Buying a home can be exciting yet costly. Besides the down payment, there are costs such as property taxes, mortgage and homeowner’s insurance, homeowners’ association (HOA) fees, utilities, maintenance, and repairs. Home buying costs also include closing costs such as the application fee, transfer taxes, closing fees, title insurance, credit checks, and underwriting, title, and appraisal fees. Knowing all these costs helps determine where you can save money. Below are a few money-saving tips to consider when buying a home.
1. Choose the right home
When deciding to buy a home, many factors come into play, including the type of home you want. Comparing resale vs new construction, choose a home that best suits your needs and saves you more money in the long run. New homes are more expensive than resales, and they offer you personalization options in terms of design. They are usually more energy-efficient than older homes.
Resale homes are already built, and people may have lived there before, costing less. Your choice of a home is purely preferential and may be based on factors like price range, how long you intend to stay there, and the neighborhood.
2. Partner with an experienced real estate agent
When determining the appropriate offer for your potential home and how you can land a better deal, an experienced negotiator agent is your best option. The ideal real estate agent can help you save money by identifying overvalued and overvalued properties and negotiating for a lower price where possible. Depending on the inspection report, a real estate agent can request concessions and credits for covering needed repair works, saving you maintenance costs.
3. Buy during the offseason
To get a great deal that saves you money, avoid buying a home during the peak season. Demand is usually very high while the supply is low, making it hard to negotiate for a lower price. Where there’s competition from other homebuyers, you find yourself in a bidding war. Find the off-peak season in your market to take advantage of low prices and high negotiating power.
4. Improve your credit score
An excellent credit score gets you low mortgage rates, saving you money. Buying a home with a poor credit score translates to you paying a higher mortgage rate to cater to the perceived risk the lender takes by approving your mortgage. This is why it’s wise to work on improving your credit score before applying for a mortgage loan.
5. Consider short-term mortgage loans
Mortgage terms are an essential consideration when buying a home, especially if you want to save. While a long-term mortgage can mean low monthly payments, it results in high interest over your loan's life. In other cases, a short-term loan reduces overall interest. This means you can make high monthly payments and low interest, saving you money in the long term.
6. Make at least a 20% down payment
Making at least a 20% down payment can be challenging. However, it can save you money in the long run. A substantial down payment not only lowers your monthly mortgage payment but also helps you avoid the private mortgage insurance requirement.
Buying a home can be expensive, and finding ways to own it for less goes a long way. Use the above tips to save you money the next time you decide to buy a home.