Buying a Home

Finances and Your Budget

Before you begin searching for a home, it's important to understand what you can realistically afford. This goes beyond just the listing price—your true budget should account for all the costs of homeownership. That includes your monthly mortgage payment, but also property taxes, homeowners’ insurance, utility bills, maintenance, and potential HOA dues. Taking time to assess your full financial picture helps ensure you’re not just buying a home—but buying the right home for your budget.

When buying a home in North Carolina, your income plays a key role in determining how much you can borrow, the type of loan you qualify for, and your long-term financial stability. Here’s what you should know about your income before buying:

Lenders Look for Stable Income

  • Consistent employment over the past 2 years is preferred.
  • Gaps in employment or frequent job changes may require explanation.
  • Income from multiple jobs, side gigs, or self-employment may count, but documentation is critical.

Your Gross Monthly Income Determines Affordability

  • Lenders use your gross (pre-tax) income to calculate what you can afford.
  • Typically, they want your total monthly housing costs to stay below 28–31% of gross income.

Debt-to-Income (DTI) Ratio Matters

  • Your DTI ratio compares monthly debt payments (loans, credit cards, etc.) to gross monthly income.
  • Most lenders prefer a DTI below 43%, but lower is better for mortgage approval.

All Sources of Income Can Help

In addition to your salary, you may be able to include:

  • Bonuses or commissions (if consistent)
  • Part-time income
  • Alimony or child support (with documentation)
  • Rental income (if already established)
  • Retirement income, Social Security, or disability
  • Self-employment income (with tax returns)

Key Differences in Practice

Purpose

Whose Income Counts?

Mortgage loan eligibility

Only those applying for the loan

DTI ratio calculation

Only applicants’ income and debts

State or federal assistance programs      

Entire household income may be considered














Documentation Is Critical

     Expect to provide:

  • Pay stubs (typically 30 days’ worth)
  • W-2 forms (last 2 years)
  • Tax returns (if self-employed)
  • Bank statements (2–3 months)
  • Proof of other income (e.g., awards letters, legal documents)


Your credit score plays a major role in buying a home in North Carolina. It affects whether you qualify for a mortgage, the type of loan you can get, and the interest rate you’ll pay—potentially saving or costing you thousands over time. A higher score can make the approval process smoother and give you access to better financing options.

Check Your Current Credit Score

  • Most conventional loans require a score of 620+

  • A score of 740+ may qualify you for the best interest rates

  • Review your credit report for errors or negative marks that may be hurting your score

Ways to Check Your Credit Score

Through your bank or credit card

  • Many banks and credit card companies offer free credit scores through their website or app

Free credit score websites

  • Credit Karma

  • Credit Sesame

  • These provide estimates, which may differ from what lenders use

Get your FICO® score

  • Visit myFICO.com

  • This is the score most mortgage lenders use

  • May require a payment, but is the most accurate

Get Your Full Credit Report

  • Visit AnnualCreditReport.com

  • Free once a year from each of the three major credit bureaus: Equifax, Experian, and TransUnion

  • Reports do not include your score, but show all activity affecting your credit

Steps to Improve Your Credit Score

Pay bills on time

  • Payment history is the biggest factor in your credit score

  • Set up auto-pay or reminders to avoid missed payments

Pay down credit card balances

  • Keep your credit utilization below 30%, ideally under 10%

  • Paying off small balances first can reduce the number of accounts with debt

Don’t open new credit accounts

  • Avoid applying for new credit cards or loans before buying a home

  • Each hard inquiry can temporarily lower your score

Don’t close old accounts

  • Older accounts help your credit history

  • Keep them open and use them occasionally to maintain activity

Become an authorized user

  • Ask a family member with strong credit to add you as an authorized user

  • Their account history may help your score if the account is in good standing

Diversify your credit mix (if needed)

  • A mix of revolving credit (cards) and installment loans can help your score

  • Only consider taking a small personal loan if you can handle it responsibly

Request a credit limit increase

  • A higher limit can reduce your utilization rate

  • Only request this if you won’t be tempted to spend more

Settle any collections

  • Pay off or negotiate collection accounts

  • Request a “pay for delete” agreement to have the account removed from your credit report after payment

Use tools like Experian Boost

  • Add utility and phone bill payments to your credit history to potentially raise your score


Why Job Stability Matters

  • Lenders view stable employment as a sign of reliable income to support mortgage payments

  • Consistent income helps maintain a low debt-to-income (DTI) ratio and reduces risk to the lender

Employment History Requirements

  • Most lenders prefer at least two years in the same job or industry

  • Short employment gaps are usually acceptable, but long gaps (six months or more) may require you to be in your new job for several months before loan approval

Job Changes During the Loan Process

  • Changing jobs can be acceptable if the new position is in the same field and pays as much or more

  • Switching to commission, contract work, or self-employment during the mortgage process can complicate or delay approval due to unpredictable income

  • Some lenders may pause or reassess your application if you change jobs before closing

What Lenders Look For

  • Stable, predictable income (salaried positions are preferred)

  • Employment documentation, such as pay stubs, W-2s, offer letters, and tax returns

  • For new jobs, lenders may want to see the first pay stub before final loan approval

  • Contract or probationary roles may require a waiting period and additional documentation

Tips for Managing Job Stability When Buying a Home

  • Avoid major job changes during the loan process when possible

  • If you must change jobs, let your lender know right away

  • Stay within the same field or industry to show continuity

  • Wait until after you close on your home before making a switch, if timing allows

  • Work with a lender or mortgage broker familiar with local guidelines and programs

What It Debt-to-Income Ratio (DTI)

  • DTI compares your monthly debt payments to your gross monthly income

Why It Matters

  • Lenders use DTI to determine how much mortgage you can afford

  • A lower DTI means less financial risk for the lender

Acceptable DTI Limits

  • Most conventional loans allow a DTI up to 43%

  • FHA loans may allow up to 50% with strong credit and income

  • A DTI under 36% is generally preferred for better loan terms

What’s Included in DTI

  • Monthly debts: credit cards, car loans, student loans, personal loans

  • Projected mortgage payment: principal, interest, taxes, insurance (PITI)

  • Not included: utilities, phone bills, groceries

How to Improve Your DTI

  • Pay down existing debt

  • Avoid new loans or credit cards before buying

  • Increase income if possible through reliable sources

Tip

Know Your Total Monthly Income

  • Calculate your gross (pre-tax) and net (after-tax) income

  • Include all reliable sources: salary, side jobs, child support, etc.

