Barry Choi’s Saving Tips for New Homeowners
Two years ago, my wife and I bought our first home. We were fortunate that we didn’t have to look at dozens of places before we made an offer or needed to go through a bidding war, but the process was still stressful – we were about to make the largest purchase of our lives and how much we spent was going to make a major impact on our lives. Thankfully, with resources like the second-hand economy, we were able to save, and put those earnings towards everyday needs.
Most potential homeowners go through similar feelings, and some can let emotions get the best of them. Here are three tips to help you keep your costs down when purchasing a new home.
Consider your purchase price
When purchasing a home, most people have a budget in mind, based on the amount their mortgage is pre-approved for. This is fine, but keep in mind that lenders don’t consider any additional expenses when deciding how much to approve you for, such as your own goals for retirement savings, vacation funds, the cost of raising kids, or furnishing your home. It’s always a good idea to avoid maxing out your pre-approval budget so you’re never left feeling house poor.
Understand your mortgage
Despite rising interest rates, mortgage rates are historically low. With a fixed rate mortgage, you may pay a little more, but you will get peace of mind that your payments will remain the same. If you go with a variable rate mortgage, you’ll get a lower rate than fixed rate mortgages, but your payment could increase (or decrease) as interest rates rise (or drop). Regardless of which type of mortgage you choose, how you set your payments could save you thousands of dollars. For example, if you choose to make your payments on an advanced bi-weekly schedule, you’d shave years off your amortization schedule since you’d be making one extra payment a year.
Furnish your home with the second-hand economy
Before my wife and I moved in, we had set aside some money to purchase new furniture. This was our first place together so we decided to buy new, but looking back, had we bought some items second-hand, we could have easily saved big bucks. The dining table we bought cost us about $450 after tax, but with a quick search online, I realized the exact same table could be found for less than $100 slightly used.
We did, however, take advantage of the second-hand economy by selling a lot of our furniture from our previous places. We listed couches, coffee tables, TV stands, kitchen islands, ottomans, and more on Kijiji. Everything we listed was in good condition, and we were in no rush so we were confident that someone would make us an offer. In the end, it took less than two weeks from the time we listed to sell everything. In the end, we pocketed about $1,000 which helped us furnish our new home exactly the way we envisioned!
When you’re a new homeowner, budgeting can be tough as you get used to different expenses, but with a few small adjustments, you can enter this new phase of your life with confidence (and a little extra cash) without sacrificing too much.
Learn How to Get Involved in the Second-Hand Economy!
If you’ve bought or sold used items, swapped, or donated, you’re already an active contributor!