When purchasing a home, there is always a balance in priorities between getting the home that you really want and saving money. Much of the costs (price, interest rates, property taxes, insurance, etc.) seem to be dictated by factors outside of our control. There are a few things, however, that you can do before, during and after your home purchase that might save you a few hundred (or even a few thousand) bucks.
Preparing for your home purchase
Save as much money as you can. This one might seem a little obvious, but it’s always worth mentioning. If you have additional money to put towards a down payment or pay out of pocket to lower your interest rate, you could save thousands on interest or mortgage insurance.
Check your credit and “clean up” any inaccurate or negative information. Surveys report that more than 80 percent of consumer credit reports contain at least one inaccuracy. Whether it’s something minor (a typo in your name or Social Security number that may cause a delay) or a collection that doesn’t belong to you that drops your score, you don’t want to run into any surprises right at the time you’re ready to write an offer on a house. And just a few points could make a difference in your interest rate.
Be sure to get pre approved. Choosing your lender and loan program ahead of time will ensure you don’t have to make any last minute, rushed decisions on a loan program. You can take your time and be sure you’re making the right decision.
Discuss special loan programs and down payment assistance options with your loan officer and real estate agent. Depending on factors such as your profession, the area you’re looking in, your income bracket and the type of home you’re interested in, there may be additional loan options available that could save you money. Additionally, down payment assistance programs are available to homebuyers who meet a certain criteria. It’s definitely worth discussing the potentially money saving options available.
When you’re ready to start looking
Carefully review the recent sold homes in the area before choosing your offer price. It’s easy to get caught up in the emotion when you find the home that’s just right. Or to low ball in hopes that you’ll get the best deal. Be sure to sit with your real estate agent and carefully review the comparable homes that have sold in the area. By choosing and supporting your offer to the seller based on the data, you’re most likely to choose a price that’s fair and avoid overpaying or offending the seller’s with too low an offer.
Discuss additional contract costs with your real estate agent. There are several additional costs addressed in a purchase contract (home warranty, title fees, etc.). Check with your real estate agent to decide if there are any of these you may ask the seller to cover without hurting your offer.
When you’ve found a home
Don’t skip the home inspection. This advice might seem counter intuitive — after all home inspections cost money — but they also give homebuyers two opportunities to save money. First, if there are some repairs needed, you have the opportunity to ask the seller for repairs or credit toward repairs. Second, it gives you a list of items that may be in need of maintenance. Being aware of these items gives you the opportunity to complete any preventative maintenance before it turns into more costly repairs.
Negotiate your home insurance. I’m often surprised by the wide range of home insurance quotes my home buyers will receive. Recently, one buyer got a quote for $650 annual premium and another for $1,300 — with nearly the same coverage options. Often times by bundling home and auto insurance, increasing deductibles, etc., can significantly reduce home insurance and subsequently, monthly payments can be reduced.
After you’ve closed
Check your sales price against the county assessor’s office. If your home sold or appraised significantly lower than the assessor’s current value estimate, you may be able to use that to your advantage. Contact the assessor’s office to find out how to have your home re-evaluated in hopes that it will lower your taxes.
Contact your local city and utility offices. Find out about any available rebates. Some communities in Arizona may offer incentives for changing you’re landscaping to desert landscaping in order to reduce water consumption — which will also reduce your water bill and maintenance costs. Utility companies may offer rebates for energy efficient appliances or solar.
If you’re planning on taking advantage of the low interest rates and affordable housing available in today’s market, I hope you find these tips useful.
• Brandon Moore is a senior mortgage banker (NMLS 258524) who resides in Ahwatukee with his wife and two boys. Reach him at (480) 222-8893 or BrandonM@ASmartLoan.com.