7 Steps for Success When Buying a Home (Step 7)

We've been considering 7 Steps for Success When Buying a Home over the course of a number of weeks now. The following six steps we've already looked at:

1. Establish your needs and wants. 
2. Determine how much you can afford. 
3. Get pre-qualified or pre-approved by a lender. 
4. Find a good real estate agent to help you. 
5. Find a home that meets your needs. 
6. Make an offer to buy a home.. 

The final step is no less a crucial component along with the previous six...

STEP 7: SAVE AS MUCH AS YOU CAN ON YOUR INITIAL INVESTMENT

There are only two major investments to consider when buying a home. These are the initial investment (including down payment and closing costs) and the monthly payment (including principle, interest, taxes, and insurance).

Here are some ways to save on your initial investment:

Choose a low down payment loan. You do not necessarily have to put 20 percent, or even 10 percent, down. You can put 5 percent, or even 3 percent, down on some loans. Ask whether or nor your loan includes “private mortgage insurance” or PMI.

As part of your offer, ask the seller to pay some of your closing costs. Sellers are usually allowed to contribute to a buyer's closing costs. In many cases this is a negotiable item.

Shop around for your home insurance. A little shopping can save you a significant amount of money.

You can deduct money paid for discount points from your gross income before computing your tax, which would effectively reduce the cost to you. Always check with your CPA to find out specific guidelines in your area.

Keep your monthly payments low. Get a loan with no monthly mortgage insurance premiums. You may be able to reduce or eliminate them by paying a little more at closing. By putting 20 percent or more down, you may be able to eliminate them entirely.

Remember that interest payments on a primary residential mortgage are fully deductible in most circumstances. Your property taxes may also be deductible. Tax rates definitely favor homeowners.

Congratulations! You have finished reading the 7 Steps for Success When Buying Home. Now it's time to go out and find the home of your dreams! :)

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