Track Your Current Expenses

  • List monthly bills: rent, utilities, groceries, insurance, gas, subscriptions, etc.

  • Don’t forget irregular expenses like annual fees or car maintenance

Understand New Home Expenses

  • Your mortgage will include principal, interest, property taxes, and homeowner’s insurance (PITI)

  • Add HOA dues, utilities, maintenance, and repairs

  • Consider PMI (private mortgage insurance) if your down payment is under 20%

Stay Within Safe Limits

  • Housing costs should ideally stay under 28% of your gross monthly income

  • Total monthly debts (including mortgage) should stay under 36–43%

Plan for Savings and Emergencies

  • Set aside funds monthly for home repairs, medical costs, and job loss

  • Build a 3–6 month emergency fund before buying

Leave Room for Lifestyle

  • Your budget should still allow room for dining out, travel, hobbies, and unexpected costs

What a Down Payment Is

  • It's the upfront amount you pay toward the home's purchase price

  • The remainder is financed through a mortgage loan

Typical Down Payment Amounts

  • Conventional loans typically require 5%–20% down

  • FHA loans require a minimum of 3.5% down

  • VA and USDA loans may offer 0% down options for eligible buyers

Why Down Payments Matter

  • A larger down payment lowers your loan amount and monthly payments

  • Putting down 20% or more helps you avoid private mortgage insurance (PMI)

  • Larger down payments may qualify you for better interest rates

  • You start with more equity in the home, which offers stability if property values change

North Carolina Assistance Programs

  • Programs like the NC Home Advantage Mortgage offer down payment assistance

  • Aid may come in the form of grants or forgivable loans for eligible buyers

Using Gift Funds

  • You may use financial gifts from family, but you must provide a gift letter and follow your lender’s documentation requirements

How Much Should You Put Down?

  • The right amount depends on your savings, loan type, and long-term goals

  • 20% down avoids PMI and gives you stronger loan terms

  • Lower down payments let you buy sooner or keep cash available for other needs

Factors to Consider

  • Current savings: Make sure you still have emergency funds after the down payment

  • Debt-to-income ratio: A larger down payment can improve this ratio

  • Financial goals: Consider how much cash you want to keep for retirement, education, or investments

  • Market conditions: In competitive markets, larger down payments can strengthen your offer

Saving Tips

  • Set a savings target based on the type of loan you plan to use

  • Open a dedicated savings account with automatic contributions

  • Cut non-essential expenses to increase savings

  • Explore down payment assistance early in your planning

Don’t Forget Closing Costs

  • In addition to your down payment, plan for closing costs of 2%–5% of the home price

What Closing Costs Are

  • One-time fees paid at the end of the home buying process

  • Cover services like the attorney, lender, title company, and government filing

Typical Closing Cost Range

  • Usually 2% to 5% of the home’s purchase price

  • On a $300,000 home, expect to pay around $6,000 to $15,000

Common Buyer Closing Costs in NC

  • Attorney fees (required in NC real estate closings)

  • Lender fees (application, underwriting, credit report)

  • Appraisal and home inspection

  • Title search and title insurance

  • Recording fees and transfer taxes

  • Prepaid costs (property taxes, homeowners insurance, interest)

  • Escrow setup for taxes and insurance

Who Pays Closing Costs

  • Buyers and sellers both have closing costs, but buyers typically pay the majority of loan-related fees

  • In some cases, sellers may agree to contribute toward the buyer’s closing costs (negotiated in the offer)

Tips for Managing Closing Costs

  • Ask your lender for a Loan Estimate early in the process to see a cost breakdown

  • Shop around for services like title insurance or homeowners insurance to reduce costs

  • Consider down payment assistance programs, which sometimes help with closing costs

  • Request seller concessions to offset part of your out-of-pocket expenses 

Why Emergency Savings Matter

  • Homeownership comes with unexpected costs like repairs, maintenance, or job loss

  • Lenders don’t require it, but having emergency funds protects your financial stability after closing

How Much Should You Have Saved

  • Ideally, have 3 to 6 months’ worth of living expenses set aside

  • This should be in addition to your down payment and closing costs

What to Include in Emergency Funds

  • Mortgage payments (principal, interest, taxes, insurance)

  • Utilities and basic living expenses (food, gas, insurance, etc.)

