Home Buying Timeline: How Long Does it Take to Save Up a Down Payment?

A family holding a piggy bank.

Time and again, we hear from potential buyers that one of the most challenging parts of buying a home is saving up for the down payment.

Many people believe that they need a 20% down payment in order to buy a home, but that’s not really true. While 20% is a standard, it is by no means the only option for putting down a deposit on a home.

In fact, there are a wide variety of mortgage loans out there that may only require as little as a 3% down payment. If you’re still saving up for your home’s down payment, here are a few things to keep in mind about your buying timeline.

How Long Does it Take to Save up a 20% Down Payment?

This depends largely on your financial circumstances. How much you make in a year, your current debt and monthly expenses, and your saving patterns will largely dictate how much (and how quickly) you’ll be able to save.

Many financial advisors suggest saving around 20% of your monthly income throughout the year, and this is certainly a great place to start! However, if you want to buy a home as soon as possible, you may have to be a more aggressive saver.

It also depends on what state you live in. In fact, the number of years it takes a median-income earner to save up for a 20% down payment differs largely by state.

How Long Does it Take Buyers in North Carolina?

Two adults pointing at a tablet lying flat on a table.

In North Carolina, it generally takes someone around two years to save up enough money for a down payment. In other states, depending on median housing prices, this may be as high as 30 years, or as low as a little over one.

But that’s just for the 20% down payment option. If you’re eligible for a 3% down payment program, it may only take you about half a year to save up for a down payment.

All in all, it depends largely on your financial situation!

How Much Should I Spend on Housing in a Month?

The age-old rule for handling your income is the 50/30/20 rule. Half of your monthly income should go to necessities like housing, healthcare, and food. 30% should go towards discretionary spending, and 20% should go to savings.

Experts in real estate agree that of that 50%, no more than 30% of your income should go towards your housing expenses.

How Do I Navigate the Financial Side of Buying a Home?

We can help with that. Here at Linda Craft & Team REALTORS®, we have years of experience helping home buyers from a wide variety of backgrounds find success in the greater Raleigh real estate market. Not only can we walk you through your many options as a buyer, but we can also connect you with professional lenders in the area.

Have a question about buying a home in Raleigh? Please don’t hesitate to give us a call or browse our free resources today.

How to Buy a Home: Your Step by Step Guide

A living room with dark hardwood floors and blue walls.

Homeownership is closer than you think!

If you’ve long been considering buying a home in the greater Raleigh area, now is the time to act. You might be worried about the financial side to buying a home: the hefty down payment and the mortgage approval process—but it’s really not that complicated.

In fact, there are ten simple steps to buying your first home in the Raleigh real estate market!

Save Your Down Payment

It’s a common misconception that you have to put down 20% of the home’s overall value. That’s simply not true!

There are a number of loans out there that require less than 20%, with some like the USDA Loan requiring only a 3% down payment and the VA loan requiring 0% down!

While it’s true that the more you save up for a down payment, the lower your monthly mortgage payments will be, 20% is not the end-all be-all.

Determine Your Credit Score

A man using a marker to circle different numbers on a graph.

Whenever you’re making any large purchase that requires a loan, it’s important to have a handle on your finances. Use a free service like CreditKarma or FICO to check your score. This will give you a good idea for what kind of interest rates the bank is willing to offer you.

Find an Agent

While it is possible to buy a home without an agent, it is twice as stressful. An agent handles a lot of the “invisible work” associated with buying a home.

In addition to handling negotiation and closing, your agent can make recommendations on local neighborhoods and homes for sale. Plus, they’ll likely be able to offer you support as you navigate a tricky real estate market.

Get Pre-Approved

Saleswoman presenting a new project property on digital tablet

Trust us, getting pre-approved for a mortgage loan will make the rest of your home-buying experience easier.

This process typically includes sitting down with a lender to review your finances. The lender will go over your credit score, savings, outstanding debt, annual income, and anything else relating to your money situation. Then, they’ll give you an offer for the amount of money (and the interest rate) the bank is willing to lend you. Boom: your budget is set.

Go Shopping

Now it’s time for the fun part! Think long and hard about what you want in a home, and get to searching. To make it a little easier on you, feel free to use our complimentary home-search tool.

You can easily filter results by price, location, neighborhood, size, special features, and more. Happy house hunting!

