Top 10 home buyer secrets that increase your buying power and save you thousands of dollars

When you buy a home, you are pretty much on your own. The only folks to help you are your real estate broker and your mortgage professional who are completely lovely people but they also have an eye on their commission.

What you need is a helping hand that identifies all the points where YOU can save (and save big), make your journey as easy as possible and get your important questions answered, without any conflicts.

Save thousands of dollars
Make home buying easy
Get all your questions answered

Homeownering is rolling out a program in early 2019 that addresses these three important needs and puts you on a higher playing field.

In the meantime, we offer you these 10 valuable homebuyer tips that came from a decade of knowledge and research into the real estate, mortgage, credit repair and insurance industries.

1. The foolproof formula to really figure out how much you should spend on a home

There are many common rules of thumb out there about how much of your income you should spend on a home. Maybe your mom told you “only spend 30% of your net income on your mortgage”. Or, maybe you heard on the news that the golden rule is now 40% of your total income.

Percentages really don’t make sense, and can put you on a bad path right at the very start of your adventure.

Here’s why. Everyone has different circumstances.

For example, do you have kids? Are you single? Do you prefer saving vs. spending? Are you looking to retire before 60? Do you have student loans? Do you pay alimony? Do you have a bajillion dollars in the bank? Do you support your parents? Is it your highest priority to vacation twice a year?

Your goals and dreams drive how much you can spend, not a percentage.

Percentages are for people who aren’t savvy. And that’s not you.

The savvy home buyer’s foolproof formula for how much to spend on a home

Review your current actual spending. How much do you make and spend? Don’t just include your rent or mortgage and home related costs, but overall costs in categories, including credit card bills, other debts and expenses.
Consider how your costs will change if you buy a home. If you are renting now, you’ll want to consider property tax, homeowners insurance and home maintenance, for example on top of your mortgage costs. If you are a homeowner now, consider changes in property tax, and maintenance costs from buying a larger or smaller home. Construct a picture of “before” and “after”. How do certain costs increase or decrease?
What are your short and long term financial goals? Buying a home is a long term commitment. Most people don’t buy homes and expect to move in the next couple of years. Do you plan to have kids, save for retirement, boost your investments? Make sure to account for these life goals when you consider the money you can put towards a home. Are you still able to reach your other financial goals?

Then, when you go to look at homes and the real estate agent and the mortgage broker tell you that you can afford a more expensive home than you figured out that you want, you can say, “whoa nelly!”.

Value to you: Buying a home at the right price where you can fulfill all of your dreams.

Do you want easy and quick tools to get a crystal clear view of what you should spend on a home? We’re launching a home buyers program in the next few months that includes easy forecasting tools. Sign up to get notified when it launches.

2. Improve your credit in advance and completely for free

Are you in the early stages of thinking about buying a home? Perfect! Now’s the time to improve your credit.

Did you know that credit repair is a $600 million industry. Many home buyers think that they need to enlist a credit repair company to help them improve their credit ahead of a home purchase, but this is simply not true. There is nothing a credit repair company can do that you can’t do yourself.

Isn’t that nice? You are welcome.

Save yourself $300 to $2,000 and follow these steps to finding issues on your credit report and fixing them.

You’ll want to start as soon as possible as it can take a while to get issues and errors fixed, sometimes up to three months.

Why is credit so important? Because the rate that you get on your mortgage is informed by your credit score, among other factors.

Did you know that even a ¼ of a percent lower interest rate on your mortgage can mean thousands of dollars savings in the first five years of owning your home?

Maybe you are thinking, “there are no errors on my report! I have great credit!”. But, did you know that 80% of people find errors on their credit report? Let’s say you have a nice score right now of 780. Fixing errors on your report can push you up above 800 and get an even better interest rate.

Some mortgage professionals have relationships with credit repair companies, but these are largely a scam. You can do it yourself for free!

Value to you: Saving $1,000 to $4,000 in the first five years of your mortgage.

With our home buyer’s program we are launching in the next few months, we are including a comprehensive credit program absolutely free – over 15 pages of expert information on achieving and maintaining credit for all of your financial needs over your lifetime without spending a penny. Sign up to get notified when it launches.

3. Choose your home like a professional investor

In choosing a home, you may find yourself making a lot of choices based on emotion. After all, choosing where we spend most of our time is an emotional decision. Every home I’ve bought I bought because I absolutely loved it!

Do you want to be near particular friends or relatives? Do you hate commuting and want to be near your job? Do you need bright sunlight, outdoor space, quiet, or want to be in a bustling place near the center of the action?

Anyone who says buying a home isn’t or shouldn’t be an emotional decision is a goddamn robot.

However, there are some things to consider that will make your emotional decision make you way more money in the long run! How great is that? Win-win.

