7 Ways to Save When Buying a Home

Posted by on Thursday, September 13th, 2018 at 4:47pm.

Buying your first house is a huge step into adulthood. And as most of us know, it’s an expensive one! In fact, a 2017 Zillow survey of 13,000 adults found that only 39 percent of millennials are able to make the standard down payment on a home, and just one in five can pay the minimum to secure a home loan. Ouch.

The good news is, there are definitely ways to cut down on the cost of buying your first home. Here are 7 of our best tips:

1. Choose an experienced Realtor

This is first on our list because it’s the most important! And it’s not just because we’re biased. You might be amazing at searching sites like Trulia and Zillow for potential homes, but what you probably don’t know is sometimes that information is totally incorrect. So you can find a home you love at the price you need, and once you contact someone about it, you might find that it’s an old listing that has already been sold, has an incorrect price, etc. A good Realtor can save you a lot of time during your house hunt and a lot of money during negotiations. Besides, the seller pays the Realtor’s commission, so it’s of great benefit to you with no cost to you.

2. Be able to put 20% down

This may sound counterintuitive to saving money when buying a home, but hear us out. If you don’t come to the table with your 20% down payment, then you will be required to pay private mortgage insurance (PMI). PMI typically costs between 0.5% to 1% of the entire loan amount on an annual basis. That doesn’t sound like a lot, but if you had a $100,000 loan, you could be paying as much as $1,000 a year or $83.33 per month. Yuck! We suggest taking more time to save before you buy so you can avoid this extra cost.

3. Build up your credit score

The higher your credit score, the cheaper your mortgage loan. Mortgage companies know that people with bad credit are a higher risk, so you will have to pay more to give them peace of mind. Take the time on the front end to pay off debt and build up your credit so you can save in the loan process.

4. Get loan quotes from multiple lenders.

Just because you got one quote from one mortgage lender doesn’t mean you can’t find a better one out there! Do your due diligence and check with other options just to see if you can get a better rate.

5. Don’t rush things

Although Chattanooga’s busy real estate market is making us a little low on home inventory, that doesn’t mean you have to pull the trigger on what’s available immediately. Of course you’ll have to compromise since no home is perfect, but looking for a couple more months can only help more than it can hurt! You can always use that time to put more money away.

6. Avoid buying as much house as you can afford

So you’ve been approved up to $150,000 … cool! But that doesn’t mean you should look at homes in the $150,000 range. Consider all of the furniture you’ll need, the maintenance you’ll have to do, etc. and be sure to factor that in to your monthly budget. Besides, you never know what kind of surprises can happen in life, and it’s better to have extra money to play with just in case.

7. Find a fixer-upper

A perfect house doesn’t exist anyway, so finding one that needs a little work and can save you money in the long run isn’t a bad idea! Don’t fret that you have to do all the work as soon as you move in, either. You can easily move in and do a couple of things every month or hold off entirely until you save a bit more money. It’s doable to live with some ugly wallpaper for a bit if it means getting a better deal on a home.