Ways to Save Money When Buying Your First Home
There’s a time to spend and a time to save. When it comes time to buy your first home, you might be wondering if there’s any wiggle room or areas where you can cut costs. The short answer is yes. However, we recommend that you speak with your lender, real estate agent, and any additional financial advisor you may have before making a big decision that you cost you more time and money in the end.
Let’s break down a few ways you can save money without sacrificing the service or quality of your purchase.
Meet with Multiple Lenders
The first step in any homebuying process is to work with a lender to get approved for a loan. Keep in mind that you’ll want to find a lender that understands your long-term financial goals and will work with you to find the best mortgage for your needs.
You may have to meet with multiple lenders before you find the right one for you. It’s also important to remember that a low estimated interest rate or automatic pre-qualification doesn’t guarantee that the lender has found the right loan for you. Ask for recommendations, review various lenders online, or set up a consolation to meet with multiple lenders in person. Choosing the right loan could end up saving you thousands of dollars off of your mortgage in the long run.
Use an Experienced, Local Real Estate Agent
Never underestimate the power of a real estate agent who knows their market. Working with a local agent will save you time (and money), especially if you’re new to the neighborhood. As a first-time homebuyer, your agent can help guide you through the homebuying process and negotiate on your behalf.
Know Your Down Payment Options
A home’s affordability is not solely about the size of the down payment. Being able to afford a home is about sustaining the mortgage payments and other homeownership expenses over the life of the loan. That being said, each homebuyer is different.
Whereas one buyer might wait until they have enough saved up for a 20% down payment, another buyer might need flexible financing requirements. If you have the opportunity to pause your plans and save before buying, you may be able to avoid mortgage insurance.
MORTGAGE TERM: Mortgage Insurance (MI) is a policy that lowers the risk of making a loan to applicants who are putting down less than 20% of the purchase price. (Mortgage insurance is required on conventional loans with a down payment less than 20% and is also typically required on FHA and USDA* loans.)
Those who need housing now, or have an excellent opportunity to invest may need to save less for a down payment. Some loan options require little to no down payment for qualifying applicants. Interested applicants should contact a lender for more information.
Work on Your Credit Score
Did you know that lenders use your credit score** to predict how reliable you will be on future loan payments? Although a lower credit score may still qualify you for a loan, a higher credit score could improve your interest rate. Before you begin the loan application process, it’s in your best interest to check your score and review the report for any disputable errors.
It’s essential to remember that credit scores are connected to only one person. Should you marry someone with a higher or lower score, yours does not necessarily change. However, both scores may affect the ability of a couple to secure a mortgage. Find out more information in this blog.
Buy a Home in the Off-Season
Summer is traditionally the best time to sell a home because the weather is beautiful, school is out of session, and there are plenty of homes on the market to choose from. However, as a buyer, you have more bargaining power when fewer people are searching for a home, which usually happens during the late fall to early spring. Fewer offers on a home provide an opportunity to bid less than the asking price.
Even if you’re not buying a home soon, it’s never too early to start planning.
Contact us today for more information!