One of the biggest ways to buy a home that you love that is also a financial win is to take stock of its condition carefully. For this, you don’t just need any old inspector, you need a foolproof plan. Lucky for you, we already made a cheat sheet for how to get the real deal on your home inspection. For example, folks who just hire any old inspector are likely not going to find the real problems that can cost you tens of thousands of dollars. Things like busted sewer pipes or structural issues.

During a real, tactical inspection, you’ll have the opportunity to find out what the major components of your dream home are and how old they are. Things like the roof, boiler/HVAC, and other high expense components. Where they are in their life cycle will have a big impact on how much money you have to spend in the first five to ten years. This article also has a plan for taking stock of your dream home and figuring out what sort of financial impact big ticket components will have on your bank account. You can even compare two dream homes with this info and see which is best!

Lucky you.

Do not, under any circumstances take the advice of a mortgage broker or listing agent on what inspector you should use. These particular professionals have an interest in getting the deal done as soon as possible. If major issues are found, this can delay or kill the deal, meaning, they don’t get paid!

For more information from a legal expert on how to avoid buying a money pit, you might want to read this article on what sort of recourse you have if you buy a home with problems.

Value to you: Save thousands of dollars in potential maintenance costs over the lifetime of your home and still end up with your dream home!

4. Get interest rates that are real instead of scams

When I bought my first home, I used to think that the interest rates offered at sites like Bankrate and LendingTree were really the rates that I would get if I clicked on the links.

The truth is, the rates that are show are ads, from the mortgage companies and banks. Certainly, there is an incentive for them to post low rates as who in their right mind would click on a higher rate when you can click on a lower one?

Most importantly, if you look in the fine print, you will see the words “rates are non-binding”. Which means, you aren’t guaranteed to get the rate.

So, what’s the point?

To make matters worse, when you put your information in, they sell it to the banks and mortgage companies, as that’s how they make money.

So, why bother? Well, if internet sites that display rate ads from mortgage companies like BankRate, NerdWallet, LendingTree, Zillow Mortgages and more were the only game in town, then you’d basically have to rely on these.

But, lucky for all of us, there is a much better, more accurate source of interest rate information. And it’s completely free. Even better, they don’t take your data and sell it!

The Consumer Financial Protection Bureau (CFPB) publishes interest rates in a cool, interactive, online tool. It’s a massive data tool that that collects information on actual rates that consumers are getting for mortgages for different credit scores, geographic areas and mortgage amounts.

When it first came out, mortgage brokers and banks tried to shut it down! Lucky for all of us, they were unable.

Best of all, they don’t collect and sell your information so you won’t have to worry about using it and then getting 85 phone calls to your phone from mortgage brokers, Oh, happy day!

You can access it here: CFPB Interest Rate tool

Value to you: Get accurate mortgage rates without companies stealing and selling your information!

Be sure to bookmark it so that you can keep it handy whenever you are looking at mortgage interest rates.

5. Get your documents in order

Once you start working with a mortgage professional, they’ll ask you for an endless stream of documents. This is so that they can qualify you properly for a loan. But, as anyone who has been through the mortgage process before knows, after you give them everything, they then ask you for the very same documents another 845 times!

It’s extremely irritating. You want to shake them and say, “How come you don’t have them? Do you just throw them out the window when I give them to you?”

It’s maddening.

But, you don’t need to be caught in this disorganized frenzy (and, the reason this happens is that processing a loan is like making a sausage – but with a lot of different cooks. Many of whom don’t communicate seamlessly with each other).

No, you’ll stay cool as a cucumber.

Once you’ve identified the type of home you want to buy, the general location, how much money you have to put down, and how much home you can afford, then it’s time to get prepared for dealing with the mortgage professionals.

But, I’m going to show you how to make this process as simple as possible, it pays to set up some things in advance. You’ll want to get the following items ready and have them in places you can easily find them throughout the mortgage process, ideally scanned and put in electronic folders where you can access them from anywhere:

Income

W-2 forms from the previous two years, if you collect a paycheck.
Profit and loss statements or 1099 forms, if you own a business.
Two months of recent paycheck stubs.
Your last two tax returns
Proof of pension income, if applicable
Social Security and Disability payments, if applicable
Proof of other income, such as rental, if applicable
Proof of bonus income, if applicable
Letter of explanation and a source for any money given to you as a gift

Assets

Bank statements for the past two months
Mutual fund statements, brokerage statements and/or records of other
investments for the past two months
401k statements
Documents for non-primary residence real estate holdings (property
address, current market value, mortgage lender’s name and address, loan
account number, balance and monthly payment)

Debts

A complete list of your monthly debts, such as credit cards, student loans, car loans and child support payments, home equity lines of credit, along with minimum monthly payments and balances.

