Buying a home is one of the largest investments that you will make in your lifetime. Naturally, it comes with quite a few up-front expenses. If you’re looking to save some money on your upcoming home purchase, here are a few tips.
Increase your credit score
If you’re in the early stages of buying a home, take the time to improve your credit score. You can do this by making on-time payments, paying down balances, etc. Your credit score can directly affect your home loan interest rate. A higher credit score can save you quite a bit of money on your mortgage payments, both monthly and over the life of the loan.
Compare lender fees
All lenders are not created equal. Although many lenders will offer similar programs, there are certain fees that will vary from one company to another. For example, there are fees for underwriting and credit checks. You may request an estimate of these fees and compare lenders.
Points are pre-paid interest to obtain a lower interest rate for your loan. For example, you may pay 1 point (or 1% of your loan amount) at closing in order to reduce your interest rate by 0.5%. In most cases, points do not save you any money until several years later. If you end up refinancing or selling your home before that, then you will not have saved any money at all. In fact, you will have overpaid. Unless you are sure that you will keep your loan for an extended period of time, it may be best to save that up-front money by selecting a loan without points.
Shop for insurance
Homeowners insurance is another item that you can shop around for. Consider bundling your homeowners and auto insurance for added annual savings. This can make a big difference. For example, insurance company A may offer the lowest homeowners insurance, but insurance company B may offer the lowest overall savings with a bundled policy.
Given that the real estate market is always trending upwards overall, homeownership is a great investment. As you budget for the up-front and monthly expenses, there will be many opportunities to save some money. Above are just a few that you should keep in mind.