93% of homeowners say that homeownership makes them happier than renting, according to a Bank of America survey. But owning a home is becoming more difficult as house prices are rising faster than incomes. Prospective buyers now need to earn more than $144,000 to secure a home. This doesn’t mean you can’t become a property owner though as these tips will help you finance a property for less.
Negotiate the price
The median listing price of a home in October 2021 was $380,000. This is 8.6% higher than the average price of a property in October 2020. One of the best ways to get a house for a more affordable cost is to negotiate on the price. Over the past year, a trend has emerged where sellers have put their homes on the market at higher prices than advised by their realtor. They’ve done this because demand is high and stock is low, so they’re effectively pushing their luck. They know some people will pay anything for a property, but don’t fall into this trap. The best advice is not to rush into a sale. When you’ve found your ideal property, think about how much it’s worth and what you’re prepared to pay for it compared to the asking price. Tricks for getting a good deal during negotiations include giving a cut-off date on your offer and counter-bidding the seller’s proposal with your original offer.
Have a house inspection
A house inspection is where a thorough assessment of the home you’re buying is completed. Safety issues will be looked at and flaws will be pointed out. For example, the report will say whether there is a water leak or if a new roof is recommended. Nasdaq reports that more than 13% of buyers have recently chosen not to have a house inspection. While this saves a few hundred dollars and can shorten the completion process, it doesn’t save you money in the long run. When major repairs are identified, you can ask the seller to reduce the price of the house so you carry out the repairs after you’ve moved in. Orchard states that buyers save an average of $14,000 when a house inspection is carried out, so it’s certainly a good way to get the house of your dreams for a better price.
Negotiate closing costs
Closing costs typically cost homebuyers between 3 and 6% of the house purchase price. So, if you bought a home for the U.S. average of $380,000, your closing costs will be between $11,400 and $22,800. One option to get your house for less is to ask the seller to pay some of your closing costs. Most lenders allow sellers to pay for multiple closing costs, including appraisal fee, credit report fee, property taxes, home insurance, and title examination fee, among others. Another option is to negotiate a lower selling price with the seller so that you can afford to pay your closing fees.
Free up cash
At the start of the year, 55% of Americans said they were planning to move home in 2021, according to Extra Space. But house sales have actually slowed this year which suggests many people changed their minds because of rising asking prices. If you want to move on and get a new home elsewhere in the country, it’s worth refinancing your current property. A mortgage calculator will show you how much money you’ll save if you increase your monthly payments. By paying off your home loan quicker, you’ll be mortgage-free sooner. When you’re mortgage-free, you can sell your existing home and get your hands on some hard cash which you can use to buy your new place. Cash buyers don’t have to pay interest or closing costs, so you’ll be better off. You’re also more likely to get a decent discount on the property price as cash buyers are more attractive to sellers as there are no worries about financial checks, loan approvals, etc.
Get financial assistance
There are programs in place across The States which help homeowners with either their down payment or closing costs. If you meet the criteria, you may qualify for a true grant, forgivable loan, interest-free loan, or lender credits. A true grant means you won’t have to pay back the costs, while a forgivable loan is wiped off if you stay in the property for a set period. A no-interest loan will normally be paid alongside your mortgage. Lender credits are less favorable as you usually pay a higher interest rate. There will hopefully be a new attractive financial assistant program available soon as the Down Payment Towards Equity Bill is awaiting approval. This will give first-time buyers a $25,000 down payment for their first home.
Buy in winter
80% of people move home between the months of April and September. Many people don’t want to move boxes of belongings in cold, icy weather or feel unsettled during the holidays, so they avoid the rest of the year. But if you can put these feelings to one side, you can save a small fortune by buying a property in winter. As there’s less demand for property in winter, you’re unlikely to find yourself in a bidding war with another buyer. This means you won’t spend more than you need to. Property prices also tend to be lower during winter. Zillow reports that if you buy a house in December, you’ll save up to $5,000. The Journal of Housing Research also encourages buyers to invest during winter. They say the fourth and first quarters of the year is when house prices are usually at their lowest.
The rising cost of property across America is making it harder and harder for people to become homeowners or move up the property ladder. While it is likely that prices will continue rising for some time, these ideas will help you get a property for the lowest price possible.
