1 of 10

Write now Article Tools

There are a few simple tips to saving money on a home that will greatly benefit you in the future.

#1) Hire a realtor. If you can, hire a realtor based on a recommendation made by a friend. If you are buying a house, a realtor costs you nothing because the commission comes out of the seller's pocket. A good realtor with a strong knowledge of the local market can help you find great deals and offer excellent advice throughout the process of buying a home.

#2) Do your research. What type of home can you afford? Don't ask your lender. Your lender gets paid more if you buy a bigger house (so does your realtor but since you got a recommendation from a friend, you don't have to worry about that.) Try to keep your total payment including insurance and taxes to less than 20% of your take home pay if you can.

#3) Find a motivated seller. Look for homes that look unkept or unlived in for signs of a motivated seller. Families that had to move on short notice for a job, or people who have just inherited a home are typically motivated sellers. Pre-foreclosure are great motivated sellers, but there are a lot of people looking for those types of deals. Talk to your realtor about potential motivated sellers in your area.

#4) Hire an inspector. An inspection may cost you anywhere from $250 - $500 depending on the square footage of your home, but it can save you thousands of dollars in the long run. An inspector is a licensed person whose sole purpose is to check every part of the house and make sure it is in good order. Hiring an inspector will give you peace of mind in knowing that you won't find nasty surprises when you move in.

#5) Put 20% down. If you can't put 20% down, you have two options. The first is mortgage insurance. Mortgage insurance is a pain in the butt. You are supposed to be able to stop paying mortgate insurance once you have 20% equity. However, you have to get your house reappraised to verify you have 20%. If your appraisal falls short, you still have to pay for it and the mortgage insurance. An appraisal can be very expensive. The second option is almost as bad. Mortgage companies will only secure 80% of your loan. So if you only put 5% down, you will have to take a 15% personal loan at a much higher rate of interest. It can be as much as 2 points higher. This can cost you thousands of dollars over the life of the loan. Putting at least 20% avoids both of these problems.

#6) Always be willing to walk away. If you can't get the deal you want, or the owners won't make necessary fixes to the home, don't feel pressure to buy that home. Walk away and find another home to purchase. Don't be locked in to one specific home.

#7) Once you've bought your home, make the necessary repairs to keep it in good shape. If you have put 20% down, and your payments are less than 20% of your take home pay you will be in good shape to do this.

Learn more about this author, Novicemoneymaker.
Click here to send this author comments or questions.

Add your voice

Know something about How to save money on a home?
We want to hear your view. Write now!