- Preparation is key.
- The more you know about the process the easier it will be to avoid common pitfalls.
- Understanding how to use your money wisely to make positive decisions during the home-buying process.
Are you a first-time homebuyer? If yes, then read on! Buying a home can be one of the most stressful times of your life if you are not prepared. A home his generally the largest asset of any family and making sure you are ready to go before beginning the process is key. Here are our 15-money saving tips for first-time homebuyers.
- Study. Study. Study. Find out how much the other homes in the area are listed and selling for because this is going to tell you what you can expect to pay for the home you want. It has to have similar specs of course to make a comparable guess, but it can give you a general range price point and save you money.
- Mortgage Shopping. The first thing to do before shopping for a house is to get pre-approved for a mortgage. To get the lowest interest rates, shop your options with multiple lenders.
- Stay Within Your Budget. Do not get carried away with finding a beautiful house only to talk yourself into paying more than 30% of your monthly income to afford it. Emergencies arise and other living expenses are inevitable so stay prepared.
- Insurance. You may have the option to group your auto, home and other insurance into a bundle thereby saving hundreds of dollars annually doing it this way.
- A Contingency Clause (Your behind-saving best friend). The more contingencies the better. These protect you in case the unthinkable happens (you lose your job or the loan falls through).
- Closing Costs. At 1-8% of the purchase price, closing costs are negotiable. Sellers will often entice buyers by offering to pay closing costs. It never hurts to ask.
- Pay More (To save less). Paying more than the minimum mortgage payment each month could add up to saving tens of thousands off the loan term.
- HOA Fees. Don’t forget about these fees as they can range from zero to a few hundred dollars per month. Find out before buying the house to decide whether or not you wish to belong to an HOA.
- The Best Mortgage for You. There is a 15 and 30-year mortgage option. Choosing a 30-year mortgage means you will pay more in the long-term but will have smaller monthly payments, while a 15-year mortgage means you will have higher monthly payments, but in the long-term will pay less.
- Income Estimates. Be accurate when estimating your income and if you can’t be, then be conservative. Find the lowest average of your income estimate and use it when determining your mortgage payment potential.
- Inspection. The last thing you need is to buy your home and then find out there are thousands of dollars in repairs. Pay for a home inspection before buying the home to save money long-term.
- PMI. If you don’t have 20 percent for a down payment, then you may be able to put down less, but you are required to have private mortgage insurance which will cost you thousands over a 30-year mortgage.
- Expenses. The more detailed you can be with your current expenses and listing the home-owning expenses, the better prepared you can manage both.
- Taxes. Property taxes are evaluated by which county you reside and an average of 1.2% of your home’s value each year.
- Beware of Buying the View. The view can disappear at any time for any reason. Unless of course, you own the adjacent property. Buy the home, not the view.