3 Clever Ways to Save Money When Buying a Home

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You have finally achieved a major milestone in your life. You have saved up enough and advanced in your career to a point where you can afford a mortgage. You are excited but also wondering what this new journey will entail. Questions are buzzing in your mind: How much will I afford? How much will a house cost in the area I want to live in? Now that I will be taking a mortgage, how much is mortgage protection insurance? Having such questions provides you the impetus to go out and find answers. In this article, we give you some quick tips on some clever ways you can save money when buying a home.

Shop Around

Before you attend a single open house or visit a real estate agent, get on your computer and see what is on the market. What kind of houses are there? How much are they going for? Has the market been going up or is it depressed? Are there new developments in the area? Having a solid understanding of what is in the market will give you a foundation upon which to build your search. No knowing what is out there, conversely, will mean you have no reference point to either counter or choose to walk away.

1. Keep It Local

If you are moving from one city to another, you may be tempted to ask your current neighbor, who is a real estate agent, to look for you a home in the new city. Do not. Real estate is one of these industries where local expertise trumps everything else. What you could do is ask them to refer a real estate friend in the city you are moving to. Local agents have the advantage of knowing the subtle nuances of each street and estate in the area you are moving to. They also, in some cases, personally know the people selling the homes. Working with a local agent will, therefore, give you a better chance at scoring a better deal compared to coming in with an outsider.

2. Work on a Fixer Upper

As you look around, consider purchasing a fixer-upper. These are properties with high intrinsic value but that have been undervalued because they are run down. If you have heard about house flipping, these are the kind of homes flippers look for. The tricky thing about such properties is that they require a keen understanding of the area. Factors such as crime rates, recent developments, demographics, the cost to fix it up and so on play a huge role. Unless a local real estate agent can advise you on this, it is probably better to steer clear of fixer-uppers.

3. Greater Down Payments Mean Less Interest Over Time

Every dollar that you do not pay upfront is a dollar you will be charged interest on. Let that sink in for a moment. If you pay a thousand dollars, that is a thousand dollars that you will not have to pay interest on. It follows that the greater a down payment you can put, the less interest you will pay on the mortgage amount. This is a powerful incentive to save as much as you can even though most banks will give you up to and over 100% of the mortgage amount

Following these simple steps are a sure way of saving some money when purchasing a home. Other areas you can consider are improving your credit score, using the right mortgage type (e.g. VA mortgages), and timing the market.