Investing in homeownership can be thrilling and costly, especially to first-time homebuyers. As indicated by Forbes, buying your first home can be overwhelming. It is a combination of delight, pride, and anxiety.
Nonetheless, all is not lost as you will eventually make it into the other side. You need to get the right advice and knowledge in the home buying journey. Below are some tips for saving money during and after buying a home.
1. Make Early Savings
Once you decide to buy a home, you should start saving immediately. Normally, you will be required to pay a down payment which ranges from 3% to 20% of the home's purchase price.
One of the ways to make money easy is by creating your house fund as your savings target. Thus, you can make money fast by deciding the amount to be saved monthly towards your savings target.
2. Get an Expert Real Estate Agent
Being a first-time homebuyer, you are green regarding the intrigues of the home buying process. A skilled agent will assist you in finding the right house as well as make the process smooth. Also, an agent will already likely have a few home options, thus saving you time and money.
3. Boost Your Credit Score Beforehand
You should ensure your credit score is high as soon as you start saving for a home. A higher credit score will ensure you qualify for a mortgage besides guaranteeing favourable interest rates and lender fees. Consequently, avoid new credit if you apply for a mortgage as it will lower your credit score, albeit temporarily.
4. Consider Different Mortgage Options
There are different types of mortgage unlike the popular longer-term 30-year mortgage, you can choose a 15 to a 20-year mortgage. A shorter-term mortgage will attract lower interest over a shorter period, thereby saving more money. However, monthly payments might be higher.
5. Budget and Negotiate for Closing Charges
Closing costs include lender fees, lawyer fees, and fees for taking out and closing on the mortgage. Usually, they amount to about 5% of the buying price. You can negotiate so that the seller pays the fees, or you do cost-sharing.
6. Do a Home Inspection
A professional inspector will check the structural and electrical systems of the home. This will ensure that all repairs and maintenance tasks are brought to your attention. Eventually, an inspection saves you money as it reveals any hidden costs.
7. Choose the Right Neighborhood
Your dream house should be in a convenient neighbourhood that fits your desires. Some of the factors to consider include:
- Secure location
- Nearness to shopping centre and workplace
- Availability of school for your kids
8. Go with What You Can Afford
You should buy a home based on what you can afford presently. Ideally, your inclusive monthly housing costs should not exceed 25% of your monthly income. Also, consider the down payment you plan to make to arrive at what is affordable.
9. Moderate Energy Utilization
Energy bills are a recurrent expenditure after purchasing your home. Such is bound to add to your monthly expenses. You might take some steps to save money on energy bills such as:
- Use of energy-saving LED bulbs
- Investing in appliances like fridges that are energy-efficient
10. Make Extra Payments
You should pay more than your minimum monthly mortgage payments whenever you get extra finances. This can significantly reduce your interest, thus helping you save money.
As observed, buying a home for the first time can be stressful. But you don't have to do it alone. Finally, don't hesitate to seek advice from friends who have done it, and you will successfully negotiate the nitty-gritty of buying your home.