6 money-saving tips homebuyers should know
Buying a house is always expensive, but recently it has been even tougher for many Americans to afford to buy a home. As of August 2023, the median home price sits at $407,100, according to data from the National Association of Realtors. That's an increase of nearly 4% year-over-year
To make matters worse, mortgage rates are high right now as well. The national average mortgage rate as of October 17, 2023 is 7.92%. Mortgage rates have gone up over the past 18 months as a reaction to the Federal Reserve enacting a series of rate hikes designed to fight back against inflation.
All of this can leave prospective homeowners struggling to figure out how to afford to buy a home, forcing many to keep renting long after they may have thought they'd be a in a place of their own. Luckily, there are some ways you can save money when buying a home.
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6 money-saving tips homebuyers should know
Here are six effective ways homebuyers can save money now.
Find an experienced real estate agent
No matter how much research you do, you're likely never going to be an expert when it comes to home buying. Just like an athlete needs a great coach or a musician a great producer, you need to make sure you find a good real estate agent.
They will act as your representative, negotiating to get you the best deal possible. A good real estate agent will also steer you away from bad deals and towards deals that make more sense for you.
Make as big a down payment as possible
When you buy a house, you normally put down a chunk of money and take out a mortgage on the rest. The more you put down up front, the less you have to borrow – and the less you have to pay in interest.
Most mortgages require at least 3.5% to 5% as a down payment, but strive to put down even more. Putting down up to 20% on your mortgage could end up saving you big in the long run. And if you put down at least 20%, you probably won't have to pay private mortgage insurance, which will save you a bit of cash.
Shop around for a lender
There are a lot of companies out there offering mortgages. It might be tempting to just use the bank you do your normal personal banking with, but they might not have the best rate available to you. There are myriad tools out there to compare rates. Just make sure you take your time and do your due diligence to get the best possible deal.
Shop for mortgages online right now.
Improve your credit score
The better your credit score is, the better rate you're going to get on your mortgage. Improve your credit score by paying down debt and making sure you make all payments on time. It might take a little while, but eventually you can improve your credit score and potentially get yourself a better rate on your mortgage.
Negotiate closing costs
Closings costs include things like attorney fees, lender fees and appraisals. Sometimes, you can get the seller to cover some of these costs for you. There is no guarantee that it will work, but it can't hurt to ask.
Refinance, eventually
As noted above, mortgage rates are high right now. Eventually, they'll go back down. While you could wait and buy a home when rates are more manageable, you don't have to delay your dream of homeownership. You can buy a home right now – and refinance your loan when prices go down. You'll just have to pay attention to refinancing rates and jump on your opportunity when the time is right.
You can get ready to buy a home now by shopping for a mortgage online.
The bottom line
Buying a house is expensive, especially right now. Home prices are high and so are mortgage rates. When combined, that makes buying a place to live even more of a financial adventure than it normally is. Luckily, there are steps you can take to save yourself money, from getting the help of a top-notch real estate agent to shopping around for your loan.
