{"id":4627,"date":"2025-01-28T15:25:21","date_gmt":"2025-01-28T20:25:21","guid":{"rendered":"https:\/\/tomo.com\/blog\/?p=4627"},"modified":"2025-02-10T11:18:23","modified_gmt":"2025-02-10T16:18:23","slug":"5-expert-backed-tips-to-save-on-your-first-or-next-home","status":"publish","type":"post","link":"https:\/\/tomo.com\/blog\/5-expert-backed-tips-to-save-on-your-first-or-next-home\/","title":{"rendered":"5 expert-backed tips to save on your first (or next) home"},"content":{"rendered":"\n

Homeownership isn\u2019t just about having a place to live\u2014it\u2019s one of the best ways to build financial security. As your home\u2019s value grows, it opens doors to new opportunities, creating what we call the Real Estate Wealth-Building Ladder<\/a>. According to the Census Bureau<\/a>, about 60% of the average American\u2019s wealth comes from homeownership, making it a critical tool for long-term financial stability.<\/p>\n\n\n\n

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But in today\u2019s market, with rising home prices and higher interest rates, getting on that ladder can feel impossible for many. The good news? There are actionable ways to save money, even in a challenging market. Here are five practical tips to help you make homeownership a reality\u2014and save thousands in the process.<\/p>\n\n\n\n

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1. Shop for a rate. But don\u2019t take the online quote at face value<\/h3>\n\n\n\n

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Different lenders can charge the exact same person buying the exact same home radically different interest rates. The difference between a great lender and an overpriced one could be as much as a full percentage point. On a typical $400,000 loan, that\u2019s the difference between paying $2,100 a month or $2,380. Over the life of the loan, that\u2019s tens of thousands of dollars.<\/p>\n\n\n\n

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See today’s rates<\/a><\/div>\n<\/div>\n\n\n\n

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But here\u2019s where it gets tricky\u2014the lender with the lowest advertised rate might not be the best deal. Often lenders disguise high rates with added \u201cpoints\u201d that you can use to pay upfront for a lower interest rate. When rates are high, paying upfront for rate points might not make a lot of sense\u2014it\u2019ll take 5 years or more to break even, typically\u2014and during that time you might want to refinance if rates start to decline. But that doesn\u2019t stop lenders from advertising their rates with 2 or more points that you shouldn\u2019t pay for baked in.<\/p>\n\n\n\n

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In addition, different lenders can offset the cost of lower rates by tacking on excessive fees\u2014like fees for origination and processing. These are essentially fees for them to give you the loan, even though they already make money on the loan. (At Tomo Mortgage, we don\u2019t charge any of these fees.)<\/p>\n\n\n\n

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So, how do you figure out who really has the best rate?  Ask every lender for a CFPB Loan Estimate<\/a><\/strong>\u2014a document that breaks down all the costs of the loan. This step is key because lenders are legally required to disclose everything, including hidden fees that might not show up in their initial quotes. Comparing these side by side can save you serious money.<\/p>\n\n\n\n

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2. Know your DTI & credit thresholds<\/h3>\n\n\n\n

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Your credit score<\/a> is one of the biggest factors in determining your mortgage rate. Improving your score even a little can save you big, especially when it goes from one \u201ccategory of credit\u201d into another (it\u2019s simply how rates get calculated). For example, if your score is 680, paying off a credit card to bump it up to 700 could put you in a better rate tier and can be as simple as paying off one credit card. The same goes for your Debt-to-Income (DTI) ratio<\/a>\u2014lowering it can make you a more attractive borrower and help you qualify for better terms.<\/p>\n\n\n\n

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Most lenders won\u2019t go out of their way to help you improve your credit, but it\u2019s worth asking. At Tomo, we train Loan Officers<\/a> to help buyers boost their credit before locking in a loan, because a few small moves can mean big savings for our clients.<\/p>\n\n\n\n

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3. Play the address<\/h3>\n\n\n\n

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Where you buy\u2014and your household income\u2014can unlock significant savings through programs like the Community Reinvestment Act (CRA<\/a>)<\/strong> and Special Purpose Credit Programs (SPCPs).<\/strong> These programs are designed to help homebuyers who earn below 80% of the Area Median Income (AMI) or who are purchasing in certain census tracts.<\/p>\n\n\n\n

Banks get incentives to lend to buyers in these categories, which can reduce your interest rate by as much as half a percentage point.<\/strong> Over a 30-year loan, that can save you tens of thousands of dollars.<\/p>\n\n\n\n

