For most of us, buying a new home is a serious commitment. However, there are a number of things that can be done during the process to make sure that your purchase won’t break the budget. Before you start thinking about buying your next house, take note of these money saving tips:
- If a mortgage lender sees you as a risk, they may protect themselves by raising interest rates. As a result, if you want low interest rates and lenient loan conditions, you need to raise your credit score as much as possible before you apply for a mortgage.
- Be sure to consult a mortgage broker with connections to a wide range of lenders. This way, you can maximize your chances of getting a loan that is well-suited to your needs but also sustainable with your monthly income and budget. Better still, you can get pre-qualified, which will make buying a new home much easier because it will provide you with increased bargaining power.
- You are going to need to make a down payment if you want to get a mortgage. Depending on the type of mortgage you choose, your down payment can be as low as 0 percent, 3 percent, or 10 percent and more. However, you should save up to make the biggest down payment that you can, since a smaller principal means less interest over the course of your mortgage.
- Similarly, you have a choice between a short and a long term loan. A shorter loan term means that you will pay more on a monthly basis, but save in the long run because of reduced interest. In contrast, a longer mortgage loan term is more manageable on a monthly basis, but can end up adding thousands of dollars to the total cost of the mortgage.
- Generally speaking, you can save for your down payment the same way you save for anything else. Examples include but are not limited to eating at home, eliminating redundant services, and cutting back on life’s little luxuries.