With the spring season approaching, the housing market is already warming up. Perhaps it’s the cold weather, keeping people cramped up in their homes for weeks and months, that leads them to consider moving to a new place or perhaps the thoughts of impending spring cleaning get the gears turning.
Whatever the case may be, if you are considering buying a new home in the near future, there are a few different ways you can save a significant amount of money along the way.
Avoid paying private mortgage insurance
You’ve probably heard the age-old advice that you should put at least 20% down when buying a house. As it turns out, that’s not just some arbitrary figure, but it actually corresponds to the amount you’ll need in order to avoid paying private mortgage insurance (PMI) in many cases. By not being subjected to a PMI, you’ll be able to save hundreds if not thousands of dollars on your mortgage in your first years.
While a 20 percent down payment has traditionally been required by most lenders, there are now a number of programs that will allow you to put as little as a three percent down payment toward buying your home and still have PMI waived. This is especially true for those with outstanding credit and for first-time homebuyers. Still, the only way to escape PMI for sure is to save up and put down the full 20 percent.
Don’t “overbuy” when house shopping
One of the mistakes that homebuyers can make when searching for a house in the price range is feeling like they need to max out their budget. Not only could this mentality lead you to waste money on features you might not need, but it could also cost you more on a recurring basis.
For example, if you’re looking at buying a home that’s larger than you actually need, consider the bloated utility bills you may face as a result of having to heat and cool your larger abode. Additionally, as far-fetched as it may sound, having extra space in your house could lead you to overspend—especially on things like furniture that you wouldn’t need otherwise. Therefore, it may be better to choose a more modest option and save the extra funds.
Keep moving costs to a minimum
Once you’ve locked down your mortgage and closed on your new home, it’s time to get packing. As exciting as heading to your new house can be, the act of moving there can often be a big pain—not to mention that it can get quite pricey.
In order to save money on your move, first, consider getting rid of possessions you no longer need. The easiest way to do this is to go through your things and determine if they should be kept, thrown away, sold, or donated. Here’s a hint: if it’s been over a year since you last utilized any item, there’s a good chance you don’t need to keep it. This downsizing process means you’ll have less to move—which will save you money on boxes and a moving truck—but could also put some extra cash in your pocket if you do find some items worth selling.
There are also a few ways you can cut costs while packing. Instead of buying supplies like bubble wrap or packing peanuts, simply wrap your fragile items in towels and sheets and/or place a pillow in the boxes to protect them. As for the boxes themselves, see if you can snag some unneeded boxes from work instead of having to buy new ones. Believe it or not, these seemingly small savings can really add up.
Obviously, buying a home is one of the largest purchases you will make in your lifetime. However, by avoiding the need to pay PMI, making sure not to “overbuy,” and cutting moving costs, you will hopefully make this massive purchase a little less large. Happy house hunting!
DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation in writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.
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