7 Ways to Save Money When Buying Your Next Home
Buying a new home is a major expense, often the biggest in someone’s lifetime. It comes with many layers of financial responsibility. The expense isn’t just the big number you see on a listing – it’s also closing costs, inspections, insurance, taxes, etc. The good news is every expense is another opportunity for thinking strategically. With a good agent, and these 7 tips, we’ll help you save some money along the way.
Savings tip #1: Prepare Your Credit
The savings journey starts before the shopping. Most buyers will need a loan and that loan will be influenced by your financial situation. Finding the best loan option will save you money in the long run. For the year or two preceding your purchase, nurture your credit. Pay everything on time, every time. Consider increasing your credit limits. Decrease your debt, increase your income. Healthy credit will expand lending options and help you to secure the best loan possible.
Savings tip #2: Shop Around for Lenders
Speaking of loans, you can save money by shopping around for lenders. Don’t settle for the first loan you’re offered. Understand your priorities, compare rates, and even negotiate with lenders to find the right fit!
Savings tip #3: Leverage the Market
You can save a lot by shopping during a “buyer’s” market – when demand is low and inventory is high. In this kind of market, a buyer has more power and can leverage their interest to get the best deal for themselves. Having a good agent will also be helpful in this process.
Savings tip #4: The Value of an Excellent Agent
While we’re on the topic of agents, the right agent will make a world of difference. Real estate agents are industry experts, and they understand everyone’s motivations. They can advise you on lenders, give you insight into the current market, and make or break a negotiation. Be sure to connect with an agent you trust, who will advocate for you every step of the way.
Savings tip #5: First-Time Homebuyer Programs, Grants, and Down Payments
There are several ways for first-time home buyers to save money in the short term or long term, depending on their needs. There are grants, special programs, and specific loan options for first-time home buyers, that will help lower the cost of a downpayment. But be aware, saving money now by putting less down can cost more in the long run. An alternative approach would be to put more money down up front; this will help you avoid private mortgage insurance payments which increase your monthly costs.
Savings tip #6: How to Save on Closing Costs
Closing costs are an often-overlooked expense. They cover things like agent fees, paperwork processing, taxes, and plenty more. One section of closing costs is “services you can shop for”, which offers another saving opportunity. These are things like inspections, document services, attorney services, appraisals, etc. and you can shop around for them.
Savings tip #7: Don’t Skip Inspections
Lastly, you may be tempted to save a few bucks by skipping your home inspection. However, the risk often outweighs the reward. Inspections cost money up front but can uncover major expenses down the road and help you get coverage for repairs in your future. You can also bundle add-ons like radon, pest, and mold inspections.
It’s easy to understand why buying a home is overwhelming. The expenses are numerous, and the journey can be intimidating. But with an expert agent and a savings mindset, you can both survive the journey and walk away with a great investment.