When it comes to big purchases and expenses, you can’t get much bigger than buying a home.
Your house is likely to be the most expensive and valuable asset you’ll ever own. And for most of us, it will mean a mortgage that we spend years paying off.
So how do you make sure you’re getting a fair price on a home and that you’re able to pay it off as reasonably as possible?
Here are some tips to make buying a home a little more financially manageable.
Time Your Purchase
If you’re looking to buy a home right now, there’s nothing wrong with starting the search immediately.
But if you’re willing to wait a bit to get the best deal possible, holding off until winter may be a good move.
More people are in the market to buy properties in spring and summer. Besides being more willing to go around looking at homes when the weather is nice, a lot of families prefer to move between school years.
Because of that, there tend to be fewer people in the market during the winter months.
A less competitive market means sellers are more likely to lower their prices at the chance of getting a sale.
Partner Up With a Good Realtor
When you’re buying a house there are a few different people you may want to consult with before you start making any deals including realtors, mortgage brokers, and real estate attorneys.
Some people are willing to skip the realtor, but the truth is that real estate agents, found through places like RECO, are much better equipped to negotiate over various aspects of the contract that you might not be aware of.
A good real estate agent can save you money you might not even realize you have to pay.
Also, in the majority of cases, the buyer doesn’t pay the commission to the real estate agent, the seller does. So there’s no real cost advantage to not using a realtor to guide you through the home buying process.
Don’t Skip the Home Inspection
Your ability to negotiate the price of a home is going to be helped by how much information you can get about that home.
There are some aspects, such as a squeaky floor or an out-of-place kitchen island, that you might be able to spot yourself.
But a trained property inspector, as found at Mike Holmes Inspections, will be able to find issues that you might not even think of.
When a home inspector finds issues, in most cases the seller will repair it themselves or they may offer to reduce the selling price to cover the cost of repairs.
If you’re handy, try to negotiate the latter and get the seller to take the cost of repairs off the total selling price. You can DIY the repairs after the fact to save more money.
Get Your Credit in Order
Most people are going to need a mortgage before they can consider buying a house.
But before you start talking to a mortgage broker or looking for loans, make sure you’re in the best possible position to borrow.
Your credit score has a huge impact on how good your loan terms (interest rate and loan duration) will be.
It’s worth checking your credit report to see what it shows and look at methods you can take to improve it, such as removing any incorrect data.
Have a Sizable Down Payment Saved Up
Though the figure can change over time, most real estate agents and mortgage brokers will recommend that you have at least 20% of the home’s value saved up for a down payment.
Your down payment is paid immediately, reducing the amount you need to borrow, with the remaining amount being covered by your mortgage.
Typically the higher your down payment, the lower your monthly mortgage payments.
If you don’t have a large enough down payment, you might have to pay extra each month in the form of private mortgage insurance (PMI).
PMI is an added insurance you pay each month to ensure the bank doesn’t lose too much money if you start missing payments.
With a large down payment you’ll save more money monthly and over the length of your loan.
Pick the Mortgage That Suits You Best
Once you have your credit in order, you’ll want to take a comprehensive look at the market to see who’s offering the best deals suited to your needs.
Most of us only buy a home once or twice in our lifetimes, so we don’t have the expertise needed to understand all the fine print.
To make sure you get the best interest rates, payment plans, and more, partnering with a mortgage broker like Altrua Financial could be the next logical step.
There’s nothing to stop you from doing your own research, but you shouldn’t be afraid to make use of those who know the market better than you.
Don’t Forget to Factor in Homeowners Insurance
Just as a mortgage broker may help you with the buying process, an insurance broker may be able to help you with finding a good insurance policy.
When you buy a home, you’re going to want to get homeowners insurance to make sure that you’re covered for the cost of any damage to the property (like from a fire or a natural disaster).
There are different levels of coverage to choose from and different providers with different price points to compare.
Find out how much coverage is mandatory where you live and what types of optional coverage might still be a cost-effective investment for you.
You don’t want to skimp too much on insurance, but you also don’t want to pay for a policy that you’re never going to use.
Pay Attention to Any HOA Fees and Contracts
When you’re buying a property, make sure you pay attention to the homeowner’s association requirements.
If you have an HOA, you’re likely to have to pay some sort of monthly or annual fee. The amount you have to pay can vary drastically depending on where the home is and the kind of services the HOA provides.
You might find the HOA services totally worth the money and be willing to pay it, but it’s important to know in advance how much you’ll be paying and what you’re getting for that money.
Take the Costs of Moving Into Consideration
I’ve helped a few family members move in the past, and despite having a large family and lots of friends to help, it was never an easy or fun process.
Professional moving services aren’t always cheap, but in my experience they’ve been worth every penny.
Just make sure as part of your home-buying process you’re including a moving budget alongside any other savings you’re setting aside for buying the home.
Get some quotes from moving companies like Movon before you move to give you an idea of how much you’ll need to budget.
You don’t have to commit to anything until you’re ready to move, but you’ll probably get a better rate the farther out you can schedule.
There’s a lot that goes into a buying a home and even more if you want to make it a cost-effective purchase.
Getting the right price, the right mortgage, and taking the right approach to paying it off are all key.
Take the time to make sure you’re ready with a financial plan of attack before you make any big decisions.
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