When you’re in the market to buy a home, odds are you’re going to want to save as much money as possible, especially when you’re a first time homebuyer. We’ve complied a list that will be sure to save you some serious cash, whether you’re a first time home buyer or not!
10 Money Saving Tips for First Time Homebuyers
1) Sign a contingency clause
Signing a mortgage financing contingency clause protects you, if for example you lose your job and the loans fall through, or the appraisal prices come in over the purchase. Should this occur, the buyer gets the money back they used to secure the property (aka “earnest money”). Without this clause, you could lose that money and still be responsible to purchase the home!
2) Dedicate A LOT of time to find the best mortgage
Don’t start shopping for a house until you get a pre-approval for a mortgage. Make sure you shop hard and smart with multiple lenders for the best mortgage. Saving even half of a percentage point can add up to some serious money over the life of a 30 year mortgage.
3) Pay for an inspection
Before you finalize the purchase of a home, pay for a quality inspection to check the condition of the home. Expensive fixes can be discovered such as furnace, roof, windows, and appliance issues. Have the seller agree to repairs before you buy the home
4) Avoid private mortgage insurance (PMI) if you can
If you don’t have 20% to put down, you can still get a mortgage. However, if your down payment is less than 20%, you’ll have to pay private mortgage insurance, which is about .85% of your loan amount and isn’t tax deductible.
5) Don’t forget about HOA fees
Homeowner’s fees can range from hardly anything to a few hundred dollars per month depending on where you live and the amenities/services offered. Before you choose your home, check out other neighborhoods and evaluate their amenities/services and HOA fees to make the best decision for your preferences and budget.
6) Don’t be house poor
Rule of thumb: Don’t spend more than 30% of your monthly income on your mortgage payment! Don’t forget you’re going to have other expenses besides your mortgage payment, so budget accordingly.
7) 30 year mortgage vs. 15 year mortgage
Make sure you understand just exactly what you’re getting yourself into when you choose between a 30 year and 15 year mortgage. For example:
30 year mortgage for $200,000 @ 5%
You’ll pay 360 monthly payments of $1,073.64 each
TOTAL: $386,511.57
15 year mortgage for $200,000 @ 5%
You’ll pay 180 monthly payments of $1581.59 each
TOTAL: $284,685.71
8) Pay extra
Save yourself a lot of time and money by making extra payments (budget allowing) on your mortgage. The more money you can put towards your mortgage each month, the better.
9) Bundle insurance
Check into bundling your home, auto, and other insurances in order to get a good deal. Shop around for a good package deal. It could end up saving you hundreds each year.
10) Hire a knowledgeable real estate agent
Don’t try and do it alone! Hiring a knowledgeable, experienced real estate agent is probably one of the smartest things you can do as a first time homebuyer. Agents know the market, have connections, know how to negotiate closing costs and more! They will always put your interests first and advise you on any questions you may have.
If you’re a first time homebuyer in the market for a home for sale in Orange County, Cesi Pagano & Associates would love to help! Give us a call today at 949-370-0819
Cesi Pagano
949-370-0819
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