Buying a home or maintaining one can be expensive, but there are plenty of ways to save money throughout the process. Whether you’re a first-time buyer or looking to refinance, these money-saving tips for homebuyers can help you make informed, cost-effective decisions. From prequalification to tax deductions, we’ve compiled the most valuable advice to maximize your savings and avoid unnecessary expenses.
- Remember to Factor in Income Tax Savings – When comparing mortgage payments to your current rent, take income tax savings into account. These savings can significantly reduce your monthly expenses.
- Prequalification – A quick 10-15 minute prequalification helps set realistic price ranges for your home search. Call our in-house Countrywide Home Loan Consultant, Jo Ann, at (910) 539-6437, or email Jo_Ann_Riley@Countrywide.com for a free consultation and access to numerous loan programs.
- Get Your Free Credit Report – Request your free credit report from services like TRW or Equifax to check your credit score before applying for a loan. This ensures you’re in a strong financial position.
- Free Estimate on Your Home Sale – If you have a home to sell, get a free estimate of its potential sales price. We can provide a no-obligation estimate to help you plan for your next move.
- Consider School Districts for Future Resale – Even if school quality isn’t a concern for you, a good school district can increase the future resale value of your home. Keep this in mind when purchasing.
- Lower Maintenance Costs with New Homes – New homes tend to have lower maintenance costs, which can save you money in the long run. This is something to consider when choosing between new and older homes.
- Think About the Future – When moving, don’t just think about your current needs—consider the long-term costs of maintaining or reselling the home in the future.
- Use a Buyer’s Agent – A Buyer’s Agent is legally obligated to negotiate for the lowest possible purchase price, ensuring you get the best deal when buying a home.
- Don’t Share Your Price Flexibility with Sellers – Never tell the seller’s broker how much you are willing to increase your offer for a particular house. Keep your buying strategy private to avoid revealing too much.
- Sellers May Cover the Buyer’s Broker Fee – Often, the seller pays the Buyer’s Broker fee, which can save you a significant amount when purchasing a home.
- Estimate How Much You Can Spend for a Home – Visit our office for a free estimate on how much you can afford to spend on a home. There’s no cost or obligation involved.
- Consider a Fixed-Rate Mortgage – When interest rates are low, choose a fixed-rate mortgage. This ensures a stable payment, and as costs rise, your stable rate becomes even more valuable.
- Understand Escrow Accounts in North Carolina – In North Carolina, you’re not entitled to interest on your escrow account, so keep that in mind when managing your funds.
- Save on Homeowner Insurance – Save significantly on your homeowner’s insurance policy by agreeing to pay small claims yourself rather than filing them.
- Avoid Mandatory Flood Insurance – If your building is above the floodplain, you may be able to avoid paying for otherwise mandatory flood insurance.
- Know the Property Taxes – Before buying, make sure you know the true tax figure on any property you’re considering. This will help you avoid surprises later on.
- Deductions for Property Taxes and Loan Interest – The IRS allows you to deduct property taxes and loan interest for co-ops and condos just as you would for a single-family home.
- Research the Financial Health of Condo Associations – Before buying a condo, investigate the financial health of the condo, cooperative, or townhouse association you will be joining.
- Be Careful with Floor Plans – Changing a home’s floor plan after construction begins can be costly. Make sure you’re happy with the layout before committing.
- Look Beyond Sloppy Housekeeping – Don’t let sloppy housekeeping or cosmetic issues deter you from a home with good structure. These problems are easy to fix and could lead to a bargain.
- Understand the Seller’s Situation – Get to know the seller’s situation to help you negotiate a better price for the home.
- Beware of the Best House on the Street – The best house on the street may be harder to sell later, so consider the resale potential before committing.
- Check for Energy-Leakage – Look for plugged holes in areas like the fascia, attic stairs, and insulation to make sure you’re not paying extra for energy loss.
- Radon Gas Problems Can Be Easily Fixed – If radon gas is an issue in a home, it can be easily and inexpensively resolved.
