Purchasing a home is often quite an exciting experience, especially if you’re purchasing for the first time. However, buying a home can also be a particularly expensive decision, one that comes with plenty of careful thought and advanced preparation. Fortunately, there are a number of easy ways you can manage to save money when purchasing a home in an effort to maintain healthy finances. Here are some of the best tips you can try in 2023:
Improve your credit score
The credit score is often overlooked, but is absolutely crucial, as it directly impacts the loans you will be able to get and the fees you will have to pay. The healthier your credit, the more likely you will be to qualify for a mortgage with low interest rates. That is why you should aim to improve your credit score as much as possible before purchasing a home, such as by paying your bills on time and taking advantage of available score-boosting programs. Minimizing or even completely eliminating debt will be just as vital.
Save for the downpayment
There are a number of different loans you can opt for, many of them requiring downpayments as low as 3-4%. Although they might look appealing, these loans can come with particularly long and restrictive terms. For that reason, it’s still recommended to save up for the traditional 20% downpayment, if at all possible. This will allow you to demonstrate seriousness to lenders, get better loan terms, lower your monthly payments, and even avoid mortgage insurance. A sizable downpayment can clearly allow you to save a significant sum in the long term.
Choose lower interest rates
In a competitive market, it seems like every bank and financial institution is currently offering attractive rates. Still, it’s important to do your due diligence and shop around for the best possible rates. Ask several lenders for an offer and focus on mortgages with lower interest rates, but don’t automatically go for the seemingly lowest monthly payment. Take into account factors such as the length of the loan, management costs, mortgage insurance, etc. Choose the most affordable solution overall and expect to save thousands in yearly expenses on your home loan.
Get some external support
When purchasing a home, there are a number of professionals who can help make this process simpler. Think about consulting with these experts, especially if you’re a first time home buyer still unfamiliar with the procedure. For instance, you can work with an experienced mortgage broker who can help you help you navigate the path with support services and find the best solution for your needs. Similarly, a dependable real estate agent can be of great help in finding suitable properties and locations, while a good lawyer can aid in managing the legal aspects.
Consider buying in winter
Many homebuyers decide to make a purchase during the warmer months, likely due to the sudden increase in available properties for sale. Unfortunately, that also means that the spring and summer period tends to be the most expensive time to purchase a home. Rather than making the same decision, consider buying your home during the colder months. This could potentially save you some money and give you more time for home improvements, even though it might come with poorer market offerings.
Negotiate the closing costs
Closing costs are an unavoidable aspect of purchasing a home, including expenses such as lender fees, attorney fees, appraisals, and title fees. If you have to pay for them on your own, closing costs could end up being an expensive factor that suddenly sneaks up on you at the end of your journey. Luckily, most closing costs can be negotiable. Feel free to talk to the seller and ask them to pay a percentage or even cover all of the closing costs. You never know; you might just get lucky in this money-saving aspect as well.
Save money in the long run
While expenses can be lowered during the process of buying a home, you might be able to save money after the purchase as well. For example, you can invest in a home inspection early on to save you thousands in the long run or attempt to get a lower assessment on the property in an effort to pay lower taxes. Buying a home that’s not located in a high-risk area could help you minimize insurance premiums, too. If at all possible, you could also try to make larger mortgage payments than necessary each month. This can significantly reduce the interest amount over the life of the loan.
Buying a home is one of the largest financial decisions you will ever make. Consider the advice mentioned above to save some money before and after making the purchase, and turn the homebuying process into a more pleasant experience.