First-time buyers should be on the lookout for ways to save money.When you begin searching for homes, start early.You can find homes in inexpensive neighborhoods or homes that need updating.Save up for a large down payment so that you don't have to pay mortgage insurance.
Step 1: Inexpensive housing markets can be found.
There are different housing prices around the country.Even within cities, prices can vary.You should be able to live where you need to.You can compare prices on websites and work with a real estate agent.It is possible to move an hour outside a city.In these areas, home prices are very competitive and the commute won't be unbearable.
Step 2: There are homes with dated kitchens.
The kitchen is often updated when people are looking to sell their home.They can raise the purchase price by up to $10,000.You should look for homes that haven't been renovated.You can get the home for less than you would pay for a new one.
Step 3: There are homes with bad paint jobs.
These are the types of fixes that are easy to make.Many buyers will avoid these types of homes.You might be getting a great deal if you identify one.
Step 4: Unkept landscaping should be checked for.
Homeowners have no incentive to negotiate on price if the home is curb appeal.If the home looks rundown, you are more likely to be able to negotiate a better deal.
Step 5: Find homes that have been sold.
A For Sale By owner is a great deal.The seller may not know how much their home is worth.You might be able to get a great deal if you drive a hard bargain.Look for sale signs when you drive through a neighborhood.People usually advertise in the newspaper or on the internet.
Step 6: There are homes that have been sitting on the market.
An owner is more likely to negotiate when a home is unsold.Look for homes that have been on the market for at least 30 days.Some homes are sitting on the market because they are over-priced or have structural problems.If you don't want a home with a lot of problems, you should still have an inspection done.
Step 7: Look into properties that have been foreclosed on.
There are online foreclosure listings.As you look through them, pay attention to the agent listed.The listing agent may not have your best interests in mind, so it's not a good idea to tell them you're interested in buying a foreclosed property.The prices listed for foreclosed homes shouldn't be given too much credit.Banks can underprice or overprice foreclosed properties.You can come up with your bid by looking at comparable homes nearby and considering how long the property has been on the market.You can buy foreclosed properties at auctions.You might not be comfortable doing this as a first-time buyer.You can observe the bidding process at auctions.You should get preapproved for a mortgage at a minimum if you want to secure funding ahead of time.
Step 8: You should buy a house that you can afford.
Buying a smaller home will save you money.You will have lower upkeep expenses because you will save on mortgage payments.Remember that your first home isn't your last, so find something within your budget.
Step 9: You can get preapproved for a mortgage.
If you have a bank approve you, you can find out if you qualify for the lowest interest rates.When you negotiate with the seller, being preapproved will give you power.
Step 10: When touring homes, keep a poker face.
Before you make an offer, you should visit every home.Don't let your emotions get in the way of being pleasant.No matter how you feel, never gush about a home.A seller who knows you love the house will drive a harder bargain, so keep sellers neutral.When you are alone with your agent, speak honestly about the house.
Step 11: It is a good idea to have the home inspected.
Everything that is wrong with the home can be found through the inspection.You can ask the seller for a credit, which should lower the purchase price even more.Go over the report with the inspector after you have ordered your inspection.If the home needs major repairs, it's a good idea to get an estimate from a contractor.
Step 12: Don't offer more than the asking price.
If you want a deal, you should offer less than the asking price.You don't want to offer a price that is too low because you will offend the homeowner.Market conditions will drive your offer.You should offer less than you want to in a buyer's market.You want to pay $180,000 for a home that is listed at $200,000.The room to go up is given by the open negotiations with a bid of $165,000In a hot market, you might have to make your best offer first.If you only want to pay $180,000 for a house, make your first offer.
Step 13: You should be prepared to walk away.
A technique used by sellers is to say that another person is interested in the house.The purpose of telling you this is to make you increase your offer.If you want to save money, walk away from a home.You might find a new home in a month if you fall in love with the place.
Step 14: The seller should cover closing costs.
Your closing costs include appraisal, title insurance, and loan origination fees.Up to 5% of the purchase price can be added by these costs.The seller should cover those costs.You can still reduce your closing costs even if the seller doesn't cover them.If you choose your own title insurance provider, you will probably get the insurance cheaper.It's less useful to try to pick your own title company on many contracts because the seller will pay certain costs in return for selecting their own.
