Buying my home was one of the biggest financial decisions I’ve ever made, and if you’ve been reading the blog for a while you’ve probably seen me through my ups and downs with this old place. From buying my home for less than $2000, being thoroughly scammed by a bad contractor, and realizing I didn’t ask enough questions, it’s been a bit of a rollercoaster. However, I’m still super proud of all that I have accomplished in this home. Being a homeowner in your 20’s is almost unbelievable these days.
Yeah, I’ve made plenty of mistakes along the way. And even though there are plenty of ways homes can be expensive, there are also many clever ways to save money on your first home. Here are a few of my favorites!
My 5 Favorite Ways to Save Money on Your First Home (no latte skipping required!)
Tip #1 – Look into Down Payment Assistance Programs
This is my favorite home buying tip; it’s how I was able to save so much on my closing and then turn around and use the extra cash towards renovating the house. Finding assistance programs is as easy as googling “[state] down payment assistance” – so why wouldn’t you? And much like scholarships for college, there are other avenues of assistance for just about everyone. Are you a single mother? A veteran? You could qualify for even more funds!
Related: How I Bought a Home for $1800.
Tip #2 – Take the Time to Go to Credit Rehab
Knowing your credit score is so important to potential homebuyers. This little number will be what mortgage brokers look at when determining how much you can borrow – and what interest rate you’ll pay. If you’re looking to buy a home but don’t have great credit, consider taking time to pay down your debts before you make a huge investment like a home. Having good credit can open up your options as far as mortgage rates and even help you afford a down payment. How? Well…
Tip #3 – Definitely Put 20% Down
Whaaaaat? Wasn’t I just talking about affordable down payments? Once you agree to borrow more than 80% of the home’s value, you’ll typically have to pay for private mortgage insurance (or PMI). This extra monthly charge is a protection for the lender in the event you default on your loan.
To avoid tacking on an extra PMI payment to your loan, try to save up at least 20% of the total cost of the home, and even though it’s difficult to get the full 20% as a first time buyer, it will save you SO MUCH money over the long term.
Tip #4 – Don’t Feel Obligated to Spend All You Can Afford
Looking at my house now, I have way too much space that I’ll never use. I ended up spending more for a house with five bedrooms when I could have gotten away with a much cheaper two bedroom condo with cash to spare.
When you’ve been saving for a home for a while you might feel like you should “get your money’s worth” and use it all on the down payment for a bigger and better house. But my advice to you is this – buy the house you want right now, not the one that you’ll want in ten years. Planning for the future is tricky enough as it is, don’t pay extra for a house when those plans could change. It’s a starter home for a reason.
Tip #5 – Don’t Go Furniture Shopping The Day After You Move In
Buying a home is super exciting; moving into a new home is super draining. Once you’ve got a place of your own it can be easy to go overboard on other big purchases like furniture and décor. I understand the temptation, but you should spend some time getting to know your space before spending even more on furniture, updates and renovations.
This post was written as part of the Allstate Influencer Program and sponsored by Allstate. All opinions are mine. As the nation’s largest publicly held personal lines insurer, Allstate is dedicated not only to protecting what matters most–but to help protect your firsts and the moments in between. Share your firsts with #HeresToFirsts.