Although saving money while trying to purchase a home may seem difficult, it is achievable. Here are some money-saving tips that will help you buy your dream house without breaking your bank.
Use a Skilled Local Real Estate Agent
Their experience in the home buying process and real estate is crucial for receiving the best deal for a house. Using a good realtor will also save you a lot of money, time, and stress and the process is likely to go a lot smoother. The real estate agent’s job is to negotiate a fair price, walk through the legal aspects of closing and save you money. Research shows that 78% of new homeowners thought their realtor was a source of valuable advice. The realtor generally receives a 3% commission but there are ways to cut down on your expenditure here. You can avoid standard commission by using services that refund the buyer a percentage of the purchase price at closing. Since you are expected to have a realtor, you can receive recommendations for a good realtor from friends or family members.
Find Loan Quotes from Various Lenders
The interest rate for mortgage businesses differs so you are advised to get quotations from four or five of them. With approximately 35.5 million Americans moving annually, it is quite simple to find referrals to different lending companies others have used. There are many other fees that you are charged for the processing of a mortgage, like loan application fee and loan origination fee. So, comparing quotations will allow you to choose the cheapest and the option you are most comfortable with.
Keep 20% Saved for the Down Payment
Having money saved up for the down payment is a form of assurance to the lending company. It assures them that they will be able to recover the balance due on the loan in the case that you are unable to finish paying. So, if you do not have the 20% down payment you will be left with no other option but to pay for mortgage insurance. This will probably cost you 0.5 – 1% of the total loan amount annually. If the houses you’re looking at are making it hard for you to raise the 20%, you may want to consider looking for lower-priced homes. The mortgage insurance allows the lender to be reimbursed in the case that you fail to follow through with your payments.
Raise Your Credit Score
Lender fees and interest rates are closely connected to your credit rating. This is because it shows your creditworthiness based on your credit history, which shows the number of open accounts, repayment history, and other factors. So, if you have a high credit score, your loan will be more affordable. To improve your credit score fast, you should avoid applying for new loans which make up 10% of your credit score and try to keep your credit card balances below 15% of your credit limit.
Look for a Fixer-Upper
Although it is more desirable to look for a house that doesn’t need any work, it is likely to be more expensive. This is because there is no additional work to be done. Finding yourself a fixer-upper will save you a lot of money, but make sure you take on a renovation project you can handle well. You can also renovate slowly, which allows you to control your costs. One project you can do yourself is painting walls, which is quite affordable as one gallon of paint can coat around 25 and 44 square yards. This allows you to make your home more personalized while saving you lots of money.
Whether you’re working on a limited or unlimited budget, being cautious when buying a home is a good idea to save money. These money saving tips are aimed to help you do so without much stress.