Seem like a lot? Now, just imagine having being at work with a million things going on and your mortgage person says, “Hey, uh, I need your 401k statement,” for the 46th time.

Now, if you weren’t organized, you might truly feel like you were in Dante’s 7th circle of hell. After all, you’d have to go into your 401k account (after resetting the password that you forgot) and losing precious time you could be spending doing work to get you home a little bit earlier.

Since you’ll be organized, you’ll have this record where you can find it and simply pop it back over to your mortgage professional who may become your least favorite person.

But the most important benefit of this is that this list of documents will make it possible for you to effectively shop around. Which is the most money saving thing you can possibly do when getting a home, and what 99% of people are unequipped to do well.

Value to you: Save hours of time and frustration. Hate your mortgage broker a little less.

With our home buyer’s program we are launching in the next few months, we feature a document management system and also a way to get every single question answered that you have during your mortgage process. Make your mortgage process pain-free and sign up to get notified when our program launches.

6. Shop around

The number one way to make sure that you get the best deal that you can on your mortgage is to effectively compare offers. Period.

Why is it so important?

Research has showed huge benefits from being able to successfully shop around. According to the Consumer Financial Protection Bureau, shopping around from at least three lenders can save you more than $3,500 in just the first five years of your loan!

How successful are people at shopping around?

Most people do this poorly or not at all.

I’ll tell you why: a home buyer will call up a couple of mortgage professionals and get a couple of interest rates before they’ve sent in the information that would actually determine what their interest rate would be.

Naturally, the home buyer chooses the mortgage person who quotes the lower interest rate, and then they submit their paperwork. And guess what? The interest rate changes.

It changes because the “phone quote” was non-binding, and the professional didn’t even have enough information to quote you a real rate!

And, now you have no real leverage because you’re working with one person who has you by the balls because you want to get the deal done fast.

You’re not in a position to negotiate if you only have one real offer.

How to get real offers?

In order to get two or more real offers, you have to submit all of your information to two or three loan professionals. And, most people poop out after one because the process wears them down.

Even if you get two or three real offers, it’s hard for people to compare them because there are so many different bits to a mortgage offer. Points, fees, rates, loan types, the list goes on and on.

Why is it so hard?

One reason it’s hard to shop around effectively, where you are actually in a position of being able to negotiate, is because mortgage professionals do everything they can to avoid this situation.

If you even mention that you are shopping around, some mortgage folks will drop you as a potential client. That is because they’d rather spend their time with someone they know they have on the hook.

Often, they won’t give you a Loan Disclosure which is binding unless you know to ask.

And, like I mentioned above, the mere process of getting multiple real quotes, submitting all the information needed to get binding quotes that you can actually negotiate with is really overwhelming for most people.

Our solution

Because the value of shopping around is so huge, the difficulty of doing it on your own is so high and time consuming, we invented a proprietary process to make it super simple to get real offers, compare them effectively, and successfully negotiate with ease and confidence.

Value to you: According to the Consumer Financial Protection Bureau, $3,500! That’s a lot of savings.

Our program includes:

Scripts to use to make sure that you get binding quotes, without your loan officer knowing that you are shopping around!
A way to quickly compare all fees from your quotes, with no fine print
Support for any questions that come up during the mortgage process
Bonus: tools to evaluate your mortgage options and negotiate like a pro

Sign up to get on the list for this exciting new product.

7. Rate lock

There is a lot of confusion for home buyers around what a rate lock is and how to use one. Most people depend completely on their loan officer to guide them.

First of all, what is a rate lock? A rate lock is when you request that your interest rate is locked at a particular rate during the time between when you first file your loan application and when you close on your home. Some lenders will lock your rate as part of issuing the Loan Estimate, but some may not. If your rate is not locked, it can change at any time. If your interest rate is locked, it won’t change between when it is locked and closing, as long as you close within the specified timeframe and there are no changes to your application.

You should always ask your lender about what specifically are their rate lock policies.

If your rate is not yet locked, ask:

“When in the process do you typically lock interest rates? Could I lock earlier or later, if I wanted to?”
“What do I need to do to lock my rate? Are there any additional fees to lock my rate?”
“How many days would I have to close before my rate lock expires?”

Often, people are at the mercy of their loan officer to tell them whether to lock rates, as there is no other person available to help them.

But, who tells the loan officer when to lock rates? Well, we think you should have the same information the loan officers do in order to make your own determination of when you should lock your rate. Don’t you? Why should you rely on someone to tell you this, who may or may not be trustworthy?

As part of our home buyer’s program, we give you independent information on interest rate movement that is of the highest quality, so you can make independent decisions about your rate!

