In your lifetime, there is a good chance that you’re going to be involved in a real estate transaction. Whether it is buying a new home or purchasing an investment property, this is often the biggest purchase decision you will face in your entire life. While it is possible to rent, a lot of people in America would prefer to own their own property. If you fit into this category, then you’ll probably also want to look at how you can save money on the property-buying process.
With that in mind, we put together a list of five simple steps that can save you money on a real estate transaction.
1. Location, Location, Location
Yes, that is a standard real estate mantra, but it is essential to thoroughly research exactly where it is that you would potentially want to buy a property. Are you looking to move to a new city or state? Or are you looking for higher investment returns on properties outside your local market? Regardless, it is really up to you to decide exactly where you will focus your property search across 50 States in America. So, the critical first step is solely to research locations that interest you. Gaining as much information as possible on multiple locations can work to your advantage by finding more affordable real estate options during the procedure. Make sure that you are very familiar with the neighborhood and the city. Research everything you can about a location before looking at specific properties. You need to get the location right before moving forward.
2. Use A Realtor
Now that you’ve found a general location that interests you, it’s time to get a local expert on your side. Whether you’re a first-time buyer or a repeat purchaser, purchasing a property with the help of a professional Realtor that is a local market expert can save you money, time, and expense and avoid hardship throughout the property acquisition process. Finding the right Realtor to work with will pay out dividends in more ways than we have space here to mention. From gaining critical local market knowledge to finding off-market properties, a local Realtor can make all the difference when it comes to finding that perfect property and effectively negotiating a purchase on your behalf.
3. Timing Purchases
Remember that the real estate market is not stagnant. Things go up and down pretty frequently. This is something that you have to be prepared for. At certain times, the prices are going to be much more expensive. During other times, you’ll find that sellers are having a tough time selling which floods the market with available listings and causes the prices to drop. Although it may seem obvious, it is in your best interest to buy a home when the prices are at the lowest. Therefore, you should never rush the process. If you have the time, be ready to wait until the market swings in your favor.
4. Use MCCs To Your Advantage
You will definitely want to learn more about Mortgage Credit Certificates (MCC). Depending on your circumstance, you can potentially save yourself thousands of dollars by taking advantage of MCCs. They could greatly reduce the amount of taxes that you’ll owe for your new property. This program could provide you with as much as a $2,000 credit each year for your federal tax liability. And, you can get the credit for the entire duration of the loan. Over a period of 30 years, it could save you as much as $60,000. With that being said, you should definitely spend some time researching Mortgage Credit Certificates in greater depth to see how this could apply to your purchase situation.
5. Drop The PMI
In many cases, you’re going to be required to obtain private mortgage insurance or PMI. This is usually a requirement when you pay a very low-down payment. The lender will make you acquire this type of insurance so they can protect themselves in the event that you default. The problem here is that PMI is very expensive. With that being said, you should try to drop it as quickly as possible. In some cases, all you have to do is obtain an appraisal that shows that 20% equity in the property is maintained, then you’ll be able to drop this insurance and save yourself a lot of money.
By HomeLight Homes