  • Emergency repairs or temporary loss of income

Don’t Use All Your Savings at Closing

  • Keep a cash cushion after the home purchase to avoid financial strain

  • Avoid depleting retirement accounts or emergency funds to cover upfront homebuying costs

Tips for Building Emergency Savings

  • Set a target amount based on your monthly expenses

  • Open a separate savings account and automate contributions

  • Cut non-essential spending while preparing to buy a home

  • Use windfalls (tax refunds, bonuses) to grow your fund faster

Why Existing Debt Matters

  • Lenders evaluate your total monthly debt to assess your ability to manage a mortgage

  • High debt levels can reduce the amount you qualify to borrow

Types of Debt Lenders Consider

  • Credit card balances

  • Auto loans

  • Student loans

  • Personal loans

  • Any other monthly debt obligations reported to credit bureaus

Debt-to-Income Ratio (DTI)

  • Lenders calculate your DTI to compare your monthly debt payments to your gross income

  • Most loan programs prefer a DTI under 43%, though lower is better for approval and better loan terms

Paying Down Debt Can Help

  • Reduces your DTI, making it easier to qualify for a loan

  • May improve your credit score, resulting in better interest rates

  • Frees up room in your budget for homeownership costs

Avoid Taking on New Debt

  • Don’t open new credit cards or loans before or during the mortgage process

  • New accounts can increase your DTI and lower your credit score temporarily

Tips for Managing Debt Before Buying

  • Make consistent, on-time payments on all existing debts

  • Pay down high-interest balances first

  • Avoid co-signing for others

  • Don’t close old credit accounts, as it can reduce your credit history length

What Home Equity Is

  • Equity is the difference between your home’s current market value and what you still owe on the mortgage

  • For example, if your home is worth $300,000 and your mortgage balance is $200,000, your equity is $100,000

How Equity Can Be Used When Buying Another Home

  • Equity can be used as a down payment on your next home

  • It can also help pay closing costs, reduce your loan amount, or pay off debts to improve your debt-to-income ratio

Ways to Access Equity

  • Sell your current home and use the net proceeds after the mortgage is paid off

  • Apply for a HELOC (Home Equity Line of Credit) or a home equity loan, which allows you to borrow against your equity

  • Use a bridge loan to access funds short-term before your home sells (note: this often comes with higher interest and fees)

IMPORTANT: NC Does Not Have a Standard Sale Contingency

  • North Carolina real estate contracts do not include a standard contingency for selling your existing home first

  • This means you cannot automatically back out of a purchase if your current home doesn’t sell

  • If you need to sell your home before buying, you must work closely with your agent and possibly include a custom addendum—and understand sellers are not required to accept it

Timing Considerations

  • Consider whether to sell first, then buy, or arrange for a temporary housing solution between transactions

  • Coordinating simultaneous closings can be tricky and may require strong communication between agents and lenders

Impact on Financing

  • If your current home hasn’t sold, your existing mortgage will count in your debt-to-income ratio

  • Borrowing against your equity with a HELOC or bridge loan also increases your monthly debt obligations

Tips

  • Get a market estimate of your current home’s value to calculate equity

  • Talk to a lender about financing options if your home hasn’t sold yet

  • Avoid using all of your equity—reserve funds for moving costs, temporary housing, or unexpected repairs

What Are Considered "Other Assets"

  • Bank savings and checking accounts

  • Investment accounts (stocks, bonds, mutual funds)

  • Retirement accounts (IRA, 401(k), pension)

  • Real estate or valuable personal property (vehicles, collectibles, etc.)

  • Business ownership or other income-generating assets

Why Other Assets Matter

  • Lenders may review these to assess your financial stability beyond income

  • Strong assets can improve loan approval chances, especially if your credit or income is borderline

  • Some assets can be used for your down payment, closing costs, or reserves

Using Other Assets to Qualify

  • Liquid assets (cash or quickly convertible investments) can be used for upfront costs

  • Retirement assets typically can’t be used unless withdrawn, which may have tax or penalty consequences

  • Assets can be listed as reserves, showing lenders you can cover future mortgage payments if needed

Asset Documentation Requirements

  • You’ll need to provide recent statements for any accounts being used or disclosed

  • Lenders will look for large recent deposits and may require explanations or supporting documents

Gifted or Sold Assets

  • If using money from a gift or sale (like a vehicle or stock), provide documentation

  • Gifts require a gift letter confirming the funds are not a loan

  • Sales require a bill of sale or proof of deposit to verify the origin of funds

Tips

  • Organize your asset documents early in the process

  • Don’t move large amounts between accounts without a clear paper trail

  • Ask your lender which assets can help strengthen your application

If you plan to finance your home purchase, take time to shop around and compare mortgage offers from various lenders—such as banks, credit unions, and mortgage brokers—to secure the best interest rates and terms. Getting pre-approved before you start house hunting can help you clarify your budget and strengthen your offer. Ask about different loan types (including conventional, FHA, VA, or USDA) and be sure you understand the down payment requirements, closing costs, and how long your interest rate will be locked in. Always review the fine print carefully, and don’t hesitate to ask questions before committing to a loan.

Common Mortgage Types

Conventional Loans

  • Not backed by the government

  • Typically require 5%–20% down

  • Good credit required (usually 620+ minimum)

  • Avoid PMI with 20% down

FHA Loans

  • Backed by the Federal Housing Administration

  • Minimum down payment of 3.5%

  • More flexible credit requirements

  • Includes mortgage insurance (MIP), even with 20% down

VA Loans

  • For eligible veterans, active-duty service members, and some spouses

  • 0% down payment required

  • No mortgage insurance

  • Must meet service eligibility requirements

USDA Loans

  • For buyers in eligible rural and suburban areas

  • 0% down payment required

  • Income limits apply

  • Must buy in an approved location

Fixed vs. Adjustable-Rate Mortgages

Fixed-Rate Mortgage (FRM)

  • Interest rate stays the same for the life of the loan

  • Predictable monthly payments

  • Common terms: 15, 20, or 30 years

Adjustable-Rate Mortgage (ARM)

  • Starts with a lower fixed rate for a set time, then adjusts periodically

  • Risk of rising payments over time

  • May be useful for short-term ownership plans

First-Time Buyer Programs in NC

  • NC Home Advantage Mortgage offers down payment assistance and favorable terms

  • Available to first-time and some move-up buyers

  • Income and purchase price limits apply

Choosing the Right Loan

  • Consider your credit score, down payment ability, and long-term plans

  • Get pre-approved to see what you qualify for

  • Compare monthly payments, total costs, and interest over time

Tips

  • Talk to a local lender or mortgage broker familiar with NC programs

  • Shop multiple lenders to compare rates and fees

  • Ask about closing costs, rate lock options, and prepayment penalties

Pre-approval is a letter from a lender that says how much they’re willing to let you borrow to buy a home. It’s based on a full review of your income, credit, debts, and job history.