Make an Offer

A man pulling several hundred dollar bills out of his wallet.

Once you’ve found a home that you can’t live without, work with your agent to make an appropriate offer. It’s important to make an offer that is both competitive enough to sway the seller, while still staying within your budget.

Remember that pre-approval letter? This makes you a more competitive buyer as well!

Get an Inspection AND an Appraisal

This is crucial. Before you sign any closing documents, you HAVE to make sure the home is a worthwhile investment. The best way to do that is by hiring an inspector to come out and review the property. This way, if there are any hidden issues with it, you’ll be able to negotiate with the seller to have it fixed.

After the inspection, your lender will arrange for a home appraisal. This is to assure the bank that your new home is worth the price you’ve agreed to pay for it.

Close the Sale & Move In

Once your loan is approved, your bank will schedule a closing date. This is when you cross your T’s and dot your I’s.

Congratulations! After some heavy negotiating and serious home shopping, you’ve finally found your dream home and made it your own.

Ready to Become a Raleigh Homeowner?

We can help with that. At Linda Craft & Team REALTORS®, we have the experience necessary to help you find the home of your dreams at the right price tag. Give us a call today to get started.

Your Raleigh Home and Radon Danger

What is Radon? How Does It Get Into My Home?

Radon is a chemical element formed when uranium in water, rock, and soil begins to break down. This causes the release of radon gas into the dirt which could be beneath your house. It gets into your home through gaps and cracks in walls and floors, spaces around pipes that enter the house through the foundation, fireplaces and furnaces, exterior air vents and if you have well water, it can come in that way too. It’s heavier than air so it tends to collect in lower levels and basements.

So How Serious is This, Really?

radon flowing into a houseWell, on one hand, we are around a certain amount of radon all the time; however, in the open air it tends to dissipate at a quicker rate. If it gets captured in the home, it is more concentrated and that’s where the problems start. Radon gas emits ionizing radiation which damages DNA and can cause cancer. It can be pretty serious, so your home should be tested regularly.

Although radon has been declared a national health problem, there are no real federal or state standards that mandate taking care of the problem. The EPA has made the following recommendations:

  • 4/pCi/L – is qualified as an “action” limit. It means fix your home now!
  • 2 pCi/L – is qualified as “consider action.” It is strongly suggested you fix your home.

Since cleaning up radon issues can cost on average about $1,200, the EPA has not made it mandatory because of the burden to homeowners. However, they have made it known that this is NOT safe. Their studies also show that radon is the second-leading cause of lung cancer. Over 20,000 people die each year because of this invisible radioactive gas.

For more information, take a look at the EPA’s online brochure: Home Buyer’s and Seller’s Guide to Radon.

How Do I Know If Radon is in My Home?

There are DIY kits you can purchase at any hardware store that you can use to test for radon at an average cost of $25 per kit. Make sure it is labeled “Meets EPA Requirements.” Be sure to follow the instructions carefully. Results take a couple of weeks for processing.

A better solution is to hire a professional to do electronic radon testing. It takes less time, provides better quality results, and you get the results back sooner because samples don’t have to send away to a lab. The average cost of testing is $110. If you do have an radon issue in your home, the same company can also perform the mitigation services.

If I Have an Issue with Radon, What Do I Do?

If you have a radon level anywhere near 4 pCi/L, you should take steps as soon as you can to reduce the level. The good news is that installing a removal system will vent the radon gas from beneath your home immediately, eliminating 99% of the radon. You should always solicit the help of a certified radon mitigation service to install the removal system. They can also assess the points of origin where the radon gas may be getting in your home and repair them.

How Often Should I Test My Home for Radon?

chemical sign for radonIf you’ve never had your home tested, do a long-term test as soon as you can. Also, the first round of tests should be performed in two different heating and cooling seasons. Maybe do one in the spring and one in the fall for best results. After that, every 2 years is fine under normal circumstances.

Exceptions to this guideline may occur if you have had any major changes to your home; renovations, ventilation changes, earthquakes, and ground settling can all lead to changes in radon gas levels. Also, if your living arrangements change and you find you are spending more time in the lower level or basement of the home.

Testing for radon is fairly inexpensive (on average $12 per test), so why not give yourself peace of mind? You’ll rest and breathe easier knowing that the air in your home-sweet-home is safe.

