Everyone knows buying a home is expensive. But did you know there are ways you can cut costs, get the best mortgage rates, and find creative ways to finance your home? Follow these home buying tips and save.
Tip #1 - Protect Your Deposit
When you make an offer on a home, you must sign a binder. Your real estate agent will tell you it's not a big deal. But, if you put as much as 1% down to hold the offer, many jurisdictions see it as a legal and binding contract. A change of mind by either you or the seller could mean you lose your deposit.
Tip #2 - Educate Yourself
One of the best ways to save money is to know what you're getting yourself into. By knowing as much as possible about buying a home and all the costs involved, you can save yourself from surprises and costly add-on expenses. The U.S. government has help for you in the way of free information. Get this free information about the process of buying a home and all the costs involved at the Federal Citizen Information Center.
Tip #3 - Find a Trustworthy Real Estate Agent
Most of the time, when you do things yourself, it means you save money. If you're familiar with the process of buying a home, you may very well know enough to save a bundle of money. But, for the most part, it pays to have a real estate agent to do the work for you. Talk to family and friends to get references for a trustworthy real estate agent you can be sure has your best interests at heart to handle the legal stuff for you.
Tip #4 - Pre-Qualify
The fun part of buying a home is shopping floor plans and visiting model homes. Finding a loan and how much you qualify for isn't. But, you can learn a great deal about the process of home buying and learn ahead of time how much you qualify for. This can save a lot of headache and heartache later on in the shopping process. It also helps you in the negotiating process by know what you qualify for.
Tip #5 - Assume the Current Mortgage
It's often cheaper to assume the current mortgage than it is to get a new mortgage. Even if the interest rate on the old mortgage is higher than the going rate, the closing costs will be lower. If the seller has a FHA or VA mortgage, it's assumable. Check all your numbers to see if assuming the mortgage is the better option for you.
Tip #6 - Ask to Split Costs
If you're buying a home from a motivated seller who's in a hurry to move, they may be willing to split the closing costs just to seal the deal. They can always say, "No" but it never hurts to ask.
Tip #7 - Consider Creative Loan Options
Shop for a mortgage with both banks and mortgage brokers. Brokers may be willing to give you the better deal. Banks make money whether you close or not. Brokers only make money at closing.
Ask relatives for a loan for your new home. Offer to pay them interest at a higher rate than they would make with their money sitting in the bank but less than the bank will charge you. You might also be able to find local investors. Get leads from real estate brokers, lawyers, and accounts. Ask the sellers if they're willing to finance all or part of the sale. If they don't need the lump sum upfront, they might consider it a good investment.
Buying a home is expensive enough. Follow these tips for buying a home and save yourself some money. Don't be afraid to shop around, pre-qualify, ask to share costs, and get creative about loans. By doing these things, you'll save money and make buying a home a fun and exciting time.