  • Shows sellers you're serious about buying

  • Helps you know your price range

  • Makes your offer stronger compared to buyers who aren’t pre-approved

  • Speeds up the loan process once you find a home

  • Check Your Credit Score

    • Most lenders require a score of at least 620 (higher scores get better rates).

  • Gather Your Financial Documents

    • Pay stubs (last 30 days)

    • W-2s or 1099s (last 2 years)

    • Tax returns (last 2 years)

    • Bank statements (last 2–3 months)

    • ID (driver’s license or passport)

    • List of monthly debts (credit cards, loans, etc.)

  • Choose a Lender

    • Pick a bank, credit union, or mortgage company

    • You can apply with more than one to compare offers

  • Apply for Pre-Approval

    • Complete a loan application

    • The lender will check your credit and review your finances

  • Receive Your Pre-Approval Letter

    • This shows the maximum loan amount you qualify for

    • It’s usually valid for 60 to 90 days

  • If you qualify, the lender issues a pre-approval letter stating the loan amount you’re approved for.

  • The letter is typically valid for 60–90 days.

  • A pre-approval letter strengthens your offer when bidding on a home.

  • Include a copy of the letter when submitting an offer to purchase.

  • Use the pre-approved amount as a guide during your home search—stick to homes within your approved price range.

  • If your pre-approval expires, ask your lender to update it.

  • Ask the Lender Why You Were Denied

    • It could be due to credit score, high debt, income issues, or missing documents.

  • Check Your Credit Report

  • Work on Improving Your Credit Score

    • Pay bills on time

    • Pay down credit card balances

    • Avoid new debt

  • Reduce Your Debt

    • Lenders often want your debt-to-income ratio (DTI) below 43%.

  • Increase Your Income (if possible)

    • Overtime, side jobs, or co-signers can sometimes help.

  • Build a Stronger Savings

    • A larger down payment or cash reserves can improve your approval odds.

  • Consider a Co-Borrower or Co-Signer

    • Someone with stronger credit or income may help you qualify.

  • Talk to a Housing Counselor

    • HUD-approved counselors can help you make a plan for free.

  • Reapply When Ready

    • Once you've addressed the issue(s), try again with the same or a different lender.

    • When purchasing a home, a need is something essential you must have for your home to function for your lifestyle—like enough bedrooms for your family, a safe neighborhood, or proximity to work or school. Without it, the home wouldn’t meet your basic living requirements.

    A want is something you’d like to have, but it’s not critical—like hardwood floors, a large backyard, or a kitchen island. These features add comfort or style but aren’t required for the home to meet your essential needs.

    Understanding the difference helps you prioritize what matters most and make smarter decisions within your budget.


    Plan for Long-Term Needs

    • Think beyond your immediate situation—consider how your needs might change in 5–10 years

    • Ask yourself if you plan to grow your family, change careers, or work from home long-term

    Avoid Outgrowing the Home Too Soon

    • A home that fits today might feel cramped later if your household expands or your lifestyle shifts

    • Buying with the future in mind can reduce the need to move again in a few years

    Evaluate Location for Future Convenience

    • Choose an area that supports both your current routines and possible future needs (schools, commute, healthcare, etc.)

    Consider Long-Term Use or Resale Value

    • If you plan to live in the home long-term, think about how easy it will be to maintain and whether it will remain comfortable as your needs change over time

    • If you expect to sell in the future, choose a home with features and layout that are likely to appeal to a broad range of buyers

    Tips

    • Make a list of your lifestyle needs now vs. what may change in the future

    • Talk with your real estate agent about homes and neighborhoods that offer flexibility for both

    Location

    • Need: Proximity to work, school, family, or essential services

    • Want: Specific neighborhood, walkability, or scenic views

    Home Size & Layout

    • Need: Minimum number of bedrooms and bathrooms

    • Need: Adequate square footage for your household

    • Want: Open floor plan, bonus room, home office, or finished basement

    School District

    • Need: Top priority if you have or plan to have children

    • Want: Desire to be in a highly ranked or specific school district

    Commute & Transportation

    • Need: Manageable commute to work or school

    • Want: Easy access to highways, public transportation, or bike trails

    Safety & Neighborhood

    • Need: Low-crime area, safe for your family

    • Want: HOA amenities, community events, or new development

    Home Features

    • Need: Central heating and air, functioning roof and foundation, good natural light

    • Want: Hardwood floors, fireplace, high ceilings, smart home features

    Kitchen & Bathrooms

    • Need: Enough bathrooms for household size, fully functioning kitchen

    • Want: Granite countertops, updated fixtures, double vanities

    Outdoor Space

    • Need: Yard for kids, pets, or gardening

    • Want: Large lot, privacy fence, pool, or outdoor kitchen

    Garage, Storage & Parking

    • Need: Enough parking or storage for vehicles and belongings

    • Want: 2- or 3-car garage, attic storage, workshop space

    Condition of the Home

    • Need: Structurally sound, move-in ready (unless you’re budgeting for repairs)

    • Want: Recently renovated, like-new finishes

    Future Flexibility

    • Need: Ability to grow into the home or age in place

    • Want: Space to build an addition or potential for resale value

    When buying a home in North Carolina, you’re not required to use a real estate agent, but it’s often a smart choice. An experienced agent can help you find the right property, negotiate terms, handle paperwork, and guide you through the legal steps—often at no direct cost to you, since the seller typically pays the buyer’s agent commission.

