Buyers across America remain highly active despite the recent sequence of rises in the mortgage rate, indicating that we still have pent-up demand for residential property and proving the incredible strength of our real estate market.
However, the continuing upward trend in prices for houses, apartments and condos can make life difficult for first-time buyers.
Every cent counts when you’re saving for your first home.
The trend of strong demand for smaller homes means it’s even more important to keep your expenses under control and cut costs where possible.
Check out these useful tips to help you get the best deal when shopping for a home.
Love your loan
Don’t accept the first loan that crosses your path. Mortgages vary enormously in terms of cost and their terms and conditions. Use a broker or research thoroughly your options before signing on the dotted line. Because so much money is involved, you want to be confident you’ve made the best possible decision.
Search high and low
The quality of the home you purchase, and the price you pay for it, will be determined mainly by the thoroughness of your search. While spending your weekends walking through countless homes can get tiring, it’s all in a good cause. Don’t stop until you find your dream home at the price you can afford.
Avoid the rush
You can find excellent deals by making your move in the slower selling seasons, fall and winter, or bidding on a property at the end of summer when a seller might be frustrated that they’ve not yet sold. This strategy is far from foolproof, but worth considering.
Focus on fees
Some closing costs cannot be discounted, such as taxes. However, it’s a smart play to shop around for lower fees for building and pest inspections, insurance, title search and settlement. These expenses can total up to 5% of your purchase costs. And while your lender will insist you pay for these services, you choose who you use.
Build up your deposit
If you can gather 20%-plus for a downpayment, you’ll avoid private mortgage insurance (PMI). If you’re one of the 64% of first-time buyers who don’t have a 20% deposit, your lender will insist you purchase this policy to protect them if you default. It does nothing for you. Going in with a 20%-plus deposit will save you several hundred dollars per month.
Line in the sand
Every buyer should have some “lines in the sand”. The most important of these is the highest price you can pay. Don’t go beyond that threshold! But there may be others, such as the shortest or longest settlement time you’re prepared to accept, or your insistence on retaining certain contingencies. So, know your deal-breakers.