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15 Money-Saving Tips for First-Time Home Buyers

15 MONEY SAVING TIPS FOR FIRST-TIME HOME BUYERS jacobgrant Property Management 1. Sign a contingency clause A Mortgage Financing Contingency Clause protects you, if say, you lose your job and the loans fall through or the appraisal prices comes in over the purchase. Should one of these occur, the buyer gets the money back he/she used to secure the property, also known as "earnest money". Without this clause, you could lose that money and still be obligated to buy the house. As you can imagine, this could be devastating. Generally, the more outs the better. 2. Geography & taxes Property taxes are assessed by the county you live in and average 1.2% of your home's value each year. $2,839 National median property tax 3. Pay for an inspection 4. Shop (hard) for your mortgage 5% = $23.000 Don't start shopping for a house before you get a pre-approval for a mortgage. Saving a half a percentage point on a $200,000 home loan can save you 8 out of 10 buyers get an inspection prior to closing When looking at buying a home, check the age and condition of the expensive fixes: furnace, roof, windows and appliances. Repairs for $64/month, or $23,000 over the life of a 30 year mortgage. these can easily set you back $5,000-$15,000 apiece. Research your financing options with multiple lenders is the best way to get the lowest interest rates. Consult with a mortgage broker for this process. 5. Consider all expenses Purchase Costs Down payment Closing costs Appraisal fee Home inspection $20,000 $8,300 $350 $500 11111 Yearly Costs Mortgage payment 6. Don't forget HOA fees $3,367 .$7,580 $2,512 $1,295 $2,300 $1,360 $1,000 Private mortgage insurance ..$670 Interest Homeowner's association fees can Property taxes Utilities.. be as low as $0 or as high as a few hundred dollars per month, depending on where you live and Renovations. Maintenance the amenities/services offered. But, HOA fees often range from $200-$400 per month. Homeowner's insurance 7. Sidestep private mortgage insurance (PMI) If you don't have 20 percent to put down, you can still get a mortgage with as little as 3 percent down. However, if your down payment is less than 20 percent, you'll have to pay private mortgage insurance, which is about .85 percent of your loan amount, and isn't tax deductible. That's $17,000 over a 30 year, $200,000 mortgage 8. Make conservative income estimates When you are determining the amount of mortgage you are able to afford, base the number on how much you are making today. Don't base mortgage payment potential off your expected bonus or salary increase. No one can predict the future, and although you may be in a better financial situation a year down the road, nothing is certain. Make conservative estimates based on stable income sources. 9. Don't buy a house for the view Buy the view, not the house. Have you ever heard of those stories of people going to court warring over a new development that will restrict their view of the lake or nature reserve. These people bought the house for the view, now within a year of moving in, the view is gone. Unless you own the land between your house and the view, never buy a house for the view. It could change overnight. 10. Don't be house poor Rule of thumb: Don't spend more than 30% of your monthly income on a mortgage payment. This is a common one. Many first-time buyers fall 30% in love with their dream home and neighborhood (or the idea of owning a home) and pay above their budget. This leaves them with zero money left over to do the things they like, or even worse, enough money to cover home, car and medical bills. This can quickly get ugly. 11. Choose the RIGHT mortgage 30 Year mortgage Over the life of a $200,000, 30 year 15 Year mortgage Over the life of a $200,000, 15 year VS mortgage at 5 percent, you'll pay 360 monthly payments of $1,073.64 each. mortgage at 5 percent, you'll pay 180 monthly payments of $1,581.59 each. Total: $386,511.57 Total: $284,685.71 Freddie Мас EPARTMENT USDA RIMENT O UNITED STA URBAN A FannieMae. SOF AMERIC DEVELOPME USDA mortgage FHA mortgage A low down Conforming mortgage Veterans Affairs Portfolio mortgage mortgage A zero down payment mortgage program available to military borrowers. A zero down Mortgages which meet Fannie Mae / A mortgage payment mortgage payment mortgage program backed by the Federal Housing program available in less-dense U.S. program from a specific bank and not backed by the U.S. government. Freddie Mac guidelines. Down payments as low as 3% allowed. Administration. census tracts. 12. Pay extra Save yourself a ton of time and money by making extra mortgage payments each month or year. On a 30-year $250,000 mortgage at 6 percent interest, paying an extra $100 each month will cut four years and nearly $72,000 off the loan term. 13. Negotiate closing costs These typically account for 1-8% of the purchase price Try living for 6 months on a pretend mortgage payment and look at your quality of life. This is the best way to gauge how much mortgage payment you can comfortably afford Don't be scared to negotiate The average home sells for 97% of asking price and 45% of sellers reduce price at least once. 15. Study the market Make sure you know exactly what other homes are listed and selling for in the area you are looking to buy. This will give you a solid idea about how much you can expect to 14. Bundle insurance Explore bundling your home, auto and other insurance together. pay for a home of similar specs. This will make you more informed in the negotiation process and keep your agent honest when working through Shop around, you can save hundreds of dollars each year if you find a good package deal. the terms of the contract. Sources Noun Project: “Negotiate" icon by Irene Hoffman Noun Project: “House" icon by llsur Aptukov Noun Project: “House" icon by Sascha Elmers Noun Project: “Bank" icon by Yarden Gilboa Noun Project: “Income" icon by Doug Cavendish Noun Project: “Money" icon by Gabriela Malaspina Noun Project: "Watch" icon by la-fabrique-creative Noun Project: “Contract" icon by Adreine Noun Project: “Chain" icon by Juan Pablo Bravo Noun Project: "Cloud" icon by Mike Ashley Noun Project: “Magnifying Glass" icon by Alexander Bickov Noun Project: “Fire" icon by Piero Borgo Noun Project: “Car" icon by Naomi Atkinson Noun Project: “House" icon by John Caserta Noun Project: “Caution" icon by Scott Lewis Map of United States of America with States - Multicolor SN AND $0- 1K $1K - 2K $2K - 3K $3K - 4K

15 Money-Saving Tips for First-Time Home Buyers

shared by jacobgrant on Jul 10
Buying a home is one of the largest investments you'll ever make, both financially and emotionally. One small mistakes could cost thousands of dollars. It is widely cited that 2015 will show a resurge...


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