    Below are some common services a real estate agent
    may provide when buying a home

  • Help you understand the home buying process and required disclosures

  • Assist with getting pre-approved by recommending lenders

  • Search for homes that meet your needs and budget

  • Schedule and coordinate property showings

  • Provide information on neighborhoods, schools, and market trends

  • Prepare and submit offers using state-approved contracts

  • Negotiate price, terms, and repair requests on your behalf

  • Guide you through the due diligence period

  • Coordinate with the seller, attorney, and lender throughout the transaction

  • Monitor contract deadlines and required documentation

  • Attend final walk-through and closing

  • Answer questions and provide guidance from offer to closing

    • Pros of Using a Real Estate Agent
    Expert Knowledge

    • Familiar with NC-specific laws, procedures, and required documents

    • Guides you through the due diligence period, disclosures, inspections, and closing process

    Access to Listings

    • Provides access to the Multiple Listing Service (MLS), which offers the most up-to-date and complete property information

    Negotiation Skills

    • Helps negotiate price, repairs, closing costs, and contract terms

    • Can present your offer in a professional and strategic way

    Transaction Coordination

    • Manages timelines, paperwork, and communication with the seller’s agent, lender, attorney, and inspectors

    My Not be a Direct Cost to Buyer

    • In most cases, the seller pays the commission for both the buyer’s and seller’s agents

    • You receive representation without paying out-of-pocket

    Local Market Insight

    • Understands neighborhood trends, pricing, and potential resale value

    • Helps you avoid overpaying or making emotional decisions

    Cons of Using a Real Estate Agent
    Less Direct Control

    • You rely on your agent for communication, scheduling, and offer submission

    • Some buyers prefer to handle negotiations and research independently

    Agent Quality Varies

    • Not all agents are equally skilled or responsive—choosing the wrong one can lead to frustration

    • An inexperienced or inattentive agent could miss details or slow down your progress

    Limited Commission Flexibility

    • If you’re buying directly from a seller without an agent, you might have room to negotiate the price lower without paying buyer-agent commission

    • Some for-sale-by-owner (FSBO) sellers may be hesitant to work with buyer agents due to commission costs

    Buyers with experience in real estate transactions, strong negotiation skills, and a solid understanding of North Carolina’s contracts and legal requirements may benefit from self-representation. This approach is best suited for those confident in handling showings, paperwork, disclosures, and deadlines on their own—but even in these cases, working with a real estate attorney is still strongly recommended to ensure legal compliance and protect your interests.

    Pros of Self-Representation

    Direct Control

    • You manage the entire process—from searching for homes to submitting offers and negotiating terms

    • You control communication with sellers or their agents

    Potential Savings

    • Some sellers may be willing to negotiate a lower price if they don’t have to pay a buyer’s agent commission

    • You may reduce overall transaction costs if the seller is also unrepresented

    Flexible Pace

    • You can search, tour, and submit offers on your own schedule without depending on an agent’s availability

    Cons of Self-Representation
    Limited Knowledge of NC Real Estate Laws

    • North Carolina has unique rules, such as the due diligence period, attorney closings, and nonstandard contingencies

    • Without an agent, you’re fully responsible for understanding and managing these legal and contractual obligations

    Risk of Costly Mistakes

    • Errors in contract terms, inspections, or timelines can result in financial loss or losing the home

    • You may overlook required disclosures or fail to negotiate effectively

    More Time and Effort

    • You’ll need to search listings, schedule showings, research values, and coordinate inspections and closing tasks yourself

    • You’ll also need to understand the Offer to Purchase and Contract (Form 2-T) used in NC transactions

    No Professional Advocacy

    • You won’t have someone negotiating on your behalf or identifying red flags

    • You may be at a disadvantage when dealing with experienced listing agents or sellers

    Summary
    Self-representation gives you full control and may save you money, but it requires a solid understanding of NC real estate law, contracts, and the home buying process. For most buyers, the risks and workload outweigh the savings—especially since buyer agents are typically paid by the seller.

    ** IMPORTANT INFORMATION **

    What to Know as an Unrepresented Buyer in North Carolina

    You Are Fully Responsible for Protecting Your Own Interests

    • Without a buyer’s agent, you must handle all aspects of the transaction yourself—property research, scheduling, offer writing, negotiations, inspections, disclosures, and closing coordination
    • No one is legally obligated to advocate for your best interests unless you hire them directly (such as an attorney)

    Written Buyer Agreements Are Required to Tour Homes

    A property showing agreement is a short, written contract between a real estate agent and a potential homebuyer that allows the agent to show properties to the buyer. It outlines the limited scope of the relationship—typically covering one or a few showings—and may include terms such as the duration of the agreement, the specific properties being shown, and how the agent will be compensated if the buyer later purchases a property they viewed.

    • As of August 2024, North Carolina real estate agents must have a written buyer agreement in place before showing any property.

    • This rule applies even if the buyer does not plan to hire a full-service agent.

    • Buyers can choose from different types of agreements, such as:

      • Property Showing Agreement – limited in scope and usually non-exclusive.

      • Exclusive Buyer Agency Agreement – a broader agreement giving the agent full representation throughout the home search and purchase process.

    • Agreements can be non-exclusive or exclusive, but must be signed before touring any homes.

