Buying a home is one of the most significant purchases that you’ll likely make in your life. Although some first-time home buyers will suppose it as a straightforward process to buy a home, there’s a set of expenses that you need to consider on your first home purchase. Thus, it’s advisable to take extra care, especially if you have a tight budget for it.
You need to look for ways on how to make your budget fit into the cost of the entire home-buying process. For a little help, here’s a list of tips how you can save on the expenses for your first home purchase.
Hire a Trusted Home Inspector
You must avoid at all cost to do a cursory home inspection on your prospective property. A quick home inspection often results in overlooking the various home improvement issues that you’ll only notice after you come to live in the property.
Thus, it’s essential that you should hire a trusted home inspector to do a thorough assessment of the property. Hiring one is also a good thing to save you money on the necessary home improvements that you’ll have to pay if you buy a home which needs too many repairs.
Steer Clear of PMI
Aside from the various expenses that you need to pay as a homebuyer, you might end up for another payment if you only pay a down payment which is less than 20 percent of the home price.
In such case, your lender will have to require a PMI or private mortgage insurance to offset any eventualities of defaulting on your loan. If you calculate it over the duration of your loan, that will mean that you need to pay thousands of dollars for it. For you to avoid PMI, you should pay the required 20 percent down payment as far as possible.
Look for the Ideal Mortgage
For you to save a lot of dollars on your first home purchase, it will be prudent on your part to look around for the best mortgage that can fit your budget.
Most homebuyers will go for the traditional 30-year mortgage, but there are other types of mortgage out there that can save you a significant amount of money. An excellent example of this is the 15-year mortgage. In this type of mortgage, although you’ll need to pay higher monthly premiums, you can pay off the property with lower interest rates in less time.
Negotiate the Closing Costs
If you don’t take extra caution, the closing costs will likely put a big dent in your budget. A lot of experts calculate that you’ll have to pay around two to five percent of the total cost of the home purchase for the closing costs.
Closing costs include payments such as the attorney fees, appraisals, home inspection, title fees, radon testing, and lender fees. You need to know that you can negotiate these fees for you to pay less for the closing costs.
Choose a Property Near a “Hot” Neighborhood
If you want to be practical in your home purchase, you can consider buying a property near an up-and-coming area. Real estate investing experts estimate that you can save between 20 to 30 percent of the price if you choose a property near a hot neighborhood. The good thing is that the appreciation rate is faster in this area.
For you to have a big-time money-savings, you can also choose a property that needs a little bit of home improvement. Not only that you’ll get a price lower than the typical rate, but you can also sell it at a higher price. You can take some advice from the experts at Ashe Morgan for it.
Buying a real estate property can be exciting. However, it’s undeniable that you need to shell out a significant amount of money for its overall expenses. That’s why you need to look for ways how to save money on your first home purchase. You can follow the tips above for that purpose.