How to Save Money when Buying a Home

Estimated read time: 2 minutes

Buying a home is a life goal many hope to achieve. Whether you' re looking for a first home, looking to upgrade to a larger home, or trying to downsize during retirement, there are several things to keep in mind when it comes to saving money for your dream home.

Get preapproved with the right lender

Before you put an offer on a home with your real estate agent, you'll need to get preapproved for a mortgage. While there are many lenders out there, the pricing may not always be the same. Be sure to ask your lender to provide details including interest rates, loan programs, and additional fees.

Boost your credit score

While shopping around for a lender, the first thing a broker or banker will do is pull your credit report. Although not a complete determinant of mortgage approval, a higher credit score may mean better interest rates and terms on your mortgage. To boost your credit score trying pay down your credit balances and avoid applying for new credit cards.

Save for your down payment

The down payment is one of the largest costs of a buying a home. A good rule of thumb is to save about 20% of the purchase price to bring to the closing table. This is mainly due to the fact that any down payment under 20% will mean paying expensive private mortgage insurance payments.

Trust your real estate agent

Although many different websites offer list prices for homes, your local real estate agent will know of fresh listings and homes that have not yet been listed. The best thing you can do is to communicate your price range to your agent and stick to it.

Look for hidden gems

Keep your eyes peeled for homes that have a good structure but may need small cosmetic changes like new paint or blinds. When you find a home with some rough edges but a great location, the purchase price tends to be a little lower than surrounding list prices.

Ask for extra credit

When negotiating with the seller, ask your real estate agent to request seller credits. These credits can cover owner's title policy and offset other up-front expenses like appliance repairs. Make sure to clue in your lender since loan guidelines have certain limits to credits.

Buy at the right time

Popular times to purchase a house are spring through summer. During these times prices spike, and you'll be more likely to pay higher than the asking price. Look for homes during the off-season like late fall and winter.