    North Carolina Is a “Buyer Beware” State

    • North Carolina follows the legal rule of “caveat emptor” (let the buyer beware)
    • Sellers are required to provide a Residential Property Disclosure form but may legally select “No Representation” on most items
    • If a seller chooses not to disclose or omits a defect, it is your responsibility to uncover it during the due diligence period
    • After closing, you typically cannot hold the seller liable for undiscovered issues unless you can prove they committed fraud or intentionally hid the problem

    North Carolina Is an Attorney Closing State

    • Real estate closings in NC are handled by a licensed North Carolina attorney, not a title company
    • The attorney typically represents the transaction, not either party individually
    • If you want independent legal advice, especially as an unrepresented buyer, you must hire your own attorney
    • The closing attorney will prepare documents, handle title work, record the deed, and disburse funds

    The Listing Agent Represents the Seller

    • If you tour a home through the listing agent, they are working exclusively for the seller
    • They are obligated to treat you fairly but are not allowed to give you advice or advocate for your interests
    • You’ll be asked to sign a Working With Real Estate Agents Disclosure acknowledging that you are unrepresented

    You Must Coordinate All Key Services

    As an unrepresented buyer, you are responsible for hiring and managing:

    ·         Home inspector

    ·         Lender (if financing)

    ·         Closing attorney

    ·         Appraiser, insurance provider, and any needed repair contractors

    You must also manage your timeline for the due diligence period, deposit delivery, and closing

    Tips for Unrepresented Buyers

    • Get a licensed home inspection during the due diligence period
    • Do not rely solely on seller disclosures—conduct your own investigation
    • Hire a real estate attorney early to help review offers and protect your interests
    • Document all terms and conversations in writing
    • Know that once the due diligence period ends, backing out typically means losing your earnest money deposit

    In North Carolina, most services that involve advice, negotiation, or representation require a written agency agreement (per NCREC rules). However, there are a few limited, à la carte services that a real estate agent can legally offer without entering into an agency relationship.

    Below is a list of services offered by a real estate agent, with a breakdown of which ones require a written agency agreement and which do not

    Services That Do NOT Require an Agency Agreement

    Provide general information about the home buying process

    • Explaining typical steps, timelines, and legal requirements without offering specific advice

    Share public property information

    • Offering MLS listing data, tax records, deed history, or zoning information

    Host an open house or provide access to listing materials

    • Answering general questions without advocating for either party

    Provide a Comparative Market Analysis (CMA)

    • Offering an informal opinion of value, clearly marked as not an appraisal

    Make professional referrals

    • Recommending attorneys, lenders, inspectors, or other service providers

    Distribute printed or digital marketing materials

    • Handing out brochures, listing sheets, or neighborhood information

    Use a property showing agreement (Form 202)

    • Allows limited property access without forming a full buyer agency relationship

    Services That DO Require a Written Agency Agreement

    Prepare and submit an offer to purchase

    • Drafting and presenting offers using NC-approved contracts

    Advise on offer terms, pricing, or negotiation strategy

    • Includes due diligence fees, earnest money, and counteroffers

    Negotiate repairs or contract adjustments

    • During the due diligence period or after inspections

    Coordinate inspections, financing, and closing details

    • Communicating with attorneys, lenders, and listing agents

    Disclose material facts on the buyer’s behalf

    • A legal duty of agents under agency law

    Represent the buyer’s interests throughout the transaction

    • Includes loyalty, confidentiality, and full fiduciary responsibility

    Choosing the right home is one of the most important decisions—and most expensive purchases—you will ever make, so it’s essential to find one that not only fits your budget but also aligns with your lifestyle, priorities, and long-term goals. Below are some key points to consider:

    Location

    • Proximity to work, school, family, or essential services

    • Quality of school districts (if applicable)

    • Crime rates, neighborhood safety, and future development plans

    • Walkability, traffic, and commute times

    Budget and Affordability

    • Stay within your pre-approved loan amount or target budget

    • Account for total monthly costs: mortgage, taxes, insurance, HOA dues, and utilities

    • Leave room in your budget for maintenance and emergency savings

    Home Size and Layout

    • Number of bedrooms and bathrooms needed for your household

    • Total square footage and functional layout

    • Room for growth, storage, or future flexibility

    Condition and Age of the Home

    • Age of roof, HVAC, plumbing, and electrical systems

    • Renovation history or need for repairs or updates

    • Potential costs for maintenance or upgrades

    Features and Amenities

    • Must-have features (garage, yard, laundry, etc.)

    • Energy efficiency, natural light, smart home features

    • Extras like a home office, bonus room, or outdoor space

    Neighborhood and Surroundings

    • Community feel and appearance of surrounding homes

    • HOA rules and fees (if applicable)

    • Access to parks, shops, medical care, and recreation

    Resale Potential

    • Desirable location and features that appeal to future buyers

    • Flexibility for changing needs (room additions, aging in place, etc.)

    • Signs of stable or growing home values in the area

    Property Taxes and Insurance

    • Research annual tax amounts and how they vary by county or city

    • Check if the home is in a flood zone or requires additional insurance

    Zoning, Restrictions, and Future Plans

    • Local zoning rules that may affect renovations, rentals, or additions

    • Nearby development plans that could impact property value or traffic

    Using online resources is a convenient way to browse homes for sale, compare prices, and explore neighborhoods from anywhere. Websites like Zillow, Realtor.com, and Redfin allow you to filter search results by location, price, size, and features—making it easier to narrow down options before scheduling in-person showings. However, for the most accurate and up-to-date listings, working with a real estate agent who has access to the MLS is highly recommended. Below is a list of some of the online resources available to help assist you in your search.

