How to Save $ When Buying Property

Saving money when buying a home involves a combination of strategies, careful planning, and informed decision-making. Here are some tips to help you save money when purchasing a home (easier said than done, I know):

1. Set a Budget

Determine how much you can afford based on your income, expenses, and financial goals. Don’t forget to factor in property taxes, insurance, and maintenance costs.

2. Improve Your Credit Score

A higher credit score can help you qualify for a lower interest rate on your mortgage. Pay bills on time, reduce credit card balances, and avoid opening new lines of credit before applying for a mortgage.

3. Shop for the Best Mortgage Rate

Compare mortgage rates and terms from different lenders, including banks, credit unions, and online lenders. Even a slightly lower interest rate can save you thousands over the life of the loan. If you have the extra cash, I always advise my clients to talk to their lenders about buying the points down on the interest rate.

4. Get Pre-Approved

– Obtain pre-approval for a mortgage before house hunting. This helps you narrow down your search to homes within your budget and makes your offer more attractive to sellers. Your REALTOR can help you find the best mortgage lender if you don’t have the contact yet. If your REALTOR doesn’t have any lenders to send you, it’s a red flag. Your lender is just as important as your REALTOR.

5. Consider Your Down Payment

Aim to save a substantial down payment. I tell my clients who are struggling with this to limit your trips to Costco and skip the family vacation to save a little extra. A larger down payment can reduce your monthly mortgage payments and may eliminate the need for private mortgage insurance (PMI).

6. Explore First-Time Homebuyer Programs

Many governments and organizations offer programs for first-time homebuyers, such as down payment assistance, lower interest rates, or tax credits. Research these options in your area. Hawai’i programs are time consuming but worth it.

7. Negotiate with Sellers

This is where your REALTOR can really shine for you. They can negotiate the price and terms with the seller. Be prepared to walk away if the deal isn’t favorable. In a buyer’s market, you may have more negotiating power.

8. Inspect and Research

Invest in a thorough home inspection to uncover potential issues. I recommend consulting with an electrician and plumber if the home inspection report shows any type of damage or repair needed. Research the neighborhood, schools, and property values to make sure you’re getting a good deal.

9. Avoid High Closing Costs

Shop around for title insurance, homeowners insurance, and other closing costs to find the best rates. Ask your lender for a Loan Estimate to understand these costs upfront. Closing cost can be discounted if you are a nurse, firefighter, police, etc.

10. Understand Tax Benefits

Be aware of tax benefits related to homeownership, such as deductions for mortgage interest and property taxes. Talk to your CPA on this matter.