When making a decision on whether or not to buy a home, the most important step is to be informed. There are many different mortgages available and real estate prices vary, sometimes widely, from area to area. North Carolina has been growing at a steady rate and offers an abundance of choices when it comes to purchasing a home including fixed and adjustable rate mortgages, as well as first time home buyers' programs.
North Carolina Real Estate Prices
At the moment, the average home cost in North Carolina is on par with the national averages, being slightly higher with a difference of less than one percent. Changes have been occurring over the last few years, however, and the trend seems to be pushing the prices of homes in North Carolina higher and appreciating at rates well above the national average. Certain locations seem to be affected more than others and listed are a few of the most popular.
Popular Destinations in N.C.
- The Triangle area: The Research Triangle, in the Piedmont of NC, consists of the Capital City of Raleigh, Durham and Chapel Hill. It is home to several major universities including NC State, University of NC, Duke University and Shaw University, and is well known for it's research park, housing companies such as IBM, SAS and Nortel, as well as it's medical centers. These institutions play a major role in the population growth of the region with significant increases in employment and earnings projected over the next several years. These opportunities, along with its mild climate and high quality of life, are the main reason the area is consistently ranked on numerous "top ten" lists of places to live. Because of the influx of people into the Triangle, home prices are rising, especially inside the city limits.
- North Carolina's coastal region: While specializing in luxury housing, the North Carolina coast is another region that is experiencing population growth. Supported by the fishing industry and tourism, the weather and leisure activities are a big draw. The area is also home to the Camp Lejeune Marine base and a major film studio in Wilmington.
- Metropolitan Charlotte area: Charlotte is the largest city in North Carolina and the 18th largest in the United States and is located half way between the Appalachian Mountains and the Atlantic Ocean. Charlotte has also been named as one of the best cities to live in the country due to its business opportunities, climate and culture. Because of its reliance on the banking industry, it was harder hit than the other areas of North Carolina during the economic crisis. Though there have been setbacks with unemployment and earnings ratings, the city and its metro area continues to grow and the housing market continues to appreciate.
- Asheville: Asheville, located in the western portion of the state, is known for its support of the arts, Art Deco architecture and its outdoor leisure options. This city is continually growing and the housing market is following its lead. A view of the mountains and short distances to summer and winter sporting activities is appealing to many, while the climate remains moderate.
While housing prices are growing, mortgage rates are typically lower in NC than the national average. The housing supply is still meeting the demand, although in some downtown areas, it is harder to find a home under a certain price limit. As of 2008, North Carolina was the fourth-fastest growing state in the United States and the fastest growing state east of the Mississippi River. The state's growing population has kept the housing market viable for North Carolina.
North Carolina Mortgage Types
There are several mortgage options in North Carolina, including fixed rate, adjustable rate and refinance mortgages.
- Fixed Rate Mortgage: The most stable and widely used mortgage is the fixed rate plan in which the interest rate and payments remain the same through the duration of the loan. In a conventional loan in North Carolina, these loans can be for 15, 20 or 30 years with interest rates varying between lenders.
- Adjustable Rate Mortgage: In an adjustable rate mortgage, the interest rate will remain stable for a specified amount of time and then will adjust with the market. There are several different options. For instance, a 5/5 ARM will have a low set rate for 5 years followed by adjustments every 5 years. A 5/1 ARM will have a set rate for 5 years, as well, but will then fluctuate according to economic trends on a yearly basis. There are also 3/1, 7/1 and 10/1 mortgages available.
- FHA: The Federal Housing Administration covers the mortgage insurance on some loans that meet their qualifications allowing lenders to take a slightly bigger risk with the borrowers who are buying a house under a certain price limit, usually well under $300,000. These FHA mortgages generally keep interest rates low and require lower down payments. FHA loans in North Carolina ask for a 3.5% payment down and are available as 30 or 15 year fixed rate mortgages. These loans must come from approved lenders and the borrower must qualify their finances according to their debt ratio.
- VA: For military veterans that qualify, the GI bill allows the purchase of a qualifying home without a down payment, as long as the residence does not exceed the appraised value. Closing costs still apply and may be negotiated at the time of purchase. VA loans come with a 15 or 30 year fixed rate mortgage.
- USDA: For a person buying a house in a rural area, the USDA will guarantee a loan to qualified buyers allowing them to purchase a home with no down payment. The home must be located in an area of less than 10,000 people or in some cases small towns and cities with the population of 10,000 - 25,000 residents.
Specialized Home Loans for North Carolina Residents
- Jumbo: There are certain lenders who specialize in Jumbo Mortgages, or loans that require amounts of money outside conventional loan restrictions. There are income and debt ratio specifications that must be met and in general these loans have higher interest rates due to the risk incurred. It's possible for veterans to apply for a Jumbo VA loan as long as they meet the requirements.
- First Time Home Buyers: The North Carolina Housing Finance agency offers assistance for first time homebuyers with a lower interest rate and up to $8000 towards a down payment. There are income limits and housing cost limits that vary from area to area, but normally match the average housing price for the county in which the borrower will be residing.
Home Equity Loans & Mortgage Refinance
Home Equity Loans are usually available for 10 or 15 years at a fixed rate and the limits are dependent upon the borrowers debt ratio and the equity in his or her home. This will be a separate loan from the original mortgage and is usually a different interest rate.
There is also the option to refinance, which would make the original loan larger instead of adding a separate payment, and normally keeps your interest rate lower. You may also qualify for refinance through the VA or FHA, which will generally have lower rates.
FHA also offers a Reverse Mortgage if you have enough equity in your house. This is a very unique loan in that the occupant does not have to make payments until they no longer use the home as their primary residence, as the payment will be taken out of their equity.
North Carolina is a non-recourse state, meaning in a time of foreclosure, lenders cannot ask for more than the home is worth.
Judicial foreclosures, which do not involve court action but requires notice commonly called a sale, and non-judicial foreclosures, where the court must issue a final judgment, are both available. In a judicial foreclose, the lender must notify the buyer 20 days before the sale, but this can be pushed up to 90 days. In a non-judicial proceeding, the average amount of completion time is 90 -120 days, for an uncontested foreclosure. If the borrower contests or files for bankruptcy, this will likely be delayed.