Saving on the first tremendous purchase: what should you know?
It is always thrilling to spend big amounts of money, but what about the most tremendous purchase in your life? Probably, some of you had a feeling that it is a very responsible stage you have prepared for many years. It was a painstaking task to save these money and it often happens that you lack some minimum amount to complete the deal. Therefore, it is very important to know how to save on this global purchase and turn it to your benefit.
Take advantage of contingency clause
A contract known as contingency clause requires from one or both parties to take a specific action or an event should take place to consider it valid. If you sign this contract, it can protect you in different life situations. One of popular contingency clauses mentions that a buyer will purchase a home only if it passes an inspection. If any problems are detected with this property, it is possible to make the seller to pay the expenses required to mitigate the problem or make a discount. In any case, it is a great way to protect yourself in any unpredictable situation.
Detailed home inspection
Homes for sale look perfect only at first sight, but if you put effort to find possible problems there, you will undoubtedly manage to do that. If you can’t spot anything yourself, it would be reasonable to hire a home inspector. The money you will pay to this person is a drop in the sea in comparison with the discount he can claim for you. It is a great chance not only to be prepared for unexpected repairs and investments but also a reason to negotiate the final price or make a seller cover these repairs before closing the deal.
Prefer better mortgage rates
Could you ever think that more effort at the beginning of your pay-off for house can save you several thousands US dollars. Most of the families opt for a mortgage that will take 30 years of their life. It is not a secret that a good deal of the total amount is interest. It is possible to decrease this rate if you pay larger amounts from the very beginning and decrease the length of your mortgage time period twice - for 15 years.
Try to avoid PMI
Every mortgage has a down payment and usually it is very low, since not everyone can save several thousand dollars for a start. However, if a buyer can invest a 20% down payment of the selling price when he buys a home, it is possible to avoid private mortgage insurance. This insurance is given to a lender to protect his rights if a buyer defaults on the loan. Only imagine how many years you will have to pay this insurance! So it is important to take a mortgage only if you managed to save at least 20%.
Check HOA fees before the purchase
It is important that you buy not only a home but also a new type of tax, insurance, utilities and other expenses connected with home maintenance. A new spending on your list can be homeowners’ association fee. It is not a secret that not only condominiums but also some neighborhoods with shared amenities have to pay this HOA fee and sometimes it can reach several hundred dollars a month. Learn about these unpredictable expenses in advance or they may hit your budget significantly.
Now you can see that simple life hacks can help first-time buyers avoid paying extra and even save some money on the total cost and mortgage. Try to remember these tips and they may come in handy to you in the future.