    Multiple Listing Service (MLS)

    • The most accurate and comprehensive source of homes for sale

    • Only accessible through a licensed real estate agent

    • Agents can set up customized alerts and provide details not available on public platforms

    Zillow.com

    • One of the most popular home search sites

    • Offers filters for price, location, features, and mortgage estimates

    • Includes public and agent-listed properties, though some data may be delayed

    Realtor.com

    • Pulled directly from MLS data, often more accurate and timely than other public sites

    • Provides detailed property info, price history, and neighborhood insights

    Redfin.com

    • Offers real-time listing updates in many markets

    • Easy-to-use interface with walk score, school ratings, and pricing trends

    Trulia.com

    • Owned by Zillow, focuses on neighborhood insights

    • Includes maps of crime rates, schools, and local amenities

    Homes.com

    • Broad search options with agent contact tools

    • Offers buyer tips and home value estimators

    Movoto.com

    • User-friendly interface for browsing homes

    • Allows you to filter by lifestyle preferences and map features

    RealtyTrac.com

    • Useful for searching foreclosures, bank-owned, and auction properties

    • Helpful for investors or bargain-hunters

    HomeFinder.com

    • Search homes for sale, new construction, and rentals

    • Includes FSBO and agent-listed properties

    Facebook Marketplace & Local Real Estate Groups

    • Some homeowners and agents list properties directly

    • Good for finding off-market or FSBO opportunities

    A Loan Pre-Approval Letter is a document from a mortgage lender stating that you’ve been conditionally approved to borrow a specific amount to purchase a home. It’s based on a review of your credit, income, assets, and debts. This letter shows sellers that you’re a serious and financially qualified buyer.

    What’s Included in a Pre-Approval Letter

    Your name

    • Identifies you as the approved buyer

    Loan amount

    • The maximum amount the lender is willing to loan

    Loan type

    • Conventional, FHA, VA, or USDA

    Down payment amount or percentage

    • May include how much you plan to put down or what’s required

    Interest rate (optional or estimated)

    • Sometimes included, but not always locked in at this stage

    Expiration date

    • Typically valid for 60 to 90 days

    Lender’s name and contact information

    • Includes the loan officer’s name, company, and contact details

    Conditions and disclaimers

    • States that final approval depends on verification of income, employment, credit, and appraisal

    What is a Property Showing Agreement and Why Do I Need One?

    A Property Showing Agreement is a short, written contract between a real estate agent and a potential homebuyer that allows the agent to show you one or more homes. It does not establish full buyer agency, but it does meet the legal requirement for a written agreement before touring a property.

    Why do I need one?

    • As of August 2024, North Carolina agents must have a signed agreement before showing any property, even for a single showing.

    • You would only need this agreement if you’re requesting to tour a home and do not already have a signed Buyer Agency Agreement with a real estate agent.

    • This agreement can be non-exclusive and limited in scope, typically covering just one property or a short time period.

    • It protects both you and the agent by clearly outlining the limited nature of the relationship and any compensation expectations.

    • It ensures compliance with new MLS and REALTOR® rules while still giving you flexibility if you’re not ready to commit to a full-service agent.


    A Buyer Agency Agreement (Form 201) is a written contract between you and a real estate agent that gives the agent the legal right to represent you in the purchase of a home. It outlines the scope of the agent’s services, their responsibilities to you, and how they will be compensated.

    When would I need one?

    • You’ll need to sign a Buyer Agency Agreement before your agent can write and submit an offer on your behalf.

    • If you want full representation—help with property searches, negotiations, contracts, inspections, and closing—you’ll need this agreement in place.

    • In many cases, buyers sign this agreement early in the home search process so the agent can represent them fully from start to finish.

    Why would I need one?

    • It legally binds the agent to act in your best interest, with duties of loyalty, confidentiality, and full disclosure.

    • It clarifies expectations, including how the agent will be paid (usually by the seller, not you).

    • It gives you access to professional guidance throughout the entire home-buying process, including negotiation, contract terms, and legal deadlines.

    The Residential Property and Owners’ Association Disclosure Statement is a required form in North Carolina that the seller must complete to disclose known information about the condition of the home and, if applicable, any homeowners association (HOA). It helps buyers understand the property's condition before making an offer.

    Where would I see one?

    • You will usually receive this form before or at the time you make an offer on a home.

    • It may also be uploaded to the MLS listing or shared during showings.
    • In North Carolina, the seller must provide the Residential Property and Owners’ Association Disclosure Statement to the buyer no later than the time the buyer makes an offer
    • If the seller fails to deliver this disclosure in time, the buyer has the right to rescind the offer or contract within three calendar days of receiving it or entering the purchase agreement

    Why is this document important?

    • It gives you insight into known issues with the structure, systems, appliances, and other aspects of the home.

    • If the property is in a neighborhood with an HOA, it discloses rules, dues, and restrictions you’ll be expected to follow.

    • It allows you to make an informed decision and may guide your due diligence inspections or negotiations.

    • Do Sellers Have to Answer Questions on the Residential Property and Owners’ Association Disclosure Statement?

      Yes, sellers must respond to every question on the form

    • Each item must be answered with "Yes," "No," or "No Representation"

    Sellers are not required to disclose known problems

    • They may legally choose "No Representation," even if they are aware of an issue

    • This option allows the seller to avoid confirming or denying the condition of specific items

    If a seller answers “Yes” to any question, they must provide additional detail

    • An explanation is required, and they may attach supporting documents like inspection reports

    The form must be completed based on the seller’s actual knowledge

    • Sellers are not required to investigate or hire professionals to complete the form

    Choosing "No Representation" limits the seller’s liability

    • However, knowingly giving false or misleading answers may still result in legal consequences

    A Mineral and Oil and Gas Rights Disclosure (Form 47) is a mandatory disclosure form in North Carolina that informs the buyer whether the seller is conveying or retaining any mineral, oil, gas rights with the property.

    Why this Document is Important?
    • It covers rights such as coal, oil, gas, precious minerals, or similar below-ground resources that may not transfer with the land.

    • Ownership of these rights can affect your control over the property—reserved rights may allow future extraction operations even if you're the surface owner.

    • Knowing whether these rights are included helps you understand any potential limitations or liabilities.

    When would I see this Document?

    • You will usually receive this disclosure before or at the time you make an offer on a home.

