Making the Market Work for You: Financial Hacks for Homebuyers
Most homebuyers enter the market understanding about down payments, mortgage rates, grants for first-time buyers, and agent commissions. To an extent, buying a home is a very similar experience for many people. But there are points that many people aren’t aware of, things that can give you an advantage when it comes to getting the best deal and saving as much money as possible through what can be a very expensive process. And there are aspects of the homebuying process that people tend to accept without question unnecessarily.
Saving is a no-brainer given the cost of getting a mortgage and purchasing a home, from down payment to closing costs and beyond. If your intention is to become a homeowner, it’s important to begin saving as soon as possible. But remember that you need to save more than the amount of a typical down payment (i.e. 20 percent). But people often overlook the fact that saving for a house involves more than just the cost of the mortgage. There are always additional costs, which can run into the tens of thousands of dollars, for realtor fees, mortgage insurance, repairs, moving costs and various other ancillary costs. Save with the assumption that there will be additional costs, and always more than you realize.
Loans and grants
Bear in mind that there are ways to defray the out-of-pocket costs of buying a home. For instance, if you’re a first-time buyer, FHA loans can reduce the amount of your down payment significantly. Always consult a mortgage professional for ways to bring down closing and other costs dramatically.
You can also save money by not hiring an agent. You’ll avoid paying realtor fees, which can cost up to 15 percent commission. Agents have expertise and experience that can be very helpful, especially if you’re new to the homebuying process. However, be aware that it’ll mean doing a lot of research, paperwork and interfacing that an agent would normally take care of. This includes researching the average down payment in your target area or the percentage of homes that sell under their list price. For example, 2.8 percent of homes sell below their listing price in Staten Island, New York.
Lower your taxes
You can have your taxes lowered if you purchase a home for less than it has been appraised for. You’ll need to talk with the county assessor, who can lower your taxes in accordance with the price you paid for the house. It’s possible to save thousands of dollars a year on taxes by going this route, and it gives you immediate equity.
If you’re buying in a “hot” market, make your highest offer from the beginning or consider adding an escalation clause, which will increase your offer to compete with any other bids that come in until it reaches your pre-set maximum. In general, avoid entering into tough negotiations for a home you really like in a hot market. Be aware that low offers may be rejected out of hand in such circumstances.
There are many ways to save money when you’re buying a new house. There are many aspects of the process that people assume are requisite. This often isn’t the case, and doing your research about the process can be well worth your while because it can save you a significant amount of money. In many cases, the more research you’re willing to do when it comes to researching home values and list prices, the better equipped you’ll be when it comes to bidding on the home you want.
Teachers and first responders have been integral in serving our communities during the COVID-19 pandemic. In an effort to thank them, The U.S. House of Representatives has proposed the HELPER Act that would allow teachers and first responders access to mortgages without having to make a down payment.
The experts at Bankrate created this guide to explain what the act entails and what it may mean for these professionals.
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