Since the market crash of 2007 many home buyers have been shut out of the market. 2015 looks to change all of that. In San Diego, rents are on the rise and many are considering purchasing a home. Zillow recently predicted that millennials aim to be the biggest home buyers in 2015. Buying a home is one of the heaviest decisions most people will make in their lives. The market is entering a time of excitement, risk, and reward. Smart investments could mean lucrative rewards, while bad investments could, and will, become costly. To help buyers make more informed decisions here are some money saving tips to live by when deciding to purchase a home.
- Property Taxes - Each year taxes are assessed by the county in which you live. On average these equate to 1.2% of your homes value each year.
- Get an Inspection - When deciding to purchase a home always pay for an inspection. A good inspection will verify the age and condition of the home while suggesting fixes that might be costly. Check the furnace, the roof, the windows, and appliances. Repairs for these items can set you back $5,000 - $10,000
- Shop for a Mortgage - Never start looking for a home until you get pre-approval for a mortgage. By saving even half a percentage point on your loan, you could end up saving thousands on a 30 year mortgage
- Expenses - When buying a home, consider all of the expenses that go into buying one. Purchase costs are things such as; down payment, closings costs, appraisal fee, home inspection. Yearly costs are things such as; mortgage payment, interest, property taxes, utilities, renovations, maintenance and homeowner's insurance.
- HOA Fees - There is a probability that you will fall in love with a home that has to abide by an HOA. Homeowner's Association Fees range from anywhere from $0 to $400. HOA is dependant upon where you live and what services the HOA offers
- Conservative Estimates - When calculating the amount of mortgage that you are able to afford, base the number on how much money you are making TODAY. Don't base it off of money or a raise that "should" be coming. Make conservative estimates based upon income that is stable.
- Don't buy for Broke - The general rule of thumb when purchasing a home is that you don't spend more than 30% of your monthly income on a mortgage payment. Don't fall into the trap of buying a home that you really cannot afford. When you spend over 30% of your income on a mortgage it gets harder to pay other necessary bills and you could end up having little to no money left over for entertainment or emergencies.
- Pay Extra - You can save yourself a lot of money by simply paying more to your mortgage each year. By making extra yearly or monthly mortgage payments you could shave off the time of the loan and end up saving you thousands of dollars in mortgage payments.
- Bundle - By bundling your insurances you could save hundreds of dollars each month. Shop for home, auto and other insurances that you could possibly bundle. You will need to research what different companies offer.
- Study the Market - Always study the market whether you are entering it to buy or sell. Look at the comps. and research listing prices. Comps will give you a solid idea about how much you can expect to pay for a home of the same type. By studying the market you will be more informed in the negotiation process and it will keep your agent honest when working the contract.
As qualified Real Estate experts, Realty Executives Dillon can help you in the purchase or sale of a property. Feel free to contact us should you have any questions.