While many first-time home buyers assume that buying a house is a straight-forward process, the reality is there’s a long list of expenses associated with it. And if you’re working with a limited budget, you have to be extra cautious.

5 Strategic Ways to Save Money
Your home is probably the most expensive possession you’ll ever own. Most people are aware of this, but few first-time buyers are familiar with the additional costs and ongoing expenses that come with purchasing a house.
If you want to save money and make home buying less expensive, there are some simple yet strategic actions you can take.
​
1. Buy Near an Up-And-Coming Area
One of the best investment decisions is buying near, but not in, a hot neighborhood. Sometimes it’s just not practical or affordable to buy in the hottest communities, but looking nearby might be the best move. You can often save 20-30 percent on the purchase price. And most importantly, you’ll see faster appreciation rates.

To save even more money, consider purchasing a house near a hot neighborhood that also needs a little bit of work. You can then update and renovate a little bit at a time. This saves you money up front and allows you to control your costs.

2. Avoid Standard Commission
Real estate agents do a lot to help their clients find the perfect house, negotiate a fair price, and walk through the legal aspects of closing. In return, they generally receive a 3 percent commission ($9,000 on a $300,000 house). There are, however, ways to save in this area.

One unique option is to use a service like SimpleShowing, which actually refunds the buyer 1.5 percent of the purchase price at closing. Depending on how much house you’re buying, this can result in huge savings.

3. Negotiate Closing Costs
If you aren’t careful, closing costs are where you’ll get hit. Zillow estimates that closing costs will run the average buyer somewhere between 2 and 5 percent of the home purchase price. On a $200,000 home, that’s $4,000 to $10,000.

Closing costs include things like lender fees, appraisals, title fees, attorney fees, escrow fees, interest, termite inspections, radon testing, etc. What most buyers don’t know is that they can negotiate many of these costs. In doing so, you may be able to save a couple thousand dollars right away.

4. Eliminate PMI
If you borrow more than 80 percent on a home, you’ll almost always be required to pay private mortgage insurance (PMI). This will typically cost you 0.5 – 1 percent of the total loan amount (per year). If you can avoid paying it, you should.

“A down payment of 20 percent is the most obvious way to avoid paying for PMI,” personal finance expert Steve Gillman writes. “If this is tough with the homes you’re considering, Realtor.com suggests simply shopping for lower-priced homes for which you can make a 20 percent down payment. Multiply the down payment you have by five to arrive at the highest price you can pay while avoiding PMI.”

5. Shop Around for Home Insurance
Just as you can with any other type of insurance – such as life or auto – you can shop around and compare prices for home insurance. While every home-insurance product is different, you may be surprised to learn just how much discrepancy there is in price. Just make sure you’re getting enough to protect your investment.

Don’t Be House Poor
Just because you can buy a house, doesn’t mean you should. Furthermore, just because you qualify for a large loan, doesn’t mean you have to spend up to the loan limit.

It’s one thing to own a nice house. It’s totally different to own a home and be financially comfortable in it. Spend what you can and do your best to avoid being house poor. You’ll experience much greater satisfaction and peace of mind.

Source
 

LISTEN
Flint had the opportunity to join Brad Roche of The Mortgage Planner and Steve Kinzler of Element Funding for their radio show The Plan. The show focuses on helping listeners realize their dream of home ownership, save for the future, and become financially independent. It aired in the Charlotte, NC area on ESPN Radio 730AM and WFNZ The Fan 610AM.

It was great to talk with people who see real estate as a true investment, starting with your personal home! LISTEN HERE:

It can be all too easy for over-eager shoppers to waste a well-intentioned agent's time. Here's what both sides should know.

Searching for a home and engaging with a real estate agent today is not the same as it was a generation ago. The space (both physical and virtual) between the buyer and the real estate agent was much larger, and coming together was slower and more methodical.

If a buyer saw a For Sale sign or an ad in the paper, they might call the real estate agency’s office, get some information, and move on. Or they could walk into an open house solo. They could be rather anonymous.

But today’s home buyers live online. They can click, text or email with agents, and seriously engage within hours. But does that mean they are active and serious buyers ready to transact? Not necessarily.

The real estate agent’s experience

Meanwhile, real estate agents, who are commission-only independent contractors, will sometimes drive around for hours showing homes. They may take these buyers around for days or weeks, thinking they have a live client they can help. They might make an offer or two on behalf of the customer, even be present at a two- to three-hour-long home inspection … all before the buyer decides to back out. They may buy a different house from the agent, or they may not.

Well-intentioned, hardworking agents can end up feeling like their time isn’t valued — particularly when they never hear from that buyer again.

Who’s responsible?

Is it incumbent on the agent to be better at time management and qualifying their potential buyer clients? Or should the buyer be clear with the agent early on if they aren’t serious just yet?

