Regardless of whether it’s your first time buying a home or your tenth, purchasing one is always an adventure. Of course, the process is expensive, so it pays to know how to cut costs. If you’re looking to save some money on your next house, consider the options below.
Consider a Fixer-Upper
Surprisingly, a fixer-upper doesn't have to be a “money pit.” Indeed, buying one could give you access to neighborhoods that might otherwise be unaffordable. After all, they can be overlooked since people often believe they are expensive to renovate. However, they could save you big bucks compared to a full-price new home, as you can prioritize only what you want to renovate. Best of all, you may be eligible for an FHA loan via their 203(k) program, which provides mortgages for homebuyers looking to purchase and restore fixer-uppers. Yes, it is a process, but in the end, you gain a home that can increase in price and give you equity down the line.
Check Out Shared Ownership
While shared ownership isn't for everyone, it can be a cost-effective path toward a home purchase. For instance, co-ownership with friends or relatives can help offset the financial burden that comes with buying a house. Namely, if you live under the same roof, then you could share the cost of mortgage payments, maintenance, and utilities. Of course, there must be a mutual understanding of what will happen if either you or the co-owner decide to leave or are unable to fulfill financial responsibilities. Alternatively, shared equity allows homebuyers to occupy a home while using the resources of an investor, such as a relative or housing association. Eventually, you buy the investor out or sell the property and split the profits.
Explore HUD Homes
A HUD home is a property, often foreclosed, that is under the ownership of the US Department of Housing and Urban Development. They come with many benefits and are usually more affordable than other homes on the market. In fact, taking this route can offer further savings as you may be entitled to a three percent deposit, and HUD will pay up to 5 percent of closing costs. Likewise, you could be eligible for FHA-approved financing or other federally-backed schemes, such as those for repairs and veterans. Lastly, because a HUD home has already been appraised for an FHA mortgage, you will be able to move in quicker.
Focus on Your Credit Score
By having a good credit history, you’re more likely to not only be approved for a loan but get one with favorable rates. Yet, to first gauge your current standing, use an online credit checker. To improve your score, you need to avoid late payments, as they negatively impact credit. Likewise, bringing debt down and keeping our credit cards in check can protect ratings. While it might be tempting to apply for new credit cards, avoid doing so, as each application results in a hard inquiry from lenders. If too many inquiries happen, our scores end up taking a hit.
Anticipate Extra Costs
Homebuying expenses involve more than just the deposit, so it's important to plan for them. Closing costs, such as home inspections and document fees, can be anywhere from 2 to 5 percent of a home's value. Similarly, there will be property taxes, homeowners' insurance, and more. Given that, prepare by shopping for the best deals and negotiating costs when possible. Thankfully, a realtor can inform your decision and potentially save you money. With that in mind, always speak to them about any concerns, as they may have solutions to minimize costs. Better still, they can haggle with sellers to get you a favorable price and cover extras.
Owning a home should be a realistic dream for everyone. With these finance hacks, you can set yourself up for success when it’s time to explore the property market. After all, it’s never a bad time to give yourself the security of ownership.
All the best,
Alice Robertson
Blogger
