Buying a house? Here are 20 ways to save


Written by:

Your home is likely the most expensive thing you’ll ever purchase and you’ll spend years paying it off. You’ll want to make sure to find a home you love and will enjoy for years to come. 

Plus, by purchasing a home, you can start building equity in your home instead of paying rent to someone else. Your home is also likely to appreciate over the long-term, resulting in being able to sell for more than you paid for it whenever you decide to move to another place.

To start, figure out how much you can afford — both upfront for closing costs and a down payment and also as a monthly mortgage payment. Then, start estimating costs and seeing where you may be able to save.

With the purchase of a home comes lots of little fees, expenses, and repairs. However, this all means there are lots of ways to save off money, especially if you’re willing to get creative. It’s also essential to find a good buyer’s agent (who the seller typically pays for!) who can help guide you through the process. 

Here are 20 smart ways to save, either when purchasing your home or by reducing your mortgage or repairs costs.

Related: Discount Real Estate Brokers and Agents: Everything You Need to Know

Image Credit: monkeybusinessimages/istockphoto.

1. Improve your credit score

If you’re like most Americans, you’ll be getting a mortgage loan for your home. Banks use your credit score to determine the interest rate you’ll pay on that mortgage, so anything you can do to improve it prior to your home search will save you money.

Image Credit: cnythzi .

2. Shop around for a lender

Different lenders have different rates and different terms. In general, you’ll pay less when using a credit union, but they may not have all the bells and whistles of convenient online payment. They may also not offer long-term loans or be able to move as quickly as a larger bank would.

When comparing loans, consider your interest rate, mortgage-related closing costs, any prepayment penalties, loan origination fees, discount points, etc.

Image Credit: Deposit Photos.

3. Consider a loan discount

Some lenders may offer you a loan discount on your mortgage in the form of points or lender credits. Discount points (typically) lower your interest rate in exchange for paying an upfront fee. 

Lender credits lower your closing costs in exchange for accepting a higher interest rate. This may be attractive to a buyer who doesn’t have much money upfront to put toward closing costs. Pay close attention to the loan terms and work with your real estate agent to evaluate if opting for a loan discount is best for your specific situation.

Image Credit:

4. Lower your mortgage interest rate

While a small variation on an interest rate doesn’t sound like much, since your mortgage is likely 15-30 years in length, it can turn into big savings. For perspective, on a $200,000 30-year mortgage, a 0.25% lower interest rate translates to a savings of almost $10,000 over the long run.

Image Credit: Chainarong Prasertthai // istockphoto.

5. Refinance when interest rates go down

If you can’t get a low interest rate when you purchase your home, you can always consider refinancing when the market experiences lower interest rates. Similarly, if you can’t get a great rate because of your low credit score, you can work to improve it and then refinance at a later date.

Image Credit:

6. Consider a shorter loan

Similarly, a shorter loan term can get you a better interest rate. As another bonus, you’ll pay off your home quicker. Although your monthly mortgage payment will be significantly higher, if you can afford it, you’ll be able to pay off your home more quickly and save bunches. 

For example, on a $200,000 mortgage, the difference you’ll pay between a 30-year mortgage and a 15-year one with a 1% lower interest rate is more than $80,000! 

Image Credit:

7. Make a higher down payment

Making a higher down payment can save you on several fronts. It may help the seller accept your offer, even though it may be lower than others. It may help you pay less interest by taking out less money in the form of your mortgage. And it may help you avoid private mortgage insurance (PMI), which will be discussed more in detail later on.

Image Credit:

8. Avoid private mortgage insurance

When you don’t pay at least 20% toward your home purchase in the form of a down payment, your lender will require you to purchase private mortgage insurance — or PMI. 

PMI ensures the bank’s investment will be covered in the event you are “underwater” — or owe more on the home than what it’s worth — and default on your loan payments. The PMI would make up the difference for the bank.

PMI rates can range from 0.5% to 1.5% of the loan amount on an annual basis and will be added to your monthly mortgage payment. 

While you can pay for an appraisal when you think you have 20% in equity in your home to remove your PMI payments, they usually won’t automatically fall off until you reach 22% equity. By paying at least a 20% down payment when purchasing your home you can avoid paying PMI altogether.

Image Credit: designer491 / istockphoto.

9. Buy in the off-season

In the prime of the home sales season, you’ll always pay more for a home because there will be more competition. If you’re willing to buy in an off-peak season — usually during the winter and specifically around the holidays — you may be able to snag a home for much cheaper. 

However, keep in mind that you may also have fewer options, as there are also typically fewer homes on the market at this time.

Image Credit:

10. Buy a fixer-upper

If you’re willing to put some elbow grease into your new home, you could save a lot of money. Most buyers want to purchase a home that is move-in ready and will completely overlook a fixer-upper, even if it’s priced at an extreme discount.