Contact Us for More Information

At Linda Craft & Team, REALTORS®, we have over 30 years of real estate experience in the Greater Raleigh area. Whether you are buying a home or selling a home, allow us to equip you with our wealth of knowledge and homeownership advice, from information about radon and other home hazards to a vast network of recommended service providers. Schedule an appointment with us today by calling 919-235-0007.

How to Understand and Navigate the Appraisal Process

RS384_iStock_000004004971XSmallThe appraisal process for a new mortgage can be confusing to both Triangle area home buyers and home sellers. The purpose of an appraisal isn’t to determine the true value of the home, but, to instead help the bank determine if they should grant the loan for the total asking amount. This is for the bank’s protection because it limits their exposure to a foreclosure.

Fact is there’s a percentage of mortgages that’ll end in foreclosure. Appraisals combined with the buyer’s credit/employment history help the bank make a sound business decision about how to mitigate risk on the funds loaned. Keep in mind that the bank has to agree with the appraiser and an appraiser may simply err on the conservative side for this reason.

To help your chances, make your home as presentable as possible during the staging process to help leave a lasting positive impression. Also understand that location and size are two strong factors in the appraisal process.

The Appraisal Isn’t Actually Your Home Value

When the bank orders the appraisal they’ll notify the appraiser of the purchase price which allows them to begin finding suitable comps to justify that number.

The appraiser also takes on risk as the bank can hold them liable in a foreclosure for over-appreciation. For this reason, most appraisers are simply looking to justify the purchase price and not necessarily provide a true home value.

No Two Are the Same

Not all loans are created equal. Some are more forgiving with things like debt to income ratios yet more stringent during the appraisal. Also, Refinances and Equity Lines of Credit tend to have higher appraisals because the bank knows your mortgage history. Familiarity tends to ease anxiety.

Knowledge Is Power!

Despite the myth, it’s allowed for appraisers and listing agents to speak. I’ve found that on my listings the appraiser always calls me when they’re having difficulty. Perhaps it’s because I’m a strong brand with a reputation of selling a lot of homes or maybe I’ve been lucky. Regardless, this has saved my sellers a ton of money over the years and for that I am grateful.

Many times the appraiser skips this important step. This is where it gets hard, but, you can still take the following steps to protect yourself:

  1. Challenge the appraisal. If the appraiser bypassed the listing agent, simply ask the lender if you can challenge it. Many times they’ll allow new comps to be submitted or will even allow a new appraisal. This depends upon the lender, loan type, and where you are in the process.
  2. Get a copy. Before sending comps, ask to see a copy of the appraisal. This may or may not be released. It’s 50/50, but, it really helps when you can see the report. If they won’t release the appraisal for review, ask for the square footage page or the breakdown of square feet that’s on it.
  3. Make sure everything is listed. The appraiser may have missed a full bath or something that would add the value you need.
  4. Review the comps carefully. Look for discrepancies that would help add value to the property.
  5. Find superior comps. Be ready to defend them as well. Be careful how you approach this because you don’t want an ego flare between the appraiser and the listing agent.
  6. See if the appraiser used any under-contract comps. If not, ask the lender what their rule is on this. Many lenders allow the use of under-contract properties in the appraisal if the market is appreciating at a higher rate.
  7. Request another appraiser. If the current appraiser will not alter their value to give you the sales price you need then as ask the lender if they’ll allow another appraiser. This cost will have to be worked out as to who pays for the second one, but, it’s usually worth the investment.
  8. Change lenders. When the seller isn’t willing to reduce the price to the appraised value and they buyer isn’t willing or can’t pay above appraised value, the last resort is to change lenders and hope for a new result. My experience has proven that often starting over elsewhere is the only solution.

We’re Here to Fight For You

During the appraisal challenge process it’s usually the listing agent fighting the battle, which means anyone thinking of selling a home would fare better having a Realtor with experience on their side.

Experience and persuasion that comes from confidence and a brand reputation for market knowledge is a powerful thing for a seller to have working for them. The buyer agent is perfectly happy with the seller lowering their price and so is the buyer. A large part of the listing agent’s job is to defend every penny of equity for their seller client.

Whether you’re still searching for your home or you’re a seller looking to list your property, Linda Craft & Team is here to partner with you to reach your goals. Contact us today. You’ll be glad you did.