If you’re planning a move to Raleigh, North Carolina, you’re already here living in a rental, or you are thinking of purchasing another home, today’s information is for you. I am going to give you some secret hacks that will allow you to buy your dream home and pay way less money for it than you would expect. We’re also going to give you a secret hack that we used to buy our current home last year. It’s our favorite!
The first secret hack is an interest rate buy down. So, what is an interest rate buy down? Well, it’s where the seller pays to reduce the interest rate that you will have on your future home. So, a 2-1 buy down would be that in the first year your interest rate is 2% less than what it currently would be, second year your interest rate is 1% less, and then the third year it resets back to that normal level. In today’s numbers, let’s say your interest rate is 7%, so your first year with a 2-1 buy down, first year you’re going to only pay 5% interest, second year 6%, and the third year 7%. Hopefully, interest rates are- going to go down in the next three years, so you may be able to refinance at no penalty into an even lower rate or a permanent rate of, for example, 5%. This is something that’s going to make it much easier for you to be able to afford your future home, saving you hundreds of dollars per month.
So, where does this work well? One great place it works is new construction. Builders sometimes do incentives, and sometimes they don’t. This is where a good agent, like our team, comes into play because they can identify the builders that may have some incentives or are willing to offer incentives. Let’s get back to the interest rate buy down. This works well with builders that have standing inventory, meaning the home has been finished or very close to being finished, and the builder has a lot of carrying costs on that property. Another scenario is when they’re wanting to juice up a neighborhood, meaning they’re wanting to get sales going in.
Can an interest rate buy down be used for resale? Yes, it can, and we recommend having your buyer agent ask for this incentive from a home that’s been on the market anywhere between 15 and 75 days. The whole idea behind the seller paying for your closing costs, and really having the seller do the interest rate buy down, is to keep more money in your pocket. Preferably, you want to go to that closing table owing nothing, paying nothing out of your pocket, because you’ve got furniture to buy, moving expenses, all the way down to restocking your pantry, especially if you’re moving across the country. All these things cost you money, and there may be improvements you want to make in the home. When offloading those expenses onto the seller, that’s more money for you to be able to spend on all those things you need to buy when you move into the home.
Another hack is asking for appliances. In North Carolina and in most states, the stove, the microwave, and the dishwasher stay with the house; they’re fixed to the house. But the refrigerator, the washer, and the dryer are personal property of the seller. You can ask the builder for these appliances at no cost to you and have them installed in the house at the time of closing. On the resale side, you can ask for those appliances too. It never hurts, even when you have a home that’s been on the market a day or two, or an hour or two, and you’re making a strong offer to that seller.
The last secret hack is really our favorite: Buy the Ugly Duckling. An ugly duckling is a home that maybe has ugly colors, ugly wallpaper, ugly countertops, or dated cabinets in the kitchen or the bathrooms, or both. It’s a great opportunity for you to buy a great house that maybe needs some cosmetic stuff and pay much less than you would pay if this was a model home. Don’t be afraid of the ugly ducklings! We can help you make that happen and turn it into your dream home if it has good bones.
If you’re considering a move either into or out of the Raleigh area, our real estate team and I would be most honored to be your agents of choice. You can email us at [email protected], or give us a call, 919-964-0474. We’ll be happy to help get things started for you.