Buying a home is a huge commitment, it comes with lots of responsibility and a significant financial outlay. It’s a challenging experience for most and a joyous occasion too, especially for first-time homebuyers. Whether are you are new to the property game or a seasoned property investor, one of the major factors to consider when buying a home is price. Let’s see how to save money when buying a home.
Saving money and finding ways to maximize your investment are key. There are many things to consider when buying a home, such as size, type of property, age and location.
Remember, when it comes to buying a property, you can always negotiate the price, there are other key tips and tricks that can help you to save money when you are buying a home too. Here are some effective money-saving tips to help you reduce the overall cost of buying a home.
Check Your Credit Score
Before you start searching for a property and thinking about your dream house and location, check your credit score. This won’t apply to you if you plan on purchasing your property outright however if you want to get a mortgage, check your credit score to make sure you can get a standard mortgage with reasonable rates. Bad credit mortgages are more expensive, have higher rates and are generally problematic. It is best to apply for a mortgage when you have a good credit score.
If your score is less than perfect, try to reduce it by working with a credit score specialist or financial advisor. They can provide the tools and steps to help you to improve your credit score. A good credit score equals a better, more cost-effective mortgage.
Think About the Location
Think carefully about the location, it really does matter. If you want to save money, consider purchasing a property a little further away from the city. Search for properties that are about 30 to 40 minutes away from the city. On a low budget, you will get much more for your money. In the city, you might be able to afford a small one-bedroom apartment if you are lucky. Move further away from the city and you might be able to afford a townhouse with a backyard and kitchen pantry.
The location you choose will depend on your preferences and needs however if you want to reduce the overall cost of buying a house, you might need to sacrifice the desirable location for one that is less convenient. The upside is that you will probably end up with a nicer property in a safer, cleaner environment.
Buy Outright if You Can
Many people don’t have the funds to buy outright but if you do, count yourself lucky. Having the upfront money to buy a property means that you can offer a quick sale advantage. You have the cash and you are willing to take the property if the buyer is willing to accept the price you are offering.
Property owners tend to prefer cash deals because they don’t have to wait for mortgage lender approval, the process is much faster and less stressful. Therefore, use the fact that you have the upfront cash to your advantage.
Use a Seasoned Real Estate Agent
Real estate agents have lots of access to new houses and properties that might not have been listed yet. They can also advise you when it comes to location and provide you with tips on the best areas to consider based on your budget and needs.
Get a Professional Home Inspection
Unless you are buying a new build property, a professional home inspection is vital. An expert home inspector will carefully inspect the property you want to purchase and compile an extensive report of all their detailed findings regarding the property.
Yes, you will have to pay for the inspection however, you could use the findings of the inspection to your advantage. If there are a few issues with the property that need to be addressed, you could negotiate a price reduction based on these minor issues. If fixing the issues could cost you dearly, the house inspection will save you the hassle of fixing these problems once you move into the house.
Pay a 20% Downpayment
There are some lenders that will offer you a mortgage without a 20% down payment however, your mortgage insurance will be more expensive and your interest rate will be higher if you don’t have the money for a 20% down payment. Therefore, if you really want to save money and don’t have the funds for a 20% deposit, save enough funds before you consider buying a property.
You can grab a bargain at foreclosure auctions if you know what you are doing. If you have a real estate agent that you are working with or a friend who works in the property industry, ask them if they can provide you with some guidance on foreclosure auctions. If you know what you are doing, you can save thousands by purchasing a property from auctions.
You probably have a list of requirements for your property however, you might have to compromise on some of those requirements. For example, you might want a house in a specific area but you find another house with all your house requirements but it’s in a different neighbourhood and it’s $20,000 below your budget. Would you be willing to compromise and get your dream home but in a different location? If you want to save money, you might need to compromise.
Get the Right Mortgage to Suit Your Needs
Avoid signing up for a mortgage straight away. Do your research and find the best mortgage rate and offer to suit your specific needs. Often real estate developers will offer you a mortgage from your pool of lenders however, you can search for your own mortgage to get the best deal for your needs. A bad mortgage can cost you more money over time therefore, make sure that you make the right decision when it comes acquiring a mortgage to purchase a home.
Buy a Property That Needs Some Work
If you are not afraid of putting in some work, search for a property that needs work, a “fixer-upper.” Buying a property that needs lots of work is a risk however if you are willing to take the risk, you could save a significant amount of money.
Purchase Your Property During the Winter Season
Properties tend to be much cheaper in the winter months. If you want to save more money on your house purchase, consider purchasing your home in the winter as opposed to the spring or summer months. On average, you could save up to $20,000 if you buy your home in the winter, that’s a big saving! It is definitely worth thinking about if you want to cut costs.
As you can see, there are many things to consider when purchasing a home, if you want to save money, you should be thinking about possibly compromising on the location and possibly some of the features you want in a home. If you have the upfront cash, make a lower offer, sellers usually want a quick and hassle-free sale therefore, use your financial position to your advantage and bag a bargain.
Foreclosure auctions are a great way to save money on a house; however, it is best to attend auctions with someone who is experienced to facilitate the process. Remember that a bad mortgage can cost you dearly so think carefully before you sign on the dotted line, shop around for the best deal. Finally, a house inspection might not be at the top of your list however, if you are buying an older property, it is vital that you get a professional inspection, you could save a significant amount of money overall if you have the property thoroughly checked and evaluated.