5 ways to save thousands on your first home purchase

Are you in the process of buying your first home? This article outlines how you could save thousands of dollars during the home buying process.

  • Facebook.
  • Twitter.
  • LinkedIn.
  • Google Plus
  • Print

Purchasing a home will most likely be the largest financial investment you make. For first-time home buyers, it is a tremendous accomplishment, but not without its fair share of problems.

To be specific, financial problems.

Many first-time homebuyers get emotionally caught up in the home buying process and rarely do they think about the various financial aspects of buying a home and how they affect the bottom line at closing and beyond.

Contingency clauses are your friend

Contingency clauses shield you if the loan falls through, if you lose your job, or if the appraisal costs come in over the market value. Should one of these happen, you get the money back used to insure the property, also called "earnest money."

Without this clause, you can lose the money and still be obligated to purchase the home. There are several possible contingency clauses. Make sure to talk to your real estate agent about the clauses necessary and specific to your situation.

Home inspections

During your search, you might find a home that seems amazing at first. Afterward, as you walk through the house, you discover issues: the floors squeak, there is mold in the toilet, the kitchen island is off center. After walking through the home, you see the house was touched up to pass a cursory buyer walk-through.

Pay a home inspector trained to look thoroughly at the property. They will uncover issues you wouldn't think to look for during your walk-through. This also saves you thousands in repairs down the line in the event the home needs more than routine repairs. If there are issues that arise in the inspection, deduct repair expenses from your offer, or better still, get the sellers to cover repairs before the sale or pay for it at closing.

Shop for the best mortgage

This is important as it stands to save you several thousands of dollars. Many first-time buyers go with the conventional 30-year mortgage, but you can save lots of cash in the future if you're able to go with another type of mortgage. An example is selecting a 15-year mortgage. You pay a higher monthly premium but will get the house paid off with lower rates of interest in less time.

Avoid PMI if at all possible

In addition to the laundry list of homeowner expenses, if your down payment is less than 20% of the selling price, you might wind up paying another fee—private mortgage insurance (PMI)—that's insurance for the lender in the event you default on the loan. This can mean thousands over the life span of the loan period. If it's possible to do so, save and put the 20% down. You will avoid PMI and probably get a better interest rate.

Examine your HOA contract

Homeowner's association (HOA) fees are dependent upon on the amenities/services offered and your geographical area. These HOA fees can run from $50 per month to several hundred dollars per month. This is in addition to your mortgage, taxes, and insurance.

You can see how this would get expensive if you don't budget appropriately for the final costs of the home because it's easy to overlook the attached HOA fees. Pay attention to this detail, as it can be a budget buster.

Do the necessary research to understand how much house you can afford—outside of just mortgage, taxes, and insurance. Understanding your local market conditions as well as the above-mentioned money saving tips will help you get into a position to afford the house of your dreams while keeping your budget in line.

Topics:
  • Home Buying
  • Renting
  • Home Buying
  • Renting
  • Home Buying
  • Renting
  • Home Buying
  • Renting
  • Facebook.
  • Twitter.
  • LinkedIn.
  • Google Plus
  • Print
Article copyright 2017 by Forbes. Reprinted from the September 30, 2017 issue with permission from Forbes.
The statements and opinions expressed in this article are those of the author. Fidelity Investments cannot guarantee the accuracy or completeness of any statements or data.
This reprint is supplied by Fidelity Brokerage Services LLC, Member NYSE, SIPC.
The third-party provider of the reprint permission and Fidelity Investments are independent entities and are not legally affiliated.

Votes are submitted voluntarily by individuals and reflect their own opinion of the article's helpfulness. A percentage value for helpfulness will display once a sufficient number of votes have been submitted.

Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917

830464.1.0
close
Please enter a valid e-mail address
Please enter a valid e-mail address
Important legal information about the e-mail you will be sending. By using this service, you agree to input your real e-mail address and only send it to people you know. It is a violation of law in some jurisdictions to falsely identify yourself in an e-mail. All information you provide will be used by Fidelity solely for the purpose of sending the e-mail on your behalf.The subject line of the e-mail you send will be "Fidelity.com: "

Your e-mail has been sent.
close

Your e-mail has been sent.
piggy

Get more insights from MyMoney

Just sign up and we'll email our latest thinking every 2 weeks.
Not sure? Learn more
We understand that privacy and security are important to you and will only subscribe you to the MyMoney newsletter. See our Privacy Policy.

Here's what we suggest you explore next

Taking your wallet on vacation? Here's how to keep it safe

Tourists are often targeted by pickpockets or thieves. Read here to learn how you can keep your wallet safe on vacation.

Like your checking account, but with some useful extras

All ATM fees reimbursed. No minimum balance. Pay bills. Deposit checks.

You might also like

Your top mortgage questions answered

Mortgages can be confusing, especially if you are buying a house for the first time. This article answers basic mortgage questions to help educate you on the fundamentals of home loans.

5 steps to take before shopping for your first home

Are you shopping for a new home? This article outlines 5 steps to take before you start shopping for a new home to help you throughout the home buying process.

5 ways to save thousands on your first home purchase

Are you in the process of buying your first home? This article outlines how you could save thousands of dollars during the home buying process.

Like your checking account, but with some award-winning extras

All ATM fees reimbursed. No minimum balance. Pay bills. Deposit checks.