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8 Tips Guaranteed to Save New Homeowners Money

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Originally Posted On: 8 Tips Guaranteed to Save New Homeowners Money – Our Alluring Home

Introduction

Millions of homes are sold in the US every year, many to first time homebuyers. This means that there are plenty of potential home buyers out there who are either trying to purchase their first home or are looking forward to doing so soon. The cost of a home is the largest price many of us will ever pay in our lifetimes, so there is a lot to consider when buying a house, and, luckily, plenty of ways to save some money in the process.

But if the thought of buying a home makes you break out in a cold sweat, don’t worry, below are some tips designed to help the first-time home buyer no matter where in the home buying process you happen to be. Whether you find yourself in the pre-purchase phase, working through closing the deal, or you’re all ready to move in, buying a house doesn’t have to be a money suck. In fact, there are several tips below that should be able to save anyone money.

House Hunting

While you might think that it is hard to save money on a house when all you’re doing currently is looking for one, you should think again, as the house hunting process is a great time to lay-groundwork for future savings.

1. Create a Budget

This tip may seem self-explanatory, but you would be surprised at how many people never take the time to create a real budget for their household and having such a budget is especially important when searching for your first home and even before. This is because knowing your real budget will help determine how expensive of a house you can afford.

For example, most mortgage lenders will look at your debt load, the amount of income you have versus your amount of debt, to determine if you are a good candidate to lend to. Banks typically want to see a debt-to-income ratio of around 36%, which is what you should shoot for when coming up with your own budget.

A quick way to calculate your own ratio is to simply take all household expenses (such as home insurance, taxes and mortgage payments) and compare it to your gross monthly income.

When budgeting for your first home it can be helpful to consider the following:

  • Mortgage lenders will want to see a stable history of employment, at least one year at your current employer or two years of verified income if you are self-employed.
  • Check your credit score. According to Experian, lenders will want to see a score above 620 in order to secure yourself a mortgage.
  • Use the information found in your debt-to-income ratio to set the upper limit of your price range.
  • Be wary of any lenders willing to give you a mortgage if your debt load is well above 50%, as these can be extremely circumspect loans. They may end up costing the borrower much more in the long term through higher interest rates.
2. List Prices Are Negotiable

Just because the home you want has a list price over your budget doesn’t mean that it isn’t obtainable. As any real estate agent will tell you, a home’s list price is just the owner’s dream until someone actually comes along and agrees to pay it.

So, what are some ways that you can successfully negotiate a lower price for your future home?

While not fool-proof, the following tips surely can’t hurt:

  • Introduce yourself to your seller. This can be as simple as dropping off a card or asking your real estate agent for an introduction. Be brief, but also be specific about what draws you to the house and how you can envision yourself living happily there.
  • Not all sellers will want to meet in person, but almost all home sellers will appreciate knowing that they are selling to a buyer who will cherish and appreciate their home as much as they do.
  • Don’t be afraid to wait for a lower price, if the market near you isn’t too fast paced. Sellers will often lower their list price after a home has been on the market for a while.
  • Make an offer, real estate agents must present their clients with all offers. Even if you think your offer is too low, you may be surprised, motivated sellers will often accept an offer for less than what they were asking for.
  • If you are serious about a particular house, maximize your competitiveness by pre-qualifying for a mortgage, this will make the whole process faster versus other potential buyers who have not pre-qualified.
Closing the deal

The closing period of the home buying process can be frantic and confusing, that is why it is best to prepare ahead of time. Doing so won’t just save you from stressful situations, it can also help save you a ton of money when it comes to the final cost of your home.

3. Remember, Closing Costs Money

Closing costs will depend largely on where the house you are buying is located, as which party is responsible for them varies by locality. A good rule of thumb, however, is to budget about 3-6% of the homes final closing price. To find out what these costs might look like in your specific case, try this closing cost calculator.

Planning for your closing costs is a good way to save money and avoid an expensive surprise if the buyer is responsible for them where you live.

Here are some tips on how to save on closing costs:

  • Delay your closing to the end of the month to save on the pre-paid home insurance that is often necessary to close deals.
  • Ask your lender if it is possible to reduce certain fees, ones they may have control over, such as rate-lock fees or loan origination fees.
  • If interest rates are low, you can save by not spending money during closing on points. This is because buying points only helps lower interest rates, which isn’t very useful when rates are low anyways.
4. Find a Home Inspector You Can Trust

One of the most important professionals you will rely on during this process is your home inspector. This is because home inspectors will report to you any concerns they have about the home and it is these concerns that you can raise with the seller to secure a better price. Most important to remember is the quality and price of a home inspector are often completely unrelated. You can easily overpay for a poor-quality home inspection report if you aren’t careful.

