Here Are the Best Finance Hacks for Home Buyers

 

Some things about buying a home are common knowledge. Saving for a down payment and getting your credit in line immediately come to mind. But there’s more to home buying than meets the eye, especially while we wait for the pandemic to end. Chore Relief invites you to consider the best finance hacks for homebuyers.

 

Know the Basics

Though most people know they need to have decent credit and a significant down payment to get a mortgage, there are some other essential factors in getting the best deal. You should work with a real estate agent who has your best interests in mind and knows what types of properties you’re looking for. You’ll also need to shop around for the best mortgage. Overall, you should know your net worth and understand average mortgage rates and requirements.

 

Look for Helpful Home Buyer Programs

Consumer Finance highlights that a 20-percent down payment is ideal in most scenarios. You’ll avoid private mortgage insurance and other fees by investing in your home up-front. But depending on the purchase price, such a hefty down payment may prove impossible.

The good news is that plenty of programs can help you cut purchase costs. Many states even have first-time home buyer offerings. Many counties even run their programs, so it’s worth searching online for local opportunities. Common programs include zero-down options like USDA loans, which are ideal for those purchasing rural property, plus grants that cover repairs. You can also find offerings that cover down payment costs.

 

Enlist the Help of a Co-Borrower or Co-Signer

You might think that having someone apply for a mortgage with you is too much of an ask. But a co-signer can help boost your suitability for a loan in the eyes of your mortgage lender. Plus, while a co-borrower retains ownership over the home with you, a co-signer does not—though they are liable, too, if you miss a payment.

If your creditworthiness or monthly income doesn’t impress lenders, having a second signer can improve your options. Plus, you can always refinance later—and save hundreds per month—if better scenarios become available.

 

Go Beyond Pre-Qualification

Getting pre-qualified for a mortgage is often the first step when you begin searching for houses. Your next step is a loan commitment, which shows sellers that you’re serious about buying. Getting a loan commitment does involve more in-depth paperwork like tax records and proof of down payment funds.

That said, it can fasten the process when it comes time to make an offer on the perfect home the moment you find it. At the same time, you are not obligated to use the commitment if another scenario pans out instead.

 

Avoid Opening or Closing Accounts to Boost Your Credit Score

Once you apply for a mortgage—and especially if you move ahead to make an offer on a property—the lender will be scrutinizing your every financial move. To prepare, make any accounting changes before you apply for a loan—ideally months before.

Opening new accounts can either improve or hinder your credit score, so it’s best to avoid such changes while you’re in the process of negotiating a home purchase. Similarly, avoid adding large purchases to your credit card and don’t move money around while you’re looking at homes.

 

Buy Below Your Means

Though buying your dream home is a big motivator, don’t overextend your budget. Keep in mind that most mortgages last for 30 years, which means a lot of time for your financial situation to change. Buying less house than you can afford also translates to more cash you can use toward other purchases. The good news for home buyers is that we may be entering a buyer’s market due to COVID-19, which means you may be able to purchase your dream home at a lower price.

 

Budget for Maintenance

Part of keeping your investment in tip-top shape should include planning and budgeting for home maintenance. Ideally, you can avoid dipping into credit cards or personal loans if you put together a home repair/emergency fund. The typical recommendation is to set aside 1 to 3% of your mortgage payment every month and allow the fund to build. You can also keep a checklist for updates and major repairs that will need to be addressed, making it easier to plan. Using an app like Chore Relief will help you connect with and vet contractors early on so you know availability and cost. Plus, getting early quotes for repairs and maintenance gives you a better idea of what to set aside. For example, if you need any windows replaced, you can expect to pay anywhere from $170 and $375.

 

Buying a home can be complicated, but there are also many ways to make things easier. Instead of stressing, consider these financial hacks and get ahead of the process. In no time, you’ll be enjoying your new home—and a great deal.

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