In your search for a home, does everything seem to cost more than you can afford?
When fees and surcharges are added, you can end up needing much more than just the cash required for your first deposit. To keep costs down, you need to know how to save money.
Knowing what fees are necessary is a daunting task. Below, we’ll give you our money-saving hacks when searching for a home.
Get Help Searching for a Home
Saving money in your home search starts with finding a great real estate agent. The temptation for many when first-time buying is to avoid using an agent and saving on the fee.
However, it is very likely you will just spend that money on other costs that the real estate agent would have done for you. This could be anything from getting a great contract for you to organizing the other legalities and finding you an excellent home for your money. They often know about properties before they go on the market, and can put you at the front of the queue.
In addition, the buyer does not pay the fee anyway. This is paid by the seller, who will give a percentage to both their estate agent and yours.
Build up Your Credit Score
The better your credit score, the lower the rates on any loan will be. This is because there is more security in a lender with a good credit score. If you start to increase your score before you apply for a loan, then you have much better options.
The first thing you need to do is to stop applying for any credit or other loans. These actually make your credit score drop. New accounts and credit lines account for around 10% of your score.
Next, start paying off the balances on your credit cards and engage in cheap living for a while. While you may be rushing to save for a deposit and this may seem counterproductive, it will be a benefit in the long term.
The amount you are allowed on your credit card and the amount spent is known as the credit utilization ratio. It accounts for a huge 30% of your credit score. Getting this down is imperative in saving money on a loan.
Shop Around for Quotes
When looking for a mortgage quote, shop around for the best deal. You want to get offers from at least three or four different lenders to see which is the best fit for you. If you have multiple quotes, you can also use them to negotiate slightly better options with the other lenders.
Some questions to ask when searching for a home are the account fees that many mortgage lenders will charge. While they may offer the lowest rate, they could make up for the shortfall in other areas. Common fees may include processing, loan application, and loan origination.
Pay for a Home Inspection
Looking for a home on a budget can lead you into some tricky situations.
One you want to avoid is the home that just looks too good to be true. If you find the perfect house that gives you lots for your money and is within budget, the temptation is to dive right in, but it may not always be the best option.
Very often, homes can have hidden problems. To avoid any nasty surprises later down the line, pay for a professional home inspection. It may add to your costs but if you sign the contract then realize the home is not what you thought, repairs and legal fees could cost even more.
Prepare to Negotiate
House prices are always negotiable, even if people say they are not. Present a low offer and wait for the seller to make a counteroffer. Click here to see some great affordable budget housing if you are still struggling to find one within your budget.
Negotiating when you get to the end of the sale is just as important. Around 5% of a home’s purchase price can be given to loan origin fees, title insurance, and credit checks. Try to negotiate this with your mortgage lender, and get as much covered by them as you can.
Get Contingency Clauses
There are a lot of things that can go wrong in life. Jobs can be lost, the economy can downturn, and loans can fall through. In these situations, you do not want to lose that deposit that you worked so hard to save.
Contingency clauses can shield you from this. They can prevent you from losing the money that you have used to secure the property. In addition, they can prevent you from any legal proceedings should you be unable to make the sale.
Shop for Insurances
Insurances are a necessity, but one that you can manage with a little work. Insurances have a lot of options, and there are numerous people willing to provide them. This means you have the upper hand when looking for a good deal.
Going with the cheapest choice is not always the best option. You may find they have a high excess or make up the shortfall with other fees. Look at your choices and see which gives the best overall coverage to price balance.
One tip is to see what other insurances you may need and try to get them in a large bundle deal. This can work out much cheaper.
One insurance to look out for is private mortgage insurance, which a lender may add if your downpayment is less than 20%. Avoid this at all costs, as it can cost you a lot of money over the length of the loan. Instead, wait and save the full 20%.
Take Your Time
When searching for a home, the best deals will come if you take your time. Do not get too fixated on a property, particularly if it gets you into financial difficulty.
If you enjoyed our handy blog, then visit the rest of our articles too. We can help you with everything from finances to home maintenance. Keep browsing our site and let us help build the home of your dreams!