The purchase of a home is the single largest financial expenditure most Americans make. Along with the size of the transaction, there are a whole host of other fees and costs associated with buying a home. These costs can be burdensome for new and old homeowners alike, and if you are on the line for getting approved for a mortgage they can push your application over the lending standard limit. Not qualifying for your loan due to added costs may cause you to lose your dream home. Luckily there are several methods you can use to save money on your new home buying process.
- Shop Around
Buying a home is a complicated and often onerous process. You have to find the right home, find an agent, obtain financing, and go through a whole host of other tedious tasks before you finally close on your new home. While it may be tempting to rush yourself through the process, take your time and shop around. The more time you spend watching the market, your ability to be exposed to and spot deals will increase. Look at several properties to ensure you are not overpaying and that you get the home you love.
- Work With a Loan Office to Get the Best Mortgage Rate
Many homebuyer’s first instinct is to go directly to traditional lenders for a mortgage loan. Borrowers often have existing relationships with banks which can make the process more comfortable for some. However, traditional banks and lenders do not always have the best rates-especially if you have your own business, alternate income streams, or less than stellar credit. Mortgage brokers and loan officers can collect your loan app and submit it to tens or hundreds of lenders to find the best rate. A .5% drop in your interest rate may not seem like much, but it can save you tens of thousands of dollars over the life of your loan.
- Save 20% or More of the Purchase Price to Increase Your Down Payment
Having a higher down payment will save you money during the home buying process. Mortgage lenders will be more likely to approve you with lower interest rates and you the more you put down up front the less interest you pay over time. Conversely, the lower your down payment the more you will pay in interest and fees over time. With the price of housing these days this can be a tough ask, but the more you can save before purchasing a home, the better.
- Buy When the Market is Slow
Home sales are cyclical. The summer months tend to be the most active for home purchases. This is mainly because many families cannot move until the kids are out of school. If you can avoid purchasing during the hot season you can find deals from motivated sellers who are facing a much smaller buyer pool. Slow markets can also be caused by low interest in an area. Let’s say you find a home in a place without great public transit, so the price is depressed. If you do not need to use public transportation you can save a great deal of money without lowering your quality of life.
- Buy a Fixer Upper
Many home buyers attempt to purchase an undervalued fixer-upper property, apply some TLC, and find themselves in their dream home. While home renovations and construction projects are not without headaches and risk, the ability to add value to your home can help you save money on your initial capital outlay. Many buyers will shy away from fixer-uppers, so you will be competing with other people less and adding a discount premium on the property due to its condition. Another major benefit is the fact that you can craft the perfect living space for you and your family. In the right situation, that is not a bad deal!
Every step you take during the home buying process can cost you money. Delayed inspections, loan funding not coming through, and a whole host of other problems can crop up. The best way to avoid these cash-draining incidents is to plan ahead, and plan well. Follow the above tips to ensure that you save money during the home buying process.
Ken is a huge fan of living his life to the fullest. He enjoys his home and all things related to organization and DIY. He also enjoys helping Generation Homes NW ( https://generationhomesnw.com/ ) – educate readers about home improvement.