Your house is likely to be the most expensive thing you ever buy, and can be one of the most stressful purchases of your life. While the stress that comes with the home buying process is perfectly natural, there are some ways you can make the process smoother and less expensive.
Here are four ways to save money on your next home that can also put you more in control of the process and reduce your stress level at the same time.
Don't take the first mortgage you're offered
Odds are that your real estate agent has a "mortgage guy" who they will refer you to when you're ready to make an offer on a home.
While it's worth hearing what they have to say, like most other purchases, it can pay tremendously to shop around. First you should know what your credit score is (FICO score is what most lenders see), and what the average interest rates are for people with your score. The website myfico.com can give you this information, and can be well worth the $20 or so you'll pay for it.
Then, get quotes from a variety of lenders. Check national banks, regional banks, community banks, credit unions, and direct mortgage lenders. You might be surprised at how much the rates can vary.
Even a small difference in your interest rate can mean big savings over the life of the loan. For instance, the difference in monthly payments between 4.00% and 4.10% interest rates on a $300,000 mortgage adds up to more than $6,200 over a 30-year repayment period.
Be sure to check the "trouble spots"
When you make an offer on a home, there are certain things you should really pay attention to as far as the home's condition is concerned.
Some things, like peeling paint or a fence that's falling apart can make a property look terrible, but won't cost a bundle to get fixed.
However, some things can turn your dream house into a money pit very quickly. If the house has plumbing issues, for example, it can cost tens of thousands of dollars to fix, and even more if a pipe bursts. Or, if the house has shoddy electrical work, not only can it be a serious fire hazard, but can cost tons of money to redo.
Pay more attention to the core components of the home as opposed to any straightforward or cosmetic issues. If any potentially costly issues are discovered, it may be a good reason to walk away.
A lower insurance rate can save you a bundle
Just like with the mortgage issue, most real estate professionals as well as mortgage brokers will send you to their "insurance guy". Sometimes they may actually offer you the best rate, but you'll never know until you shop around.
If you can afford to pay a higher deductible in the event of a catastrophe, it could save you a lot of money. Another strategy to try is to contact your auto insurance company and see if they offer discounts for bundling your home and auto insurance with the same company. Getting a new, state-of-the-art security system installed can also knock a considerable amount off your premium, and usually won't cost you too much up front if you agree to sign a service contract.
Negotiating can be the most stressful part, but can save you the most money
The absolute best negotiating tactic is to be as prepared as possible. Simply knowing what you should pay can make all the difference.
Before you begin to negotiate on a home, do some research about the local market. Is it declining or increasing in value? How long are houses sitting on the market, on average?
Once you do that, do some research on the property itself. Tax records and building permits are public records, so you could find out some useful information to use in your favor. For instance, the sellers may have made the roof look great for the showing, but if you find out it was last replaced nearly 20 years ago, you can use that knowledge to your advantage.
Whether you choose to use an agent or not in the buying process, you should do your homework, ask questions, and always ask for a better deal than you think you'll get. Who knows, maybe you'll get an even better deal than you wanted.
You'll thank yourself later
While buying a house can definitely be a nerve-racking and time-consuming process, saving yourself thousands of dollars, either on the purchase or over the long run with insurance or mortgage rates can make the effort well worth it.