Value to you: Substantial savings on your interest rate, and peace of mind.

Sign up here to get notified when our program launches.

8. Compare homeowners insurance effectively

A big mistake that home buyer’s make is to shop for their homeowners insurance when their mortgage is about to close. This leaves you with little or no time to compare quotes. Consider this: shopping around for homeowners insurance can give you better coverage for less money.

Many home buyers think it is hard to shop around for homeowners insurance, but in fact, it is simple. We’ve created a comprehensive guide to getting the best policy for the lowest rate.

The time to shop for your homeowners insurance is when you’ve picked out a home and made an offer. You have between the time when you go into contract and close on your mortgage to negotiate your homeowners insurance.

You’ll want to consider things like replacement cost, understand what is covered and what isn’t, and liability insurance you want to carry. This can seem intimidating, especially for new home buyers, but our guide goes through how to go about it step by step.

Value to you: Thousands of dollars over the lifetime of your home.

Here, we have a comprehensive guide to getting the best homeowners policy. Save yourself major money and get a better plan, too!

9. Get on top of your closing so there are no “surprise” costs

Talk to any home buyer after the purchase and they will say that at their closing, “we had to write a check for $250” or so, sometimes over a thousand dollars.

The lawyer always says, “bring your checkbook!”

Closing, while the most exciting part of buying a home as you literally get the keys to your kingdom, is nerve wracking. Depending on your state, it may be anywhere from slightly painful to feeling like you are getting your fingernails ripped out.

You might find yourself sitting in front of a two inch high stack of papers with five other people in a stuffy office. Your hand will cramp from signing every other page. You’ll be overwhelmed with the number and types of papers you are expected to sign without reading. You’ll feel nervous and look to your lawyer every two seconds to tell you it’s going to be okay.

And, somehow, the numbers don’t all add up! So you write the check and then think – “hmmm did I just get ripped off?” You’ll probably never know.

But, this can all be avoided!

By law, you are entitled to get a copy of your Closing Disclosure three business days before your closing.

Contact your lender or closing agent (title company, escrow officer, or attorney) at least a week before closing to find out how you will receive your Closing Disclosure.

The Closing Disclosure may come from your lender or your closing agent. Find out who will send it to you.

Find out if your Closing Disclosure will come via email, postal mail, or if you will have to download it from a website.

Find your most recent Loan Estimate from your paperwork file. You’ll want to compare it to your Closing Disclosure.

Request a copy of your other closing documents in advance.

In addition to the Closing Disclosure, there are other important documents to review. Ask the lender or closing agent to send these documents to you in advance, at the same time as the Closing Disclosure. Key documents include:

Promissory Note
Mortgage (also known as the Security Instrument or Deed of Trust)
Deed

You have three business days to review your Closing Disclosure.

It’s not uncommon for some of the individual closing costs to have changed by small amounts compared to your Loan Estimate.

By law, some fees cannot increase at all unless you have asked your lender for a change in your loan or your financial information has changed.
Other fees are limited to a 10 percent increase, and another group of fees are not limited in how much they can change. Learn more about which fees can change.

You may want to have a real estate attorney to review the documents.

If any of the basic loan terms are not what you are expecting, ask questions and be wary.

Double-check the loan amount, loan type, loan term, interest rate, monthly payment amount, whether there is a prepayment penalty, whether you are paying points or receiving credits, and other key details.
Compare the Annual Percentage Rate (APR) on the Closing Disclosure to the APR listed on your Loan Estimate. This is an easy way to see if your costs have increased.
Ask lots of questions. Do not sign any documents at closing until you have double-checked that the documents you are being asked to sign are correct.

Value to you: Not having to bring a check to your closing to pay mystery amounts!

Make sure you get your paperwork ahead of time. You can review it so that there are no surprises.

10. Save and file your documents

You’ll need these in the future, I promise!

Your mortgage is a big financial commitment. Keep your documents so you can refer to them as needed. You may think, “Oh, I can get these documents at any time from my mortgage company!” but that would be wrong.

Mortgage are often sold to other companies to service, and they won’t be able to replace your documents. Also, your mortgage statement has limited information and does not include things like original loan terms for things such as adjustable rate mortgages.

Save all of your final loan and purchase documents in a safe place.

Beyond your mortgage documents, it’s good to scan and file these other documents as well:

Closing Disclosure
Promissory Note
Deed

Your Closing Disclosure can help you save money at tax time. Some of the closing costs you paid may be tax-deductible. You’ll need your Closing Disclosure to complete your tax return accurately!

Value to you: Save money on tax filings, and avoid future problems by not having the records you need.

Also, when it comes time to consider refinancing your home or moving to a new home, your Closing Disclosure reminds you of the types of costs you can expect.