Uncommon Strategies for Financially Savvy Homebuyers
Everyone wants to save money when buying a home. For some people, this means settling on a house that doesn’t quite meet their expectations on quality, size or location. Homebuyers with a more financially savvy approach will look for ways to save money on a home without having to make compromises or sacrifices. If you fall into this second category, then you’ve likely spent countless hours scouring the internet to find financial hacks before buying a home. While this information is available, it can take some time to find. Luckily, we’ve gathered some uncommon strategies to help financially savvy homebuyers save money on their next purchase.
Buy when your credit score is at its highest point.
It’s well understood how a credit score impacts a person’s ability to buy a home. In short, a lower score is indicative of poor borrowing and repayment habits in the past. This makes it less likely for an individual to be eligible for the loans required to purchase a home. However, you should resist the temptation to aim for the minimum credit score required to receive these loans.
In regards to home buying, credit scores don’t just decide your eligibility to receive a loan. The interest rates that are placed on top of these loans is also calculated by your credit score. In order to avoid exorbitant interest rates, buy a home when your credit score is at its highest. You’ll get more favorable conditions on your borrowing with a higher score. This could end up saving you thousands of dollars in the long run.
Take out a loan if you don’t have the full down payment.
In order to close on a home, the vast majority of properties will require a 20% down payment. For many couples who are eager to move out of their parents’ house or an expensive apartment, that high percentage is too much. When faced with the choice of continuing to sink money into a rental or downgrade on a home, many homebuyers will decide to settle on a property that doesn’t meet their expectations as long as the down payment is manageable.
What many homebuyers don’t realize is that there are many hacks that can be used to land your dream home even if you can’t foot the 20% down payment. There are many institutions that are willing to offer loans to cover the percentage that you cannot afford. USDA Rural Housing loans, FHA loans, and VA loans are just a few examples. Some banks even offer to pay the difference if you are willing to pay for insurance coverage on the loan.
Hire a local realtor.
Many homebuyers who are looking to save money on their purchase are reticent about hiring a realtor. While you do have to pay a realtor for their service, it doesn’t always end up making the entire process more expensive. When trying to save money as a homebuyer, you can’t just count the money you don’t spend. You also need to include the savings that are gained from hiring a realtor.
While Hiring a local realtor can help you save money on a home, you do need to be careful about which realtor you hire. Don’t fall into the trap of hiring a larger realty group that doesn’t have experience in your local area. The real value will be found in hiring a local realtor who knows the area, the sellers, and the local industry.
Buying a home is one of the most important investments that you’ll make in life; it also happens to be the most expensive and valuable. In order to make sure you get the house of your dreams without going over budget, you’ll have to make some extra efforts to save money in the process. If you work hard enough, you’ll be able to save money in areas that other homebuyers didn’t know existed.
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David Dixon is a contributing writer.