They say that your home is your biggest investment–meaning you’re going to sink a good chunk of change into your new abode, both at the outset and over the years. With that kind of money on the table, it’s crucial to save some dollars wherever you can. With that in mind, I picked the brains of three real estate professionals to determine the easiest ways to save money when buying a home. Here are nine of their best tips:
1. Check your credit early.
When you first decide to buy a home–and plan on applying for a mortgage–immediately check your credit score, says Richard Barenblatt, a mortgage specialist at GuardHill Financial. If you plan ahead, you will have enough time to correct any surprises and even work on improving your score. “A high credit rating will enable a borrower to qualify for the best interest rate and lowest mortgage payment,” he says.
2. Find a great mortgage broker.
Because interest rates and fees vary from lender to lender, enlist the help of an experienced mortgage broker who can secure you a loan at a low interest rate, says agent Alexander Boriskin of Douglas Elliman. This allows you to spend the same amount and get more house for your hard-earned cash.
3. Determine what you can afford–and proceed in the right order.
Clearly, a great way to save money on a new home is to know how much you can afford and stay within that price range. “That sounds simple, but it’s a multi-step project,” says Holden Lewis, a writer at NerdWallet specializing in mortgages and homeownership.
First, contact a mortgage lender for a pre-qualification, Lewis says. Then, when you know how much you can afford to borrow, ask the loan officer how much you can afford to pay for a home. Then, he says, start working with a real estate agent.
“To save money, it’s important to do the steps in this order: first the lender, then the real estate agent,” Lewis says. “When you have that bottom line from the lender, you can clearly instruct the agent to show you properties that fit into your price range.”
4. Apply with more than one lender.
Many people apply with one lender and simply take what they’re offered. Lewis says this is a mistake: “They’re wasting money by not comparison-shopping.”
Applying with multiple lenders and comparing loan estimates is the biggest way to save money during the closing process, he says. That number-crunching may sound confusing, but Lewis points out that each lender will give you a loan estimate in the form of a standardized three-page document specifically-designed by the Consumer Financial Protection Bureau. Once you have a document from each lender, you can compare and contrast, page by page. “The top of the third page has a section called Comparisons,” he says. “That section tells you how much you will pay in the first five years when you total up the closing costs, principal, interest, and mortgage insurance.”
He notes that, when comparing similar loans, your best deal is probably the one with the lowest total cost (given in a five year outlook). From there, you can try and negotiate the lender’s fees and shop for title insurance to bring that number even lower, he says.
5. Find out about first-time home buyer programs.
Many states have money-saving programs–in the form of down payment assistance as well as discounts on mortgage insurance or interest rates–for first-time home buyers, Lewis says. Do your homework to see what your state offers.
6. Really think about that commute.
Sometimes, when a potential buyer loves a home, they’re willing to accept a long commute as part of the package. That’s a bad idea, says Lewis: “Be hard-headed about the time you’re willing to spend on your daily commute. If you detest your commute, you’ll be tempted to sell the home and move before you otherwise would have, and that’s an expensive proposition.”
7. Take a thorough look at the house and neighborhood.
Take your time to thoroughly vet a home and neighborhood before committing, says Lewis. A NerdWallet study revealed that nearly half (49 percent) of homeowners said they’d do something differently if they had to go through the home buying process again.
Don’t be one of those homeowners. Walk the neighborhood at different times of day, especially at night, to determine if it’s noisy or traffic-heavy. Talk to neighbors. If you can, inspect the home at all hours of the day–as Lewis did for his first house–to spot any problems in advance. “This process helps eliminate regrets after purchasing a home,” he says.
8. Time your purchase well.
Historically, there are months where the real estate market slows down (like December), Boriskin says. Trying to purchase a home during that time can help a buyer negotiate a better deal. “Especially if the home has been on the market for quite some time and the sellers really need or want to sell because now they are seeing less traffic and less offers,” she adds. “They may look at an offer that comes in at this time differently.”
9. Pick the right time to move.
Since the majority of people move on weekends and during the summer, try to time your move to avoid these busy times to save money, Lewis says. He also suggests comparing at least three estimates from local movers, downsizing your possessions, and packing your own items as additional ways to pinch pennies.