Here are some things to look for in a home inspector:

  • Start looking for a home inspector before you even have a home picked out. This will take stress and pressure out of your home search later along and help ensure you have time to find the right person for the job.
  • Don’t go with a real estate agent’s recommendation for a home inspector. Real estate agents want to close the deal at any and all costs and thus cannot be trusted to provide an impartial inspector.
  • If you live in a major metropolitan area, like Chicago, checkout Consumers Checkbook for unbiased and independent recommendations.
  • Ask your home inspector exactly what a typical inspection looks like for them and how long they take. Be sure they give thorough answers.
  • Request one of their previous home inspection reports to make sure it is of high-quality and detail filled.
  • Get feedback from previous customers and ask your home inspector what professional certifications they hold.
Moving In

Once you’ve closed the deal and purchased your new home the real fun begins. This means filling and maintaining your home as a responsible homeowner, along with some real opportunities to save.

5. Prepare for the Unexpected, and Expect Maintenance

One of the most overlooked recurring costs most new homeowners will fail to appreciate is budgeting for expected maintenance. What can expected maintenance usually entail? It could be anything from money to replace a broken window to fixing your home’s siding after a hailstorm. While you can’t truly plan for every possible maintenance cost, you can and should budget for them. Putting aside money for maintenance now will save you money in the future so that you don’t have to finance potentially costly repairs later. This is why it is recommended to set up a maintenance fund for your home that is equal to 1-3% of its total value.

6. Learn to Love FIY (Fix-It-Yourself)

The best part of being a homeowner is that you are finally in charge of your own home repairs. This means that you can easily save money by learning to fix things around your home yourself.

There are a lot of FIY resources online already, so here are just a few suggestions to get you started:

  • Identify areas of your home where you think you could improve things yourself. Try starting with small projects that can easily be completed in a day or weekend.
  • Learn about the project you are undertaking by watching video tutorials on YouTube or checking out books from your local library.
  • Invest in a basic set of tools, this will save you money over having to rent common equipment repeatedly from a hardware store.
  • If you have friends who have expertise in this area, ask them for advice, this won’t cost you anything and you can trust the source.
  • For larger house systems (such as HVAC, Electric work, or plumbing) it is best to hire a professional unless you really know what you’re doing.
  • Ask a handyman to assist you or check your work. Many will be happy to do so for a reasonable fee and will usually give you valuable tips you can use later on your own.
7. Start Scouring for Bargains on Home Goods

When moving into a new home, most homeowners will realize that their old furniture is in some way lacking. They may not have enough pieces to fill their space, or what they do have may no longer fit the decor of their abode. For these homeowners looking to fill their new homes, and anyone else just looking to save some money, bargain hunting and resale shops can be a godsend.

Don’t forget these tips when looking for deals on furniture:

  • Swap-meets can be a great way to get rid of something you no longer want and turn it into something you need. Swap-meets are usually held on weekends in civic centers, look for one in your area.
  • Estate sales, garage sales and yard sales can all be great places to find high-quality furniture at rock-bottom prices. Be sure to get there early for the best selection and don’t be afraid to haggle for a better price!
  • Stores like Goodwill or the Salvation Army will often have vintage furniture and housewares for much cheaper than they would be new, though the condition of some items may be so-so.
  • Online resellers like Craigslist or Ebay can be useful, but beware, it can be harder to judge an item’s condition online and you maybe be stuck with large shipping fees for heavy furniture.
8. Buy Things You Need, Not Things You Want

One of the hardest parts of having any new home is resisting the urge to fill it with things you’ve always wanted but never had room for. While it may seem like overly-simple advice to save money by not buying things you don’t need, it bears repeating, as one will hardly ever be in such a financially tight spot as when buying a new home. This means taking a cold, hard look at all potential purchases and making sure they are something you actually need.

Conclusion

So, as you can see, new homeowners will definitely have opportunities to spend more money than they have to when buying a home, but, as the above tips illustrate, they certainly don’t have to. With just a little pre-planning and effort you can easily save money throughout the process. We hope that you agree and that you have enjoyed reading this article and learned something new in the process. Thank you for reading!

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