Housing inventories are high and mortgage rates low. Even so, it's as easy as ever to overestimate how much house you can afford and underestimate how much it'll cost you. Following are a few tips for making your home purchase as cost effective as possible.
1.Own or Rent?
Owning a home is expensive. In addition to the down payment and mortgage, you'll have to pay for closings costs, insurance and maintenance. To figure out whether it's financially smarter to buy or rent in your area, calculate and compare total home ownership.
2.Consider Monthly Costs
Even if you can scrounge up a down payment, figure out before buying a home whether you can comfortably cover the full costs of ownership--including the mortgage, taxes, insurance and regular taxes.
3.Aim For A First-Time-Buyer Tax Credit
If you're buying your first home, the feds have a deal for you: An $8,000 income tax credit for those who sign a binding contract before May 1. Then again, it's entirely possible that, like past.
4.Getting a Government-Backed Loan
As of this month, mortgages guaranteed by the Federal Housing Administration got harder to come by. Would-be buyers with a credit score of 580 or less now must put up a 10% down payment.
5.Avoid Family-Assistance Tax Traps
Before applying to the Bank of Mom & Dad, note that outright cash gifts can result in big tax bills. Avoid them by structuring parental assistance as a bona fide loan with minimum interest rates set by the Internal Revenue Service.
6.Consider Foreclosures
Foreclosed homes often sell at discounts--but you'll have to act fast and often with help from a real estate agent who specializes in foreclosures. It also pays to first get a mortgage pre-approval letter from a lender. Among the best markets for foreclosures:
7.Factor in Property Taxes
Got your eye on a dream home in Westchester County, N.Y., or Marin County, Calif.? Both are property tax danger zones, according to a recent Forbes analysis. Before taking the plunge, consider the thousands of dollars a year you might save by moving a county or city
8.Beware of Title Insurance Rip-Offs
In some states, home buyers can save as much as $1,000 on title insurance.
9.Consider High-Deductible Home Insurance
If you're a do-it-yourselfer moving into a new home, consider lowering your homeowners insurance premium by raising the deductible. Even if you're buying an older home, or aren't too handy, it might not be cost effective to pay a lot in extra premiums.
10. Cut Insurance Costs By Upgrading
Security systems, smoke alarms and other upgrades can cut your insurance premiums. It can also pay to insure your home with the same company that covers your car, boat or other property.. visit
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