Aside from buying a car, the very first home that you’ll buy is one of the most significant decisions that you’ll make in your life. Even though some newbies in a home purchase will think of it as an easy process to buy a property, the reality is that you’ll need to prepare yourself for a set of expenses before you consider yourself a homeowner.
Therefore, taking precautions and doing some research is crucial, especially if you’re tight on the budget. You should consider, for instance, how you can save for your first home purchase. So, for a little bit of assistance, here are some tips that you can follow for that purpose.
Get the Services of a Home Inspector
Some first-time homebuyers often make the mistake of doing a cursory home inspection on the property that interests them. Making this mistake means overlooking the different structural and renovation issues of the property that will cost you a significant amount of money later.
Therefore, it will do you good to get the services of a trusted home inspection firm to look for damages and problems in your prospective property. Hiring a home inspector will also help you prevent spending your money on the home improvement issues that you overlooked by doing a quick home inspection.
Check for the Best Mortgage Out There
Looking for the ideal mortgage that can suit your budget is one of the smartest ways to save money from the cost of your first property purchase.
You can find other types of mortgage out there other than the traditional and expensive 30-year mortgage that will help you get big-time money-savings on the cost of buying a property. For instance, there’s the 15-year mortgage.
Even though the payment for a 15-year mortgage will require higher premiums, you can avoid higher interest rates for this type of mortgage because you’ll pay it off in less time than the 30-year mortgage. It’s because, in the latter, there’s a high chance that interest rates will go higher within the duration of your payment.
Go for a Property Near a Hot Neighborhood
Excellent money-savings is what’s on top of your mind, right? Then, it’s time that you look for a property near an up-and-coming neighborhood.
Real estate investing sites like southerncaliforniahomebuyers.com estimate that buying property near a “hot” neighborhood will get you money-savings of around 20 to 30 percent from the original home price. It will also put you at an advantage because properties in this type of neighborhood get a faster appreciation rate than in other areas.
Avoid Private Mortgage Insurance
Paying a downpayment that’s below the 20 percent threshold of the price of the property will require you to pay for more on your mortgage. This payment is called private mortgage insurance or PMI. Lenders typically charge this payment in case you default on your mortgage.
If you estimate it throughout your loan duration, you’ll see that you’ll need to pay a significant amount of money for it. So, if you want to avoid paying for PMI, you should make sure that you pay the downpayment of 20 percent of the total home price.
Negotiate the Closing Expenses
There are times that the closing costs will eat up a significant part of your budget if you don’t take extra caution. The closing expenses typically include the payments for the home inspection, lawyer, real estate agent, radon testing, and title fees.
The cost of that can go between two to five percent of the total value of the property that you’ll buy. Therefore, it’s essential that you use your negotiation skills for these fees for you to save money.
Your first home purchase will require you to have a prepared budget. However, you can get a significant money-savings if you know the ways how to navigate the entire home buying process. You can take knowledge from the list of tips above for that purpose.