Step 15: Agree to close at the end of the month.
From the day you close, you will need to pay mortgage interest, hazard insurance, taxes, and homeowners association dues.You won't have to pay them if you close at the end of the month.If there are 7 days remaining in the month, you will be responsible to pay 7/30ths of the interest in a month with 30 days.The later in the month that you close, the less interest you will owe.
Step 16: You can choose a 15-year term.
The monthly payment will be higher with a 15-year loan.You will save a lot of money over the life of the loan.You can get a 15-year mortgage if you can afford the monthly payments.The benefit of 15 year mortgages is that they usually have lower interest rates.
Step 17: Pay more each month.
You can save a lot of money if you pay more each month.You will pay off your mortgage quicker and pay less in interest.Imagine you have a mortgage with 4% interest for $220,000.If you make an extra payment each quarter, your loan will be paid off 11 years early and you will save $65,000 in interest.If additional payments are marked with "apply to principal" they could be applied to the interest.
Step 18: You can consider a hybrid mortgage.
Your interest rate never changes with a fixed mortgage.There is a second option, which is the variable rate mortgage (ARM).During the housing meltdown, these mortgages received a lot of bad press.A hybrid ARM can save you money and carry less risk than older ones.The interest rate will be fixed for a period of time.At the end of the fixed period, the rate on the mortgage can change.The initial fixed rate is usually lower than what you can get with a mortgage.A 7/1 hybrid is a full percentage point lower.Your mortgage rate will probably increase at the end of the fixed period.Refinancing your mortgage will cost you more money, and you should seek professional advice before taking an ARM.
Step 19: Don't borrow more than 80% of the home's value.
If you borrow more than 80% of the value of your home, you must pay for private mortgage insurance.Up to 1% of the loan amount can be spent on private mortgage insurance.You could pay as much as $2,000 for insurance if your loan is $200,000.If you have good credit, you might be able to get a mortgage.You take out two mortgages from the same lender.Because neither mortgage is for more than 80% of the home's value, you don't pay private mortgage insurance.
Step 20: Before you get an FHA loan, compare costs.
An FHA loan isn't likely to save you money in the long run.It is a great option for buyers who don't have a large down payment or have bad credit.Because of the low down payment, you will need to pay mortgage insurance, which is not cheap.Home ownership is possible for many people, but don't assume they are the cheapest option.Ask your lender to compare your loan with a conventional one.Take the monthly mortgage payments and the total costs.
Step 21: You can check your credit score.
If you have a credit score of 740 or higher, you may be able to get a lower interest rate.You might not be able to get a mortgage if you have a low score.Use a free online service, such as freecreditreport.com or Credit Karma, though note that the score you receive may differ from the one used for the mortgage.You can check your online credit card account.Some credit card companies will give you your credit score for free.You can get your credit score by talking to a HUD-certified housing counselor.At myfico.com, you can pay for your score.
Step 22: Errors fixed.
You should pull your credit report at least a year before shopping for a mortgage.Each of the major national credit reporting agencies will give you a free annual report.Common errors include accounts inaccurately listed as closed or in collections.The accounts have the wrong balance or credit limit listed.The accounts are owned by your ex- spouse.Someone else's account is listed on your credit report because they have the same name or tax ID number.
Step 23: You can improve your credit score by paying down debt.
When you apply for a mortgage, you want your score to be high.You should pay down your debts, in particular your credit card debt.Extra cash should be put toward your debt payments.Debt payments should not be more than 42% of your income.If your income is $5,000 a month, then your monthly debt payments should be no more than $2,150.Make sure you include your mortgage payments in your debts.Don't close credit card accounts.Your utilization is the amount of credit you use.You might have two credit cards with different limits on them.Your utilization goes up to 80% if you close one card.If you need help with a budget, visit a credit counselor.The counselor can negotiate with your creditor to lower your interest rates.
Step 24: Obtain multiple quotes.
Don't get the first mortgage offer.Don't shop around.Multiple banks, credit unions, local brokers and online mortgage lenders are available to visit.You can find the lowest price by looking at both the rate and fees.Make the process simpler by working with a mortgage broker.They can get quotes from more than one lender.