Dear Olivia,
I’m saving up to buy my first home, and I’d like to know, what do you recommend for saving as much money as possible when it comes time to buy?
Sincerely,
Ready to Own
First off, congratulations on working toward your real estate goals!
The first step is to start saving up for a down payment, and you seem to have that part well in hand. But there are other things you can do to save money. Let’s outline a few of them!
Find a Low Down Payment or No Down Payment Loan
The rule of thumb for buying a home is to put 20 percent down. Doing so minimizes how much money you have to borrow, which also reduces how much interest you’ll pay over the life of the loan.
But many homebuyer programs don’t require you to put down 20 percent. For example, some FHA loans only require 3.5 percent down, provided you meet certain requirements, like having a credit score of 580 or above.
Better still, a USDA loan requires zero down for eligible buyers, as do VA loans. And, like FHA loans, you don’t need stellar credit to qualify – most lenders require you to have a 640 score or above for USDA loans and 620 or above for VA loans.
These programs often have very competitive interest rates, too, so you can take advantage of a low or zero down payment while also reaping the benefits of a lower interest rate. It’s critical to shop around for your home loan, to say the least – it’s one of the best ways to save money!
Improve Your Credit Before You Buy a Home
Your interest rate is based in part on the quality of your credit – the better your credit score, the lower the interest rate you can get.
Now, as I said before, you don’t need stellar credit to get a loan. But, your interest rate will be higher if your credit history isn’t all that great.
It’s not a very exciting way to save money, but if you focus on repairing your credit and improving your score before you buy a home, you will save a tremendous amount on interest over the life of your loan.
Trust Your Realtor to Negotiate on Your Behalf
Who you choose to represent you as your Realtor can also have a tangible impact on how much you can save when you buy a home.
For example, if you work with a Realtor that is a hard-nosed negotiator, you might be able to buy your dream home for less than the list price. Or, perhaps your Realtor negotiates to have items included in the sale (like the washer and dryer) to save you money on those expenses.
Another way your Realtor can help you save money is by negotiating the closing costs. Having the seller pay part or all of the closing costs can save you thousands of dollars – money you can put in the bank or put towards repairs or improvements to your new home.
The point is that there are many ways to save money when buying a home. If you work with a knowledgeable and experienced Realtor, they can help you maximize your savings while also helping you find your forever home!
Are you ready to buy or sell? Don’t be afraid to reach out with questions! I can be reached at 307-856-3999, and I’m happy to help you get on track to achieve your real estate goals!
~Olivia