’ll ask you to look at this and sign verifying we showed it to you. Your signature is not a contract. It is simply for our records so we can show, if asked, that we provided you the brochure.

Click here to see a copy.

Contracting your Buyer Agent

After we have showed you some property, we may ask you to solidify your commitment in writing by signing an Exclusive Buyer Agency agreement. This document confirms our relationship as buyer and agent and requires us to be your fiduciary. This means we work solely in your interest throughout the process and represent only you (not the seller).

Who pays the buyer agent? The agent rate is defined in the agreement. Typically, the commission for agents is built into the sales price and the agents are paid via the seller proceeds. In almost all cases, having a buyer agent costs you no money out of pocket. It’s a great option for your representation!

I’ve picked my agent, found my dream home, and am ready to buy. What happens now?

The Offer to Purchase and Contract

This is the document that officially offers your terms to the seller and if they sign, becomes your contract for the purchase of the home. Your agent will go through the offer with you, but here are some main points that you will need to consider:

Purchase Price: Discuss with your agent your ideas for the amount you are willing to pay for the home. Your agent may also offer advice based on the days on market, popularity of the home, and inventory in the area.
Due Diligence Fee and Period: This is an amount of money that you offer the seller to basically take the home off the market while you do your research like inspections and finalize your financing for the home. This fee is paid directly to the seller and is non-refundable, but it does factor into the final purchase price at closing. During the due diligence period, you can walk away for any reason or no reason and you will receive a refund of your Earnest Money Deposit.
Earnest Money Deposit: This is a deposit that you pay to show that you are making this offer in good faith. Your agent will help you determine an appropriate amount. These funds are held in the closing attorney’s escrow account and will fact into the final purchase price at closing. As long as you terminate the contract before the end of the Due Diligence Period or don’t somehow otherwise breach the contract, these funds can be refunded.
Escrow Agent: This is the closing attorney. The buyer gets to select the attorney that handles the closing and recording the deed. If you have an attorney you prefer to work with, we will set that up. Otherwise, we will help you select an attorney.
Settlement Date: If you are getting a mortgage, using a bank, you can expect your closing date to be about 45 days out. We will discuss your settlement date when completing your contract.
Closing Expenses: Talk with your agent about whether or not it would be prudent to ask the seller to pay a portion of the closing costs.

Once your contract is complete, it will be sent to the seller. If they sign it, congrats! You are one step closer to your home purchase!

We’re “under contract”…now what?

Completing the Purchase

Once the contract is signed, the clock has started ticking on your due diligence period. Here’s what you do next:

Send your Contract to your Lender. Do this as soon as possible so they can start their processes to close the sale. They will order the appraisal on the home. Expect to pay this up front, and it can be as much as $500.
Give your DD and EM checks to your agent ASAP.
Order Inspections. Talk with your agent about what inspections may be appropriate for the home and get those ordered. Options are typically general home inspections, pest inspections, and radon inspections.
Negotiate Repairs. Once you receive the inspection report, discuss it with your agent and decide what, if anything, to ask the seller to repair. Don’t be scared by inspection reports…they will find and notate every little thing they see! If there is a deeply concerning find, your agent will discuss that with you.
Do NOT make any financial changes. Don’t quit your job. Don’t buy a car. Don’t take out a loan. Don’t even pay off a credit card. Don’t do anything to change your credit that your lender doesn’t know about. It can derail or severely delay your purchase process.

It’s Closing Day! What do I expect?

Final Walkthrough

Your agent will take you to the property to walk through one final time before closing. Make sure everything is as you expect, repairs have been made, etc. Once you sign and that deed is recorded, that property is yours exactly as it sits.

Sign, and sign, and sign

You’ll go to the attorney at the scheduled time. Bring your certified check made to the attorney for your funds to close, if needed. You can expect to sign a big stack of papers…the attorney will explain everything you are signing.

Wait until the deed is recorded

After signing, the attorney will notify us when the deed is on record, meaning the home is officially yours! Refrain from entering the property until this time. It is typically an hour or two after you sign.

buying a home