Owning a home can have a lot of benefits. There’s the freedom to create exactly what you want, build equity in where you live, and of course added privacy. However, home ownership is no walk in the park. Homeowners insurance, property taxes, monthly mortgage payments, home maintenance, HOA fees and so many others can create a constant strain on your pocketbook. If you’re unsure about where to allocate your funds appropriately, the cost of home ownership can be intimidating.
Instead of turning your home into a money pit, use these helpful tips. They’ll make your real estate decisions much more affordable and functional for years to come.
Costs of Homeownership
Utility Bills
Utilities are a necessary homeownership cost. And, while it seem hard to pinch your pennies here, there are plenty of viable ways to do so.
Staying conscious of the amount of energy and natural resources you use is key to lowering housing costs in this area. Keep shower times to a minimum. Showering for four minutes or less could save you up to $100 a year in usage costs. Additionally, turning down your hot water heater could also lead to ample saving.
The bottom line, though, is to be mindful of the amount of electricity you’re using. Almost $19 million is wasted every year on “vampire electricity”, or energy wasted from electronics being plugged in while not in use.
Mortgage
Did you know that you can actually lower your mortgage payments even after signing for certain terms and conditions? Known as refinancing, this type of opportunity lets homeowners lessen their monthly payment.
Rate/term refinancing is most commonly used. With this type of refinancing, home buyers can lower their mortgage rate or payment or even alter their term without changing their existing mortgage balance. By adjusting the term of your loan, you can make the mortgage last either longer or shorter, depending on your specific financial situation and what works best for you in the long run.
Changing your loan’s type can also be a benefit. Two popular types of home loans include adjustable-rate (ARM) and fixed-rate (FRM) mortgages. Fixed-rate loans maintain the same interest rate for the duration of the loan, meaning you continue paying the same monthly cost to your mortgage for the entire term. An adjustable rate mortgage fluctuates based on market conditions over time, meaning some months your interest rate will be less and others it will be more.
Maintenance and Home Improvements
General upkeep is a familiar cost of homeownership. Instead of letting home repairs fall to the wayside, pay attention to the small details so when it’s time to make improvements, you’re not dealing with them all at once.
If there are any nicks in the paint on the wall, fix them before they grow bigger. Change out knobs and handles when they wear out instead of struggling with expensive cabinet repairs. Update appliances over time so that if you ever consider selling your home, you’re able to do so without making hefty purchases all at once.
Additionally, make sure to maintain the outside of your home so you don’t leave a bad taste in any of your neighbors’ mouth. This is one of the biggest areas of home ownership where people tend to spend more money without knowing the actual, true costs of care. For example, on average, home owners are charged 115 percent more than the cost of materials and labor when hiring a landscaping company to preserve their yards for them.
You can save maintenance costs here by doing the landscaping yourself. Or, if you lack a green thumb or simply aren’t up for it, consider asking around. There’s probably a high school or college student who lives nearby who can do groundskeeping work. You can also order on-demand lawn services for a one time fix so recurring costs don’t negatively affect your personal finances.
Amenities
Sure, it’s nice to buy a bunch of shiny, new things. But how many of those do you don’t truly need?
Cable and the Internet may seem like a no brainer. But, you’re potentially losing out big time if you’re unaware of other options. Getting the Internet from a lesser known provider can save you plenty on your monthly bills. Plus, looking into streaming services instead of entering a contract with a cable provider can also help you curb costs.
You also have the option to bundle subscriptions, saving money without giving up any of the value. Instead of spending a lot of time browsing different options, try using a bill negotiation service. That will help you lower your monthly expenses without any risk of losing your hard-earned cash.
A note for first-time buyers on the cost of home ownership
New home buyers often don’t think about the cost of home ownership, including closing costs, when they’re making their first down payment. However, the more you know up front, the more prepared you’ll be to attack the hidden costs that come with owning a home or condo. You’ll be ready to maintain your property value long after you’ve moved in and gotten settled.
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