Money Saving Tips When Buying Your First Home
Purchasing your first home is an exciting time, but many first time home buyers wind up spending far too much because they are eagerly searching for homes and excited to get the house they have become emotionally attached to. There are many pitfalls to avoid when purchasing a new home, the below tips for first time homebuyers take that into consideration. When it comes to real estate, there are always going to be bigger and better deals to be had, so patience plays a huge role in being able to save money while buying the house of your dreams. These five money saving tips when buying your first home will allow you to keep more cash in the bank and spend less over the years on your investment.
Using an Experienced Real Estate Agent
As a first time buyer, nothing can replace the experience of a skilled local real estate agent. The best local Realtors are going to save you money, time, and heartbreak too. The best Realtors not only can negotiate the best deals without offending the seller, they ensure the sales process moves along smoothly so there isn’t a huge issue at closing that kills the deal. Try buying a house without a Realtor, you’ll discover quickly that the commission you think you are saving is far less than the discount in the listing price you could have secured. At the end of the day, from the buyer’s perspective, it doesn’t cost you ANYTHING to utilize the best Realtor in your area, so its a no-brainer. Choosing the right real estate agent often is the single most important factor – as a good Realtor will insure that many of the other aspects of the real estate transaction are handled correctly.
Increasing Your Credit Scores Now
Many of our money saving tips for buying your first home have to do with getting the best mortgage rate. Regardless when you are going to make the decision to buy your first house, increasing your credit score will only have a huge positive impact on the eventual cost of the house. It’s important to look at a home purchase not only in the sales price of the home, but the full cost of home ownership, which includes the mortgage interest, homeowners insurance, flood insurance, maintenance and upkeep and taxes. The bottom line is the higher your credit scores, the lower your loan will eventually cost. Your Realtor can put you in touch with several lenders, and all of them will tell you that the interest rate and lender fees are both tied directly to your credit rating. Start by paying down as many credit balances as possible to increase your credit utilization ratio.
Don’t use your credit cards to buy anything big or apply for new credit until you own the house!
Hard inquiries and new accounts could drop your credit by 10 percent for months.
Getting Quotes for Mortgage Loans from Multiple Lenders
It was only a few years ago that you would have to meet with different lending officers to compare mortgage rates and get approval. Today, first time home buyers can access a variety of websites to apply for one mortgage with dozens of lenders. Not only will you have these lenders coming to you, as a buyer you can easier compare the loan origination fee, application fee, interest, and PMI, so you can decide which lender will best serve you.
Use a Local Lender
We do strongly recommend that you use a LOCAL lender and not an “internet lender” as local lenders make a living off of their reputation and referrals. That means if they don’t live up to the promises they have made to you, they get a bad name in the local real estate market. Local lenders generally will strive much harder to not leave a bad taste in your mouth. Not only that, when you choose a local lender, you have the ability to look them in the face. You know where there office is. They cannot hide from you. Lastly, a local lender will usually come to your Act of Sale. This not only is a professional courtesy, but they are there to answer and questions that come up as you review the final loan closing packet. If you find a lender you really like, you can also use the quotes you received as leverage to try and negotiate a lower rate.
Purchasing a Home Closer to the Winter
One of the best-kept secrets when it comes to saving money buying a house is to simply make the purchase as close to winter as possible. When most homeowners put their houses up for sale in spring and summer, they assume they will be long gone as the colder weather approaches. Regardless if the market is down or it is currently a buyer’s market, a frustrated homeowner will not want to go through the winter trying to sell the house. As the cold weather drags on, frustrated sellers lower the price in an effort to make their move. Waiting to make a first home purchase in the winter could save you nearly $20,000 compared to what it would have cost you in the spring and summer months. The downside to waiting for the colder months to purchase a home is that you will generally have fewer homes to choose from.
Getting the Right Mortgage Loan for Your Needs
Choose the wrong type mortgage, and you could be spending thousands of dollars in interest over the length of the loan. There are some loan programs out there that are better suited to your needs than others. If you or your partner are veterans, for example, the VA loan allows you to move forward with the home purchase without a down payment or having to pay mortgage insurance. If you are shopping for a house outside any major metropolis, you could qualify for a USDA loan. The reason the Department of Agriculture created the USDA home loans was to help low-to-median income home buyers find properties in more rural parts of the country.
If you qualify for the USDA home loan, not only is there no down payment required, the mortgage insurance is only .35 percent of the loan amount. Each year, that one aspect alone could potentially save you thousands of dollars.
Lean on the Experience of Professionals You Can Trust
The combination of a skilled local real estate agent, a qualified mortage loan officer and your patience put you in the best position to save countless dollars over the length of your mortgage loan. As a first time home buyer, just remember that the more due diligence you do up front, the bigger the potential to save money.