If you’re saving to buy a home in 2023, you might be worried about rising interest rates, and the cooling of the market that has taken place throughout the past year. In 2023, interest rates are increasing, and home prices are going down slightly from years prior.
This can seem scary, but it’s a natural process of fluctuation in real estate, and if you’re looking to buy, this might mean that you’ll get more houses for your money than years prior.
Buying a home is a big step, but if you follow some simple financial tips to better your home-buying prospects, you’ll be saving a lot of money in the future. So, let’s consider some tips in this post.
Financial Tips to Save for Your Home
#1: First, get your finances in order
First off, make sure that you can comfortably afford to buy a home. There is no need to rush into home ownership. If you need to take a few more years to save enough money to be able to afford the purchase, that stability is going to pay off in the long run.
You’ll also need to make sure your credit score is as high as possible in order to get a low rate on your loan. To make your credit score shine, pay off outstanding debts and make credit card and other payments on time.
Once you get your finances in order, you can think about the perfect location and type of home you’re looking for. Check out HomeLight’s listings as well as top real estate agents working in your area.
#2: Find a reliable agent
The best way to find a perfect home that works for you and your budget is to find a great real estate agent. An expert real estate agent not only knows what to look for in a house that will make for a great investment, but they know everything about the housing market in your area.
Especially if you are a new buyer, a great agent is going to be essential to help you find a home and walk you through the process of buying.
Using a skilled agent will help you find a home that will save you money in the future; they know what types of issues to look for that can cause big bills, like an old heating system or a decaying roof.
Before hiring an agent, you’ll need to ask questions to make sure they are the right choice for what you need. Read HomeLight’s article Questions You Should Ask Before Hiring a Real Estate Agent to prepare. And when you’re ready to hire an agent you can find the best experts in your area with the HomeLight agent search tool.
#3: Consider all your options
Before you decide to buy, look into various financing options. Cash buying is becoming more and more common in 2023, and it can be a great way to save money overall on your home.
With cash buying, you pay for your home upfront instead of paying a mortgage that comes with an interest rate. In competitive markets, offering to buy in cash can also put you at an advantage over other buyers.
Look into HomeLight’s Simple Sale tool to join the network of cash buyers. HomeLight will connect you with sellers in your area looking to sell homes for cash. Using this tool, you could move into your dream home as quickly as possible!
#4: Consider a smaller down payment
When buying a home, a down payment is the money you pay upfront towards the purchase price of the property. In general, it’s often better to drop at least 20% of the total money you are asked to pay for the property as a down payment.
This is because you could make your monthly payments go smaller because you will now need to borrow less money as a result of having a large down payment. That also means you will not need to be paying Private Mortgage Insurance (PMI).
On the other hand, a smaller down payment means that you’ll be borrowing more money, which will result in a higher monthly payment. You’ll also need to pay PMI up until you get to 20% equity in the home.
If you default on the loan, PMI will be there to protect the lender and that can add hundreds of dollars to your monthly payment.
#5: Look for homes that need some work
When you’re in the market for a new home, looking for properties that need some work can be a great way to save money. Homes that need cosmetic updates or minor repairs can often be purchased at a lower price point than move-in-ready homes, allowing you to save money on the purchase price and potentially build equity in the home through renovations.
#6: Shop around for a mortgage
This is another tip that might help you save extra bulks when looking to purchase your own home. Getting a mortgage is typically a crucial part of the process. Don’t just go with the first mortgage offer you receive.
Shop around to find the best interest rates and terms. Even a slightly lower interest rate can save you thousands of dollars over the life of your loan.