There are many first-time homebuyers who assume that the process of buying a house is simple and straightforward. However, the truth is, there are countless expenses associated with this purchase. If someone is working with a minimal budget, being extra cautious is highly recommended. Keep reading to learn some strategic ways to save money when purchasing a home.
Keep in mind, for most people, the home is likely the most expensive thing they will ever own. While most are aware of this, they may not think about it when applying for mortgage loans. It is tempting to take as much money as a lender is willing to give. However, this is not always a smart move. With the tips here, anyone can save money while still getting the home they want.
Purchasing in a Growing Area
One of the very best investment decisions a person can make is to buy close to, but not in, a popular neighborhood. In many cases, it will not be affordable or practical to purchase a home in the up-and-coming neighborhoods in the area. However, looking close to this location could be a smart move. In most cases, it is possible to save between 20 and 30 percent on the total purchase price. What is even more beneficial is that a person will be able to see improved appreciation rates.
If a person wants to save even more money, they should think about buying a house close to a popular neighborhood that needs some work. By doing this, the buyer will be able to renovate and update a little at a time. This is going to help them save money upfront and will help in controlling costs.
Avoid the Standard Amount of Commission
There is no question that real estate agents do quite a bit to help clients find the house that perfectly fits their needs, get a fair price, and handles all the legal parts of the closing. For doing this, they will usually receive about three percent in commission. However, there are some ways a buyer can save on this. It is a good idea to research some of the options to find the one that best suits the needs a buyer has.
Negotiate the Closing Costs
If a person is not careful, the closing costs are where they are going to take the biggest hit. In fact, closing costs run (on average) between two and five percent of the total purchase price. This means that someone buying a house for $200K can expect to pay between $4K and $10K in closing costs alone.
The closing costs will cover certain expenses, such as termite inspections, attorney fees, lender fees, radon testing, appraisals, interest, title fees, escrow fees, and more. What the majority of buyers are not aware of is that they can negotiate some or all of these costs. When they take the time to do this, it is possible to save a few thousand dollars right off the top.
When it comes to buying a home, there are more costs involved than just the price of the home. Be sure to keep the tips and information here in mind to save as much as possible on the home that is being purchased. Being informed is the best way to save money.