Especially if you have the tools, skills, and time to do the work yourself, a fixer-upper may be the way to go. You can often perform the work cheaply and may be able to afford a higher-quality home or one in a nicer neighborhood than you would have otherwise.

Image Credit: DragonImages / Getty.

11. Make a lower offer

While offering a lower purchase price isn’t as attractive to a seller, you may be able to sweeten the deal in other ways. For example, the seller may be interested in a quick closing or you could offer to purchase the home “as is” without any repairs or improvements requested. Just make sure you have a good idea of the condition of the home prior to purchasing it.

Image Credit:

12. Get quotes for home insurance

Before you purchase a home, you’ll need to secure home insurance that will be added to your monthly mortgage payment. Shop around to multiple providers for the lowest rates and the best coverage. You may be surprised how much you can save.

Image Credit: SolisImages / istockphoto.

13. Dispute your home valuation

If you’ve already purchased a home and you think the valuation may be off, most municipalities will allow time for you to dispute it. This may take some time on your end to find decent comps (or comparable homes to your own) and set up an appointment to argue your case, but could save you money for years to come.

Image Credit: monkeybusinessimages / istockphoto.

14. Buy in the right area

Although you won’t want to buy a home in a run-down neighborhood just to save money, your real estate agent may have a good pulse on ones that are up-and-coming. 

This can benefit you in two ways. One, you may be able to purchase a home more cheaply and two, the value of your home will likely go up and you could eventually sell for a nice profit.

Image Credit: istockphoto.

15. Home buyer rebate

The seller typically pays for realtor fees for both themselves and their buyer, but you may be able to get your buyer’s agent to agree to a home buyer rebate.

Some agents offer this perk and provide their buyer with money back in the form of a credit at closing that comes from their own commission. You’ll need to negotiate this with your own agent, but some real estate sites such as Clever offer a rebate automatically to buyers.

Image Credit: Deposit Photos.

16. Closing costs

As with most things related to real estate, closing costs are negotiable. When you purchase a home, closing costs are split between the buyer and seller.

Usually, the bulk of the seller’s closing costs are related to real estate commissions — because they pay for both the buyer and seller’s agents. Most of a buyer’s closing costs are for items related to their mortgage — like discount points, credit checks, escrow, and origination fees. Other closing costs such as filing fees and title insurance are usually split 50/50 between buyer and seller.

As a buyer, you can request that a seller pay more in closing costs — especially if you’re willing to accept the property with little to no repairs or offer other perks like a quick closing, etc. 

However, this may be more difficult to negotiate in a seller’s market, as the seller will have lots of offers to choose from, and others may be more attractive.

Image Credit: Vladimir Vladimirov.

17. Negotiate for repairs

After having a home inspection on a house you intend to purchase, there is usually some back-and-forth on which repairs the seller will complete and if they’ll make them prior to closing or simply offer a monetary credit on the overall purchase for the buyer to complete them on their own.

While negotiating for repairs with a seller won’t save you money upfront, by asking them to complete needed repairs prior to closing, you’ll save yourself from having to pay for it shortly after moving in. When negotiating, it’s best to focus on those repairs that either need immediate attention or are particularly costly.

Image Credit:

18. Reach out to a potential seller on your own

An out-of-the-box idea to save money when buying a home — especially in a seller’s market that’s tough for buyers — is to contact potential sellers on your own. There are ways to find homeowners you think may be reaching out to a realtor soon to put their home on the market and speaking with them before they do so.

Real estate investors do this all the time to find discount properties — it’s called “driving for dollars.” They may see a property in major need of mowing with overgrown weeds or a home that clearly needs a new roof and has been neglected. Then, they find out who owns it — usually through the local assessor’s office — and contact them to make an offer.

Homes in need of major repair are usually owned by homeowners or landlords who either can’t keep up with the work or don’t have the money to pay for it.

Thus, they may be willing to sell at a discount if they don’t have to hire a real estate agent or deal with the hassle of listing it on a multiple listing service (MLS). Those listing their home as a for-sale-by-owner may also be willing to sell for a discount, as they’re not paying agent commissions either.

Image Credit: DragonImages/istockphoto.

19. Stay out of the city

If you’re flexible about where you can live, consider the suburbs of your city or a mid-sized city. Obviously, you’ll pay more to buy a home in the hub of a major city, as they’re in short supply and high-demand. Not to mention, you’ll likely have a higher cost of living and pay much more in transportation costs.

Image Credit:

20. Be flexible on your criteria

You’ll save money by staying flexible in which homes meet your criteria. For example, split-level homes are typically less expensive than others. Also, you may be able to get more square footage for your money if you’re willing to opt for a multi-level home.


This article
originally appeared on and was
syndicated by

Image Credit: istockphoto/fizkes.