- Choose an Unbiased Home Inspector – Avoid home inspectors who also perform repairs or recommend contractors. You want an independent, impartial inspector.
- Avoid Oral Offers – Never make an oral offer on a house. Without written documentation, there is no binding agreement, and you risk revealing too much of your negotiation strategy.
- Determine Your Maximum Price in Advance – Decide in advance how much you would be willing to pay for a property and keep it to yourself to avoid negotiating against yourself.
- Watch for Overpriced Homes – If a house has been on the market for a long time, it may not be worth the seller’s asking price. Look for homes that have been on the market for a while.
- Leverage Your Pre-Approval in Negotiations – If you’re pre-approved for a loan, use it as leverage in price negotiations. Sellers may be more inclined to accept your offer.
- Work with Mortgage Brokers Paid on Commission – Choose a mortgage broker who only gets paid after you receive a loan commitment. This ensures they’re motivated to find you the best deal.
- Avoid Costly Real Estate Courses – Skip the expensive real estate courses and seminars. Your realtor can provide you with the same valuable information for free.
- Negotiate Garbage Fees – If you’re well-qualified, you may be able to negotiate away certain garbage fees in your contract.
- Tax Deductions for Points Paid – You can deduct points paid during closing, whether you or the seller paid them. This can lower your overall cost.
- Consider an Adjustable-Rate Mortgage When Rates Are High – If interest rates are high, consider an adjustable-rate mortgage to take advantage of lower rates later on.
- Avoid Negative Amortization on ARMs – Be cautious when opting for an adjustable-rate mortgage. Make sure it doesn’t involve negative amortization, which could increase your loan balance over time.
- Don’t Focus on Initial ARM Rates – Ignore the low initial interest rates on adjustable-rate mortgages and focus instead on what the current rate is.
- Verify Extra Principal Payments – Always check your annual statement to make sure extra principal payments were correctly applied. Mistakes can happen with lenders.
- Plan for Refinancing with Balloon Mortgages – If you’re using a balloon mortgage, be sure to have a plan for refinancing before the balloon payment comes due.
- Renegotiate After Low Appraisals – If your appraisal comes in lower than your purchase price, you may be able to renegotiate with the seller.
- Buy a Reissued Title Insurance Policy – If the seller has a title insurance policy under three years old, consider purchasing a reissued policy rather than a completely new one. It can save you money.
- Consider Replacing Items Instead of Moving Them – Moving heavy items can be expensive. Consider how much it costs per pound and whether it would be cheaper to simply replace items later.
- Benefit from the $125,000 Tax Exclusion – If you qualify, the $125,000 tax exclusion can save you significantly, whether or not you buy a replacement residence.
- Save on Inherited Property Taxes – If you inherit property, the IRS grants you a stepped-up basis, eliminating capital gains taxes on any increase in value.
- Track the Cost of Improvements – Keep track of improvements made to the property as they can be added to your cost basis for tax purposes.
- Property Taxes Are Deductible – Property taxes paid on land, campsites, or potential building lots are deductible on your income tax return.
- Deduct Points Paid at Closing – Points paid during closing are deductible from your taxes, whether you or the seller paid them.
- Factor Selling Costs into Your Sale Price – Selling costs such as agent fees and closing costs should be subtracted from your sale price to calculate your adjusted sale price.
- Save on Energy Costs – Check with your local utility for tips on saving energy. There may also be incentives for installing more efficient light bulbs or appliances.
- Refinance When Interest Rates Fall – When interest rates drop, refinancing your mortgage can save you money in the long run, so check if it’s worth pursuing.
- Streamline Your Loan Recasting – Contact your lender to find out if a streamlined loan recasting option is available, which could help avoid closing costs, new appraisals, and credit checks.
These 50 tips can help homebuyers and homeowners save significant amounts of money. Whether you’re buying, selling, refinancing, or simply maintaining your property, the right strategies can make all the difference!