7 clever ways to cut the costs of buying your first home


Being a first-time home buyer makes you a newbie, but it doesn't necessarily mean you have to be naive about purchasing a home. 

RELATED: House hunters, here are 5 secrets to getting the best home loan

While you might not be the “Property Brothers” your first time out, you can still have some clever tools and tips to reduce those costs.

Work on your credit score way ahead of time. 

Reducing your mortgage interest rate by even a fraction of a percent point can save you thousands of dollars over the life of your loan, according to the Consumer Financial Protection Bureau.

One key factor: your credit score. According to Kiplinger, a score of 740 or higher will set you up to obtain the best interest rates. Check your credit report months - or even years - before you're sold on the idea of buying your first home, giving yourself plenty of time to boost your score. "What you don't want is to have to address a bunch of mistakes on your credit report while actively looking for a home and trying to get approved for a mortgage loan," HSH.com vice president Keith Gumbinger told Kiplinger.

To see just how much impact this step could have, enter information on your current and target credit scores into the CFPB's explore interest rates tool.

Crowdsource your down payment. 

If you're comfortable accepting money from friends and contacts, House Logic suggests crowdsourcing to accelerate financing your down payment. Sites like Feather the Nest can walk you through the process.

See if Uncle Sam will help. 

The U.S. Department of Housing and Urban Development, or HUD, offers a number of home ownership programs for those who meet specific income or location requirements. You may qualify for assistance with down payment and closing costs, for example.

HUD also offers deep discounts for people in professions like law enforcement or firefighters when they buy in "revitalization areas." The Veterans Administration can guarantee part of a home loan, help veterans secure a competitive interest rate or waive down payment and private mortgage insurance requirements.

Find a housing counselor. 

HUD-approved housing counselor can give first-time home buyers entirely independent advice on whether a particular set of mortgage loan terms is a good fit.

Pick a real estate agent based on where you want to live. 

A neighborhood expert can often find you the best house at the best price in a way your friend who's a realtor or the agent who lives where you do now can't. "You want people who have worked and have experience directly in the areas you're looking in," Mia Simon, a Redfin agent in Palo Alto, California, told U.S. News and World Report. When you're a first time buyer, never hesitate to use real estate agents, since it costs you nothing. The agent will help structure and present your offer and can troubleshoot any issues that arise.

Choose a home where you could stay five to seven years.

"You're going to spend thousands of dollars to get into the home. To get out of it is going to be equally expensive and may possibly cost more when you do it in less than five years or in a down market," Keith Gumbinger, vice-president of HSH.com, told Kiplinger.

Don't get distracted. 

Aspects of properties for sale that may seem important to you aren't always important to your bottom line. U.S. News recommends concentrating on home features that would be expensive or impossible to change, like not enough bedrooms, an undesirable location or a floor plan that makes it hard to get around. Don't get sidetracked by things you could easily and inexpensively change after the sale, like an odd decorating scheme, dirty carpet or cabinet hardware.


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