Homeownership is considered a cornerstone of the American dream. It brings numerous perks including financial stability, tax deductions, and a permