It's undeniable that buying a home costs a lot of money. In addition to the cost of the house itself, you will need to spend money on furnishings, improvements, and of course, the process of moving. All of this adds up until buying a new house drains your budget. However, there are many ways in which you can save money when buying a house.
Use an experienced real estate agent
An experienced realtor will save you a lot of time and money. Realtors are the best choice for finding the best properties within your price range. An experienced agent is knowledgeable about the neighborhoods, schools and restaurants in the area you're interested. They also double as a mediator for negotiations, so you can get the absolute best deal when buying a house.
First-time buyers may try to save money by not using an agent, but it can often end up costing more in the long run. A real estate agent wants to do their best to get you a great deal on your new home, because their commission comes from the buyer.
Get mortgage quotes from multiple lenders
Because interest rates vary from lender to lender, it's recommended you get quotes from at least 3 to 4 different mortgage companies.
Mortgage processing fees, loan origination fee and application fees are different depending on the lender. The loan estimate will have the fees clearly listed.
These quotes are helpful for negotiating lower rates and gives you a chance to speak with different lenders, so you are able to make an informed choice.
Increase your credit score before applying for a mortgage
Your credit score greatly affects how much your loan costs. The higher your credit score, the lower your interest on your loan. If you increase your credit score, you can greatly decrease the rate of your montage.
A few easy ways you can increase your credit score include:
- Paying down your balances
- Not applying for new loans
- Increasing your credit limit
- Paying more frequently
Wait for price reduction before submitting an offer
You could also save money by buying a home after a major price reduction. If a home has been on the market for a while without selling, the owner and their real estate agent will likely have to lower the asking price to move the sale along. Additionally, homes that are under foreclosure are usually priced cheaper than they normally would be. Don't submit an offer if you expect the price to decrease.
If you are trying to purchase a home but can't find one you like within your price range, you might want to wait for a price reduction or foreclosure of a home in your desired neighborhood. This way, you can get a home you like at a lower cost while taking full advantage of your agent's services.
Find a house that needs some work
While you may be looking for a dream home that you will fall in love with upon first glance, that may not be the best option when you are trying to save money. Homes with custom features and upgrades will often cost more than a home in need of repair.
Turning a fixer-upper into your dream home can be more affordable than buying a house that needs little-to-no repairs. Not only is a fixer-upper cheaper, but you can also put your personal touch when making renovations to the house to make it suit your preferences.
Use a discount broker or buy the house without an agent
Instead of spending money to use an agent from a large real estate agency, you can get comparable service at a lower price by using a discount broker. Discount brokers provide many of the same services as real estate agencies but without the high price tag. Though they may not offer every service that a larger agency provides, most discount brokers charge by the services that you use rather than a flat rate.
Finally, you can save money on buying a home by doing all the work yourself. If desired, you could buy a home directly from the listing without the help an agent or broker. Just make sure that you take the time to shop around before making any hasty decisions.
Buying a home on your own can be risky. You should always hire a realtor the first time you buy as it can be a complex process. You should only try to buy a home on your own if you are very familiar with the real estate industry and know everything involved in the buying process.