Becoming a first-time homebuyer is an exciting time in your life. This is most likely the biggest and most important buying decision you will make in your life! But with buying your first home you may begin to realize that there are many more costs associated with home ownership than you may have expected. So, what can you do during your home search that will help you save money on your first home purchase? There are actually many things you can and should do other than looking for the best offer to help you save money when buying a house. We’ve put together our best tips to help you save money during your home buying process!
Determine How Much House You Can Afford
Before you even begin your new home search, you will need to make a realistic determination of how much house you can afford. As a first-time home buyer, it is unlikely that you will be able to afford your dream home, so before you start looking at homes and fall in love with one you won’t be able to afford, sit down and determine what your price range should be and then make sure you stick with it.
Explore Your Down Payment Options And Start Saving Early
There are many special programs designed for first-time home buyers to help you through the home buying process. Fannie Mae and Freddie Mac loans are federal mortgage programs that help first-time home buyers to be able to afford purchasing a home with as little as 3% down. But 3% down can still be a lot, depending on how much the cost of your home is, so it is also best to start saving for your down payment as early as possible. If you know you are planning on buying a home soon, start by saving large sums of money such as tax refunds and work bonuses, then develop a budget that will help you put money away towards your savings as well.
While the lower down payment program options are attractive, it is also important to consider the ways you can save money by putting more money down. If you put anything less than 20% down on the purchase of your home, then you will likely be required to purchase private mortgage insurance (PMI) which is insurance to protect the lender in case you default on the loan. FHA loans will require this PMI coverage no matter how much money you put towards the down payment.
Shop Around For Your Mortgage Loan
There are many different types of mortgage loans available and knowing which one will best fit your needs can help you save thousands in the long run. You should work with an experienced and professional mortgage loan processer that is a broker for many different loan companies, so they can help you shop for the best deal on your mortgage loan.
When it comes to finding the right mortgage loan for you there are many different factors to consider, and the one that will be right for you will be dependent on your specific needs. Interest rates on a mortgage loan will vary from one lender to another so it is recommended that you get loan quotes from at least 3 or 4 different mortgage lenders. Additionally, lenders may charge various other fees such as the loan origination fee, application fees, etc. so shopping around different lenders will allow you to compare their fees. An experienced mortgage loan processer will be a broker with access to many different lenders, so they will be able to help you through this process.
Use An Experienced Local Real Estate Agent
Using an experienced realtor can make the difference between finding yourself stuck in a contract that is a bad deal and getting the best deal possible when buying a house. Not only is your realtor going to be able to answer any questions you have about the home buying process and the homes you are viewing, but they also have the necessary experience to negotiate a good deal all the way through the home buying process – from the purchase price of the home, to closing costs, to negotiating repairs and credits there are a number of different things your realtor should be able to help you negotiate to help save money when buying a home.
Many first-time homebuyers think that skipping out on using a realtor is a good way to save money, but in reality, doing this will wind up hurting you far more than it will help. It is important to know that as the buyer you will not be the one paying your realtor’s commission, the seller does!
Be Open To Houses That Need Some Work
While it is easy to get caught up in the emotions of finding and purchasing your perfect dream home, doing so will likely be a lot costlier. Instead, be open to finding a home that needs some work done to it, and then you can put your own customizations in to make it your dream home.
Remember that when it comes to purchasing a home most buyers will be looking for homes that are move-in ready and don’t need any work done at all, so if this is the type of home you are looking for also competition will be a lot higher and it will be a lot more difficult to negotiate a great deal on the home. Instead, finding a home that doesn’t need any major work done to it, but could use a small amount of care and updating will allow you to put your own personal touch in on the design of the home and will save you a lot of money while doing so!
Choose Your Location Carefully
Making sure you choose the right location can affect your savings significantly. However, finding the right location at the right cost can be tricky. You will need to be able to do a little bit of future predicting to really be able to get the best deal. If you are able to find an area that is more rural or where your home comes with more land, and that area is developed more in the future, the potential for your home value to rise increases significantly. It is also important for you to keep in mind things like the quality of schools near the home, local safety and crime statistics, traffic, noise, and activity levels, and ease of access to hospitals, pharmacies, grocery stores, and other amenities you will use as all of these things will affect the value of your home in the future. Choosing the right location can even affect how much your closing costs will be as areas with lower tax rates will likely have lower closing costs.
Although the home buying process can be stressful for first-timers, it will all be worth it when you walk into your new home for the first time! Use these tips and they will be sure to help you save money in the process. If you are looking for an experienced mortgage loan processor contact American Dream Home Mortgage at 813-655-4663 today!