Easy Practices to Save Money When You Buy Your First Home 

While the dream of owning that white picket fence may seem like an unattainable goal for many, savvy homebuyers can plan to make that purchase and avoid expensive surprises. From saving for a down payment to negotiating seller concessions, there are many opportunities for savings that come with buying your first home. 

1. Get a Good Lender 

When it comes to home buying, there are a lot of little costs and expenses that can add up quickly. Luckily, there are also many smart ways to save money during the process. 

One of the most important things to do is to get preapproved for a mortgage. This will give you an idea of what you can afford in terms of price and monthly payments. 

It’s also a good idea to set aside any gifted funds or windfalls for the down payment. This is especially helpful if you’re a first-time homebuyer who doesn’t have much saved up yet. A bigger down payment can help you avoid having to pay for mortgage insurance, and it may also qualify you for better rates on your loan. 

2. Create a Budget 

Homeownership is the American dream, but it can turn into a nightmare if you don’t budget well enough. Many lenders recommend using the 50/30/20 budgeting rule, which allocates 50% of your income to needs, 30% to wants, and 20% to savings and debt paydown. 

Creating a budget will help you understand the cost of homeownership and how much of your income you can afford to spend on housing each month. In addition to one-time expenses like closing costs and down payments, there are also ongoing costs of homeownership like homeowners insurance, property taxes, and maintenance. Homeowners should also prepare for extra expenses that were not included in rent, such as homeowner association fees. Getting these additional expenses out of the way will ensure that you can keep your mortgage payments low. 

3. Automate Your Savings 

Automating your savings is a financial game-changer. It ensures you’re saving consistently by establishing it as a non-negotiable part of your budget. It also helps safeguard against impulsive spending. 

Whether you’re just starting out or thinking about buying your first home after years or even decades of renting, it takes time to build up a down payment. Putting your savings on autopilot can help you achieve your goals faster by eliminating the temptation to spend the money you set aside. 

You can use automated transfers from your checking account to a dedicated savings

account. Be careful, though; too much withdrawals can eat into your momentum and could trigger fees. You may want to check with your bank to see if they limit the number of withdrawals from an interest-bearing savings account. 

4. Get a Home Inspection 

Home inspections are necessary for buyers in order to gain a complete picture of the house they’re buying. They also provide important information to lenders that could impact the final appraisal of the property. 

Depending on what’s uncovered during an inspection, buyers can ask for certain repairs to be made by the seller before closing. While these issues may be minor (like fixing a leaky faucet or replacing a doorstop), they can save homeowners money in the long run. Look into appliance warranty plans that can save you money from future costly repairs. 

Buyers can also choose to walk away from a deal if the seller refuses to make the needed repairs or if they’re too costly. Regardless, proper financial planning is essential to surviving homeownership without becoming overwhelmed with near endless check writing. Getting your financial plans in order before you buy is the best way to stay on track. 

5. Negotiate 

When purchasing a new home, there are often many fees and expenses involved. Some of these costs are upfront, such as the closing fees and down payment, while others will be ongoing, like mortgage payments and maintenance costs. 

To save money during the buying process, you should negotiate with the seller on all possible terms and conditions, including a lower sales price, credit for closing costs or assuming some of the closing fees. It is important to remain unemotional during negotiations to increase your bargaining power and be able to focus on the facts of the situation. 

Closing costs are a big expense that buyers pay once they close on a property and can add up to 3% of the purchase price, according to Zillow. By negotiating, you can reduce these closing costs.