    • It may also be uploaded to the MLS listing or shared during showings.
    • In North Carolina, the seller must provide the Mineral and Oil and Gas Disclosure to the
      buyer no later than the time the buyer makes an offer
    • If the seller fails to deliver this disclosure in time, the buyer has the right to rescind the offer or contract within three calendar days of receiving it or entering the purchase agreement

    The Offer to Purchase and Contract (Form 2-T) is the standard residential real estate contract used in North Carolina for most home purchases. It’s a legally binding agreement between the buyer and seller that outlines the terms, conditions, and responsibilities of both parties during the transaction.

    Not everyone is required to use Form 2-T but it is the most commonly used residential purchase contract in North Carolina, especially when real estate agents are involved.

    What’s included in Form 2-T

    Purchase price and financing terms

    • Details the full offer amount, how the buyer will pay, and whether financing is involved

    Due diligence period and fees

    • Defines how long the buyer has to inspect the property, negotiate repairs, or cancel

    • Includes any non-refundable due diligence fee paid to the seller

    Earnest money deposit

    • Funds held in escrow to show the buyer’s serious intent to purchase

    Closing date and settlement terms

    • Specifies the date by which the transaction must be completed

    Seller representations and disclosures

    • Covers property condition, title, and known issues

    Repair negotiations

    • Outlines how repairs or concessions will be addressed during due diligence

    Contingencies and default terms

    • Explains what happens if either party fails to meet their obligations

    Attorney and title involvement

    • Reflects North Carolina’s requirement that closings be handled by a licensed attorney

    The Due Diligence Request and Agreement (Form 310-T) is a standard North Carolina form used when a buyer wants to request repairs, credits, or other concessions from the seller during the due diligence period. This form is most commonly used after inspections or other evaluations reveal issues the buyer would like addressed before moving forward.

    This form is only available to licensed real estate agents who are members of NC REALTORS®. Buyers cannot access it directly but can receive it through their agent as part of the transaction process.

    What the Form Includes

    Requested repairs or actions

    • A detailed list of repairs or specific issues the buyer wants the seller to address

    Credits or price reductions

    • The buyer may request a financial credit or price reduction instead of physical repairs

    Deadline for response

    • The form includes a section for the seller to respond and accept, reject, or counter the request

    Signature section for both parties

    • The agreement becomes binding only if both the buyer and seller sign

    Why it's important

    • It creates a clear, written record of what the buyer is requesting

    • It helps both parties negotiate and document any changes before the end of the due diligence period

    • If no agreement is reached, the buyer still has the option to walk away before the due diligence deadline without penalty

    A Closing Disclosure is a detailed, five-page document that outlines the final terms of your mortgage loan and all closing costs associated with the purchase of your home. It shows exactly how much you’ll pay at closing and where every dollar is going.

    Who Provides It and When?

    Your lender provides the Closing Disclosure

    • It is prepared by your mortgage lender (not your real estate agent or attorney)

    You must receive it at least three business days before closing

    • This waiting period gives you time to review the terms, ask questions, and resolve any errors before signing

    Who Provides It and When?

    Your lender provides the Closing Disclosure

    • It is prepared by your mortgage lender (not your real estate agent or attorney)

    You must receive it at least three business days before closing

    • This waiting period gives you time to review the terms, ask questions, and resolve any errors before signing

    What’s Included on the Closing Disclosure

    Loan terms

    • Final loan amount, interest rate, monthly payments, and prepayment penalties (if any)

    Closing costs

    • Detailed breakdown of loan fees, title charges, taxes, and prepaid expenses

    Cash to close

    • The exact amount you’ll need to bring to closing

    Payment schedule and total loan costs over time

    • Helps you see how much you’ll pay in interest and principal over the life of the loan

    A Settlement Statement is a detailed breakdown of all the financial transactions involved in closing on a home. It lists the purchase price, loan amounts, deposits, fees, credits, and how much money is due from or to each party. The most common versions are the ALTA Settlement Statement and, in certain cases, the older HUD-1 form.

    Who Provides It and When?

    The closing attorney or settlement agent provides the Settlement Statement

    • In North Carolina, an attorney usually handles the closing and prepares this document.

    You’ll receive it just before or on the day of closing

    • It is reviewed at the closing table alongside the Closing Disclosure to confirm all final figures.

    What’s Included on the Settlement Statement

    Buyer and seller transaction details

    • Purchase price, deposits, loan amounts, and seller proceeds

    Itemized closing costs

    • Attorney fees, title charges, escrow adjustments, HOA dues, taxes, etc.

    Prorated amounts

    • Splits costs like property taxes or HOA fees between buyer and seller

    Final cash to close

    • The exact amount the buyer needs to pay or bring to closing

    Below is a list of other documents a buyer may see during a real estate transaction in North Carolina:

    Home Inspection Report

    • Provided by the inspector you hire; details the condition of the home, including any defects or safety concerns

    Wood-Destroying Insect Report (Pest Inspection)

    • Required by some lenders; identifies signs of termites or other wood-damaging pests

    Septic System Inspection Report (if applicable)

    • Verifies the condition and functionality of the septic system

    Survey or Plot Plan

    • Shows property boundaries, easements, and structures; often recommended but not always required

    Title Commitment or Title Search Report

    • Issued by the closing attorney; confirms legal ownership and identifies any liens or claims on the property

    Homeowners Association (HOA) Documents (if applicable)

    • Includes bylaws, rules, fees, meeting minutes, and financials

    Appraisal Report

    • Ordered by your lender; provides an opinion of the property's value to confirm it supports the loan amount

    Loan Estimate (LE)

    • Given early in the process by your lender; outlines estimated loan terms and closing costs

    Proof of Homeowners Insurance

    • Required before closing; shows the home is insured as a condition of your loan

    Repair Agreements or Addenda

    • Documents any agreed-upon repairs or seller credits negotiated during due diligence

    Final Walkthrough Checklist

    • Used by the buyer to confirm the home's condition before closing

    Closing Disclosure (by lender 3 bus. days before closing)