Lancaster County PA Realty Check: June 2007

Saving on Home Purchase Financing Costs


moneySaving on Home Purchase Financing Costs

Everyone wants to make the best deal they can on a home purchase!  But there's more to saving money than just the price of the house.  Many buyers overlook the potential savings they could get on the financing of their new home.

There are two major types of costs when it comes to getting a mortgage. 
The first is the initial investment, which includes the down payment and the closing costs.

The second is the monthly payment, which includes principal, interest, taxes and insurance.

Here are some ways to save on your initial investment:

Choose a low down payment loan.  If your credit is good, you can put down as little as 5%, 3.5%, or for some types of loans, even zero down.

Get a gift to cover closing costs.  A blood relative can give you a gift, or money may be available from a non-profit group or church.

Ask the seller to pay part of your closing costs.  A good Realtor(R) can be invaluable in helping you negotiate this.  Sellers are usually allowed (but not obligated) to pay buyer costs up to a certain limit.

Don't pay more insurance than you have to.  Some lenders want 14 months worth of insurance paid at closing.  The extra money sits in your escrow account, paying you no interest.

Get more than one quote for home insurance.  It can be surprising the difference you can find in premiums.

Consult with your tax advisor about what closing costs can be deducted from your income taxes.

Here are some ways you can save on your monthly payments:

Get a loan that doesn't have monthly mortgage insurance premiums.  You can do this by putting 20% down.  You may also be able to do it by getting an 80% first mortgage plus a smaller second mortgage.

Don't forget that interest payments on a primary residence, plus property taxes, are generally deductible.  Consult with your tax advisor.  The tax code favors homeowners.

In some cases an adjustable rate mortgage (ARM) may be justifiable.  The interest rate will start out lower.  If you will be selling the home within  a year or two, an ARM may make sense.  If you will be in the home for a longer period, a fixed rate is safer.

Find a good real estate agent to work with.  If you don't have one, ask your friends or co-workers for a referral.  Get yourself preapproved for a mortgage before you make any offers for a house.  You'll be able to make a better deal because sellers will give your offer more credence if you're already approved for a mortgage.

If you would like no-obligation information on how an Accredited Buyers Agent can help you save money and reduce your risk, call (717) 951-5552 or email .


Brian Schulman offers expert real estate representation for buyers and sellers of homes in Lancaster County, PA.  To learn more, visit


Brian Schulman offers expert real estate representation for buyers and sellers of homes in Lancaster County, PA.  To learn more, visit

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Comment balloon 2 commentsBrian Schulman • June 29 2007 06:11PM
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