We don’t know anyone that doesn’t love a good deal. Whether the money is saved in the short-term or the long-term, saving money is helpful no matter what your home’s price bracket. There are some things you can do to avoid pricey fees and extra bills after you purchase your new home during this year’s spring buying season. By making some smart moves you could save tens of thousands of dollars (or more) on your next home!
Have a 20% or More Down Payment
Most Americans only put down 11% of their home price when purchasing a new home. Not only will a larger down payment save you from spending more each month on mortgage payments, it will also save you from costly private mortgage insurance.
If you’re unfamiliar with private mortgage insurance (or PMI), you need to understand it and the relationship it has with your down payment. It’s an insurance that you’ll have to pay just in case your home is someday foreclosed on. If your home is foreclosed on, PMI pays your lender for what you don’t pay. If you pay a 20% down payment, your bank won’t have you pay for this insurance. PMI usually costs about 1% of your home’s value, this could mean several thousand dollars you could avoid paying each month if you put down a larger down payment.
Have Great Credit
Depending on your credit score, you could spend several hundred dollars more each month on your mortgage payment. Your credit score determines the interest rate you’ll receive on your mortgage. If you have a low credit score your mortgage payment will reflect it and cost you considerably more.
It’s possible to spend an extra $100,000 over the life of your loan if you have a low credit score versus a higher one. Keep track of your credit on a regular basis and be proactive to ensure it stays as high as possible.
Keep Your Finances Steady
Your home loan interest is determined by lots of factors. Credit score is one, but steady income is another. Your mortgage company will expect you to prove that you have a regular income and don’t have more assets than exceed your income. Typically, a lender doesn’t want to see your monthly output for loans, credit cards, student loans, and other expenses exceed 43% of your monthly earnings. Strive to keep your financial situation in check to ensure your loan is the best one possible that can then save you money.
Save for a Rainy Day
Buying a home always costs more in lots of ways. The “extras” that constantly occur throughout the process will add up. There are also unexpected costs that may occur as soon as you make your move. A new air conditioner unit or a broken appliance can be costly. Ensure you don’t have to purchase these items on credit after you’re in your new home. Credit may seem like an easy solution, but charging large items costs you hundreds or thousands over the course of your loan. Put aside an emergency fund for home repairs or other expenses, you’ll be glad you did.
Implementing these tips can save you large amounts of money monthly, yearly, and over the course of your home loan. By using these tips, you’ll find that you can save money and not only live in your dream home, but live your dream life at the same time.
If you are looking to buy or sell a home this spring along the Shore, The Ferzoco Group is here to help. We are experts in real estate from Ocean City to Cape May. Real estate is one of the biggest investments of your life and The Ferzoco Group knows what it takes for you to take that leap of faith in real estate. We provide you with the tools, professional service, and resources it will take for you to live the dream. Contact us here, or give us a call directly at (609) 399-5454. We are here to help you with all your real estate needs.