Buying property is never a small investment unless you happen to be a billionaire, but there are many ways to save money in the process. According to Money Under 30, homebuyers should always aim to purchase less home that they can afford to ensure that payments are made regularly and on time.
Fortunately, there are several different ways that you can save some extra money when buying a house so that it won’t be as damaging to your bank account.
Buy Just Outside of Hot, Up and Coming Areas
It will always cost more money to be right in the thick of a popular neighborhood or a rapidly growing city. This is why it’s key to check out the surrounding areas that are just out of popular, perhaps up and coming communities. Of course, the farther away you can stand to be, the cheaper that house is likely to cost you. There are plenty of areas that provide easy access to the places that you want to be near yet cost a lot less. You might want to consider properties that require just a little extra fixing too.
Save Up the Recommended 20% Down Payment
It might feel like you’re breaking the bank when you put 20% down of the total price towards a new house, but in the long run, you’ll be saving a lot of money. By putting that much down, you’ll avoid having to pay insurance on your mortgage loan, something referred to as PMI (private mortgage insurance). That can add up to hundreds and thousands of dollars throughout a 30-year loan term. Whether you’re looking to buy Edmonton real estate or somewhere else, saving up to pay 1/5th of the price tag of that new house is a smart way to save money.
Negotiate Closing Costs
The average buyer will have to come up with closing costs for a new house, which is typically between 2 to 5% of the price. They include escrow fees, lender fees, termite inspections, radon testing, attorney fees, among others, and many people aren’t aware that those costs are negotiable. Sometimes the easiest way to save money when buying real estate is knowing to ask the right questions and not being afraid to negotiate. Sometimes, if the seller is highly motivated to move, they may even be willing to cover the closing costs.
Improve Your Credit Score
Raising your credit score before you apply for a loan can help you save quite a bit of money. Interest rates and lender fees are directly determined by how high your credit score is, so it’s worth putting in the effort to raise it as much as you can before applying. If you know well in advance that you’ll be looking at getting a home loan, it can be a big benefit to pay down your debt, making sure all payments are made on time every month.