Buying a home is expensive, real expensive- but it’s a great investment that increases the quality of your life and your finances. It might seem like a real financial burden, but you’ve done your homework and you’re prepared. The good news is, there are a few easy tricks that can help save you money during the home buying process.
That’s right, you can still save some money while getting the home of your dreams.
Ways to Save Money When Buying your Next Home:
1) Save a larger down payment:
I know, you have already been saving a minimal down payment for what feels like an eternity. A larger down payment means you can take out a smaller mortgage, lower your monthly payment, and even get lower interest rates. Taking a break from eating out and shopping for a little while might be hard, but the savings will definitely add up over time.
2) Buy a less expensive home than you can afford:
Huh? Shouldn’t I go out and buy all the house my money can buy? No, absolutely not! If you are buying a house yourself or in a couple, it’s great you can afford that 5 bedroom home- but you don’t need the space. Buying a smaller house means you can take out a smaller mortgage and pay off your new home faster. The monthly payments won’t overburden you and it gives you a lot of extra cash to update the home to your liking. That means you can grow the home’s value and when it’s time to buy that larger home, make a large profit on the resale. Not a bad deal after all.
3) Pay a little extra than you have too:
Going off #2, if you buy a smaller house and have a smaller payment- pay a little extra every month and pay off your loan off A LOT earlier than you were expecting. I’m not saying for you to pay anything out of your comfort zone, but a couple extra bucks a month toward your mortgage helps to really lighten your load. Instead of putting your tax return towards your next vacation, maybe use it to pay down your mortgage.
4) Double Check your Property Tax:
Make sure your home’s property tax rate is correct. You are going to want to check the listing and make sure all the home’s information is correct. Sometimes you’ll find the listing says your home has extra bedrooms or more living space than it actually does. These mistakes can increase the property tax rate on the home. It’s also a good idea to get a survey of the land and make sure the map of the land matches up with the information on file for your property tax. You might find that you qualify for a less expensive rate.
5) Never buy the biggest and best house on the block:
Every neighborhood has that one house that doesn’t really look like it belongs. It’s larger than the others, maybe more ornate and renovated to be absolutely flawless. Wouldn’t it be awesome to live in that house, right? Definitely, as long as I’m not paying for it. Although it’s tempting, you have to remember that your house will only increase in value based on the block. If you house is $1M and the rest of the houses on the block are $500,000-600,000, your home will appreciate for less over time. That means when it comes time to sell your home, your profit is going to be a lot smaller and the home might take a very long time to sell.
6) Get the home inspected:
Getting a home inspected before you purchase it is crucial to saving money in the deal. You want to find out what costly repairs the home needs before you get a nasty surprise once you move in. If your inspector finds a big issue during the inspection you have the option to walk away from the sale before it’s too late, or ask the sellers to cover the costs. It also gives you the option to try and re-negotiate with the sellers for a lower price.
Being a smart bidder can make all the difference. When you put in your opening bid make sure you are not putting your max purchase price in first. If you do that, you might force yourself into a situation you can’t afford or are not comfortable with. The bid should be fair and reasonable so you don’t offend the sellers, but should also reflect what you think the home is worth. You might be able to negotiate the price down a bit which could help you out in the long run.
So what are you going to do with all that extra cash you saved? Better start planning now.
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