How to Save Thousands of Dollars When Purchasing a Home

By Shelly Klimusko

 

Whether you are thinking about buying your first home or your 10th home, by far the best thing you can do to save yourself literally thousands of dollars in unnecessary expenses both during the purchase process and over the next few years is to PLAN AHEAD!  It is amazing to me how many people spend less time planning for a home purchase (a major investment of money and mistakes can be costly!) than they spend to plan their vacation (a comparatively minor investment of money).  By following a few simple steps you should be able to accomplish your purchase with the least expense of money, stress and regrets.  After all, as many of us have found, experience is something you don’t get until just after you need it…  We will cover the experience issue a little later, but take the time now to plan for success.  The following 3 steps are essential to accomplishing your goal:

          Step 1 – Plan Your Timetable

          Step 2 – Find Out Where You Stand

          Step 3 – Put Your Team Together

Plan Your Timetable:

Decide when you will be making your move – hopefully it will be 2 to 6 months into the future at the time your planning begins.  This will allow you enough time to correct any errors in your credit profile, to correct any detrimental spending habits you may have gotten into which may have lowered your credit (FICO) score, and to begin saving earnestly for any additional money you will need for the down payment and/or closing costs.  You need to basically be grooming yourself to be the best qualified buyer you can be.  This will get you the highest credit score, which gets you the lowest interest rate and best terms available.  It will also give you the opportunity to interview and put your “team” into place.  I’m sure you can imagine how taking these few preliminary steps can help make your home purchasing experience a much better one.

 

Find Out Where You Stand:

You need to begin at the beginning…. start at the money source.  Unless you have an endless supply of this, you will need money to accomplish your purchase no matter what the house looks like, where it is, or the price of it.  Most people find the property first and then because of the fear of losing a home they simply must have, they are pretty much forced into doing anything to close the deal.  Avoid walking into that trap at any cost, and believe me the cost is high!  You need to find a source that will lend you this money under the best possible terms and conditions.  To find the house first is far too costly.  Find a reputable mortgage broker who works as a consultant to their clients, (as I do – just have to get a commercial break in there somewhere…).  You can call me of course (my personal favorite choice) or ask your relatives, friends, co workers, or your CPA or tax professional for recommendations. Someone who has done a really good job for them and they are happy with the results.  Asking someone at your bank who is paid to recommend the bank loan officer or asking your realtor who may have some kind of ‘relationship’ really shouldn’t be considered an impartial referral. 

Once you find a mortgage professional you feel you can work well with, they can do a pre-approval application for you.  This means your credit will be run and analyzed.  You can find out at this point what your credit scores are and your mortgage broker can help you improve these scores if necessary or help you to know what inaccurate information needs to be corrected. You can also be advised if your savings should be increased, your spending habits should be adjusted or which bills should be paid off or merely “paid down”.  This helps you get the most “bang for your buck”.  It is important that you find someone you can feel confident in their experience and abilities.  Experience IS important!

The things that will save you the most money on your financing is not saving $50.00 or $100.00 here or there on fees, it is saving thousands of dollars by initially getting you the most advantages loan program for your needs and future plans, to avoid having to refinance for quite awhile – which is costly.  Also to maximize your credit scores and equity position so that you can qualify for the best priced programs.  Calling from broker to broker or bank to bank yourself to compare rates that you can’t qualify for or “lock in” that day, if ever, (as sometimes they change hourly as they have been doing lately!) to save an .125% in rate is just a waste of time.  Let your mortgage broker shop for you.  At least they know where to shop and what to look for.  A good mortgage broker acting as a consultant can save you thousands in the long run!

Put Your Team Together:

Ask your mortgage consultant for a recommendation to a realtor in the neighborhoods you are interested in purchasing a home.  This is important as your mortgage consultant can handle loans statewide (and sometimes out of state) and does not specialize in limited neighborhoods as realtors do.  Therefore, we know realtors in all areas and have been in transactions with really good realtors and really bad realtors, and we can help you before you choose the really bad ones by mistake.  And again – EXPERIENCE DOES MATTER!   You need a realtor who can negotiate very well on your behalf (another area where you can save thousands of dollars!).  They will need to be experienced and competent in overcoming any problem areas that may arise through property inspections and/or other unknown factors which may require more negotiating to overcome (more money saved!).  Most people think a realtor just drives you around and points out “here is the kitchen”, “here is the bedroom”.  That is completely wrong – anyone can do that part, and you need to know the ones that can do the money saving part.  Your only alternative to a bad, lazy, or unskilled realtor is to hire a real estate attorney to protect your interests in the transaction (which is what your realtor is supposed to do) and the lawyer charges about $250. per hour.  I recommend you get a good realtor – it saves you money (and you don’t even need to pay them, the seller does!).  As tempting as it seems, don’t have your Uncle Harry, who just got his real estate license and works in aerospace during the week and sells real estate on the weekends help you.  You need a professional

I also highly recommend using a realtor to purchase a home through a new home tract development, for all of the reasons we have mentioned above.  Most new home tracts will pay a realtor their commission, and it may well be worth it in the long run.  It always amazes me that most people act as if the sales office staff is there to help them make this wonderful purchase…(?)!  They are employees of the seller and they are there to get the most money for their employer, and give away the least amount to get it, (kind of like the new car salesman that none of us trust).  At least let your professional realtor guide you through this transaction.  Even if they are unable to negotiate the price, they can keep a watchful eye on inspections, repairs and demands that are in your best interest, (which can save you money in the long run!). 

Now you should be able to begin to shop for your new home with confidence and the least amount of expense, stress and regrets.  Enjoy the excitement of the process! 

If this is your first home, I wish you all the happiness that having a part of the ‘American Dream’ can bring to you.  Helping people realize their dream to become homeowners is one of the many joys I am able to experience in my job and has proven to be well worthwhile for all the happy clients I have been able to assist. 

May I help you?  Please contact me at shelly@asaplending.com.

 


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