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Unfortunately, most lenders keep the extra incentives for themselves, but at Tomo, we believe those savings should go back to the buyer. If your household income or the property you\u2019re buying qualifies, you could score a much better rate than you\u2019d find elsewhere.<\/p>\n\n\n\n

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Curious if you qualify? Use tools like the AMI Lookup Tool<\/a> to see if your income or the area you\u2019re buying in falls within the eligible range. <\/p>\n\n\n\n

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By focusing on these programs, you\u2019re not just saving money\u2014you\u2019re tapping into incentives designed to make homeownership more accessible.<\/p>\n\n\n\n

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4. Don\u2019t forget about insurance costs<\/h3>\n\n\n\n

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Back in the 90s, home insurance<\/a> was practically an afterthought\u2014around $30 a month for most buyers. Those days are long gone. Extreme weather, from hurricanes to wildfires, has caused insurance costs to skyrocket. Today, the national average is about $160 a month.<\/p>\n\n\n\n

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But here\u2019s the kicker: if you\u2019re buying in a high-climate risk area<\/a>, like a coastal town or a wildfire-prone zone in California, insurance can easily cost you over $1,000 a month. That\u2019s not a small jump\u2014it\u2019s a massive hit to your monthly budget, and one that can catch buyers off guard.<\/p>\n\n\n\n

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This is why it\u2019s critical to factor insurance costs into your overall homebuying plan. Don\u2019t just focus on the mortgage payment\u2014dig into insurance quotes for the specific area you\u2019re looking to buy in. Rates can vary significantly based on location and provider, so shopping around is a must.<\/p>\n\n\n\n

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5. Buy now, refinance later<\/h3>\n\n\n\n

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If you\u2019re waiting for interest rates to drop before buying a home, here\u2019s the reality: rates aren\u2019t expected to fall anytime soon<\/a>. And waiting can cost you more in the long run. While you\u2019re on the sidelines, home prices and rents keep climbing, and you\u2019re missing out on the chance to build equity.<\/p>\n\n\n\n

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Here\u2019s a smarter approach: lock in a fixed-rate loan now and refinance<\/a> if rates drop in the future. Even if today\u2019s rates aren\u2019t ideal, buying sooner lets you start building equity and get ahead of rising prices. Housing inventory is tight\u201486% of homeowners have rates in the 5\u2019s or lower, so they\u2019re staying put, which means prices aren\u2019t going to fall anytime soon.<\/p>\n\n\n\n

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Get pre approved today<\/a><\/div>\n<\/div>\n\n\n\n

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Leave with this<\/h3>\n\n\n\n

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Homeownership isn\u2019t just a pipe dream\u2014it\u2019s one of the best ways to build wealth<\/a> and stability. But today\u2019s market is tough, and it can feel impossible at times. That\u2019s why it\u2019s more important than ever to know how to save.<\/p>\n\n\n\n

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By shopping for the best rate, improving your credit, taking advantage of income-based programs, planning for insurance costs, and buying strategically, you can save thousands and set yourself up for success. <\/p>\n\n\n\n

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Greg Schwartz<\/a><\/p>

Greg Schwartz is the CEO and co-founder of Tomo Mortgage, where he leads with a customer-first approach to make the mortgage process simpler and more accessible for homebuyers. Prior to founding Tomo, Greg was a key executive at Zillow, overseeing strategy, sales, and product development. His insights into the real estate industry inspired Tomo\u2019s creation, supported by a record-setting $70 million seed round.<\/p><\/div><\/div>\n\n\n

If you’re ready to start your journey to homeownership, get pre approved with Tomo Mortgage today.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Homeownership isn\u2019t just about having a place to live\u2014it\u2019s one of the best ways to build financial security. As your home\u2019s value grows, it opens doors to new opportunities, creating what we call the Real Estate Wealth-Building Ladder. According to the Census Bureau, about 60% of the average American\u2019s wealth comes from homeownership, making it […]<\/p>\n","protected":false},"author":14,"featured_media":4267,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[13,285],"tags":[],"class_list":["post-4627","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-home-buying-guide","category-home-buying-tips"],"aioseo_notices":[],"jetpack_featured_media_url":"https:\/\/tomo.com\/blog\/wp-content\/uploads\/2024\/11\/ally-vs-us-bank-jpg.webp","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts\/4627","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/users\/14"}],"replies":[{"embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/comments?post=4627"}],"version-history":[{"count":5,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts\/4627\/revisions"}],"predecessor-version":[{"id":4648,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts\/4627\/revisions\/4648"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/media\/4267"}],"wp:attachment":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/media?parent=4627"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/categories?post=4627"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/tags?post=4627"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}