How to Save Money When Buying a House

Wait, what? Yes, you read that title correctly: in this article we’re going to teach you a few things that you can do to make buying a house–presumably one of the most expensive things you can ever purchase–more affordable. It’s possible and, once you’ve made the decision to buy, one of the most important parts of the purchasing process begins.

So! You’ve found your dream home but looking at the listing price makes you feel faint and vaguely nauseous. Here are some things that you can do to bring that number down.

Do Your Research

Do not think about visiting a bank, credit union or other mortgage lender without knowing your credit score and every detail of your credit history. There are a lot of predatory lenders out there who will try to convince you that, because of this or that ding on your credit, you have to pay more than you actually do. Knowing what is actually contained in your report helps you spot these predators and avoid being taken in by them. While you’re at it, having at least a basic working knowledge of current mortgage rates and how they are calculated is also a good idea.

Look for Specialized Programs

Are you a single mother? Are you un or underemployed? Are you income challenged or even homeless? Are you a veteran? There are tons of programs out there that are designed to help people who meet specific criteria get the mortgages they need at the rates they can afford. Some of these are federally subsidized and run through your local HUD or Human Services office. Others, like Low VA Rates, are meant to help people (in this case, veterans) take advantage of benefits that guarantee low mortgage rates and plans but are typically misunderstood by civilian lenders. Take some time to find out if there are programs out there designed to help someone in your situation. You’d be surprised by what is available!

Consider a Larger Down Payment

A lot of mortgage lenders will allow you to use “points” to reduce the amount of interest you pay on your mortgage loan. If you plan on staying put for a long time, this is definitely worth looking into. The lower interest rate means you will pay less overall for your mortgage (remember, mortgage interest payments are usually tax deductible). Typically you get these “points” by paying a larger down payment on the house or agreeing to pay some of the interest that you would have had to pay at closing. Yes, you’ll have to work hard to save up that amount (the typical down payment is around 20% of the cost of the house) but if it saves you more, it might be worth it!

Inspections Matter

Never ever make an offer on a house without having it professionally inspected. Yes, the homeowners will likely have already had their house inspected before putting it up for sale (to figure out what the house is worth) but selling inspections will often gloss over problems. Your inspector will help you identify potentially expensive problems as well as issues that you can use to get the cost of the house reduced–often by quite a lot! Yes, it’s true that you’ll have to pay for this inspection out of your own pocket but if it can reduce the overall cost of the house, that payment will definitely have been worth it.

Give Yourself a Few Outs

Whenever you make an offer on a house, you have to put down “earnest money” to prove that your offer is serious. If you end up not buying the house or having to back out of your offer, you lose that money…unless the reason you back out is covered by a listed “contingency.” Make sure that you have things like “couldn’t secure financing” “unable to sell current home”, etc listed in your contingencies.

Above all else, pay a professional to help you with the process. Yes, that’s more money out of pocket but going it alone will inevitably cost you much more than you’ll pay your realtor.