I think that the consumer comes first, and it’s up to the agent to better qualify — as best they can. But it’s also part of the business, and par for the course. Agents sign up for a sales job, and they can’t win every deal. They need to ask lots of questions of their new “client” before offering up their time and cashing a paycheck that doesn’t exist.

Some consumers relish the attention they receive from this new “friend” who will drive them places, show them around, and teach them something new about the world of real estate. If the buyer isn’t paying for the agent’s time, the reasoning often goes, why not take a few rides and see some great houses?

But soon-to-be homeowners should be mindful of their intentions, and considerate of the resources the agent is delivering.

So what’s a buyer to do?

Should everyone stop looking online or clicking the “Contact Agent” button? No way. Consumers should always feel free to click away, ask questions and gather information.

But they should be mindful of how things work once they start seriously engaging. Most buyers don’t realize that there is a process to buying a home, and that it rarely happens overnight. From the time they first click on the photo of the killer master bathroom until they get the keys, it might be one year and three dozen (or more) house tours.

And if things don’t feel right with the agent with whom you engage early on, move on. Keep researching independently, or get a referral for a good local agent. Or, better yet, just go with the flow and the right agent will come along organically.

And what about agents?

Real estate professionals need to understand that one text, click or email does not make an active buyer. A good agent has a handle on the sales process, and asks buyers lots of questions to get a read on them. A good agent fills their sales funnel with a mix of folks in all parts of the home buying process.

Early on, an agent needs to be a guiding light, resourceful and ready to answer questions. As some of their buyers get more serious, smart real estate pros know where to direct their attention.

Source

Many potential home buyers believe that buying a foreclosed home is easy and inexpensive. While these homes are traditionally cheaper, some specific steps should be taken when purchasing a foreclosed home.

1. Budget for the Unseen
While the house may have a low price tag, the purchase price is not necessarily the only cost; repairs will also probably be needed. Some repairs may prove to be minimal, such as replacing a doorknob or patching up holes in the drywall. Other repairs, such as plumbing and electrical reconstruction, probably require professionals and a small investment.

2. Take Your Time and Look Over the House Closely
When buying a foreclosure, see the property yourself; do not rely on pictures. While you are looking at the house, take your time and examine the house thoroughly. No matter how much the home is reduced due to its foreclosure status, a house is still a major purchase that warrants careful inspection.

3. Do Careful Research
Find out how long the house has been on the market. This information will help you budget for those necessary, unforeseen repairs. The longer the house sits on the market, the less likely it has been properly cared for.
For example, if the toilets are not in use, sewer gases could back up, or vermin may have infested the area due to untended lawns.

4. Hire a Home Inspector
More likely than not, a home inspection fee will come out of your pocket. While inspections also fall under the category of housing expenditures that are not part of the home’s purchase price, this expense is foolish to forego when buying a foreclosed home.
Careful, thorough home inspections can show you what your untrained eye cannot. For example, you may not know that you are purchasing a home with no insulation. The inspection will reveal the absence and you can then calculate home improvement costs.

5. Know the Value of the Home
Find out the appraised value of the home. Typically, the amount a foreclosed home is listed for is the amount left on the unpaid mortgage. While this initially sounds like a good deal, situations exist in which the amount remaining is higher than the value of the house.

6. Do Not Put All of Your Savings Toward a Down Payment
Know what you can comfortably afford, so that you do not end up in foreclosure as well. Rather than putting all of your money into the down payment, you can use that extra cash as part of the repair or replacement process later.

7. Bid Low on the House
The whole point of buying a foreclosed home is to save money, so when you are bidding on the house, start low. When purchasing traditional homes, low bidding can sometimes lead to offended owners. In a foreclosure, however, the other party is a bank or other financial institution.

8. Be Aware of Waiting Periods
When a home is sold as a foreclosure, significant legal paperwork needs completing. For example, the previous owners may need to relinquish all rights to the property before you sign any final sale document. It is not uncommon for parties buying the home to wait months before being able to take possession of the property.

9. Check Out the Neighborhood
The neighborhood in which the house is located is as important as its condition. Whether you are planning to live in the property yourself, rent out the property, or resell the property after you have remodeled it, location is crucial.
In some areas, neighbors are quiet and keep to themselves. Some neighborhoods have little crime and vandalism, while other locations have daily vandalism or other problems. Purchasing in such an area could leave you frustrated with continuous repairs you may have to make to the home.

10. Hold Your Ground
When a bank sells a home, it wants to recoup the mortgage amount not being collected. As long as the bank receives that dollar amount, the bank is happy. Some sellers in a foreclosure are anxious to close and would do just about anything to sell you the house.

You can be picky, and you should not have to settle for anything less than what you want.

Source