How to Find Your Dream Home, Not a Nightmare Expense
If you’re in the market for your first home, you need to be prepared. Keep reading as we explore financial hacks that will help you get the most out of your home buying budget.
Know the True Cost
Before you start filtering homes on the MLS, you need to understand what you can truly afford and how much that house is really going to cost; you can’t simply factor in the amount of the mortgage payments. Homeowner association fees, routine maintenance, and utilities can add up quickly. This home cost calculator from Angie’s List can get you started and may help you discover expenses you had not considered.
Choose a Mortgage Outside the Norm
You already know that 15- and 30-year mortgages are an option. You may even be aware of adjustable rate mortgages. What many people don’t realize, however, is that there is another option offered by the vast majority of lenders. A 20-year mortgage, according to Credit Sesame, offers a lower interest rate than a 15-year mortgage with a payment not that much different than a 30-year loan. A 20-year loan can save a substantial amount – $40,000 or more depending on the price of the property.
Cut Down Maintenance Costs
Once you own a home, you are on the hook for anything that goes wrong. Fortunately, there are several ways to potentially reduce liabilities. Start by keeping your major appliances and systems maintained. Contact your local major heating, cooling, plumbing, and electrical service providers. For reference, Hiller, a service provider covering parts of the southeast, offers a preventative maintenance membership that covers the cost of annual inspections.
You found the home of your dreams but it comes with more land than you can possibly manage on your own. Depending on where you live, you may be able to recoup a significant chunk of your investment by subdividing the land. There are costs associated with this process, and local fees vary. This is not a financially feasible option if you are on just a few acres, but if you are on 10 or more, slicing up your piece of the American dream is something worth considering.
Fix Your Credit
Obviously, a higher credit score equates a better interest rate. However, improving your credit means more than simply paying your bills on time. MyFico explains that your payment history is only one aspect of what lenders will view as your credit-worthiness. If you want to raise your score and thus reduce your potential interest rate, pay off the debt you owe and avoid using your credit cards while you are in the homebuying process. You can also dispute information you think is inaccurate or has been erroneously attributed to you.
Once you get settled into your new home, make a point to get to know the neighbors. This will give you an opportunity to discuss those aspects of home maintenance you each detest. Consider swapping chores to save on costs. For instance, if you don’t like to mow the yard, you may be able to build your neighbor’s children’s swing set in exchange for a month’s worth of mowings that you would otherwise have to pay for. Realtor.com notes that lawncare can be expensive, and this can save you hundreds of dollars over the mowing season.
Avoid Good School Zones
Time explains that homes in highly rated school districts are almost 50 percent more expensive than the national average. If you don’t have children or plan on providing a private education, you might find a house that suits all of your needs without paying an education access premium.
Homeownership, although expensive, is often cheaper than renting. When money is a concern, take the time to do your research and look for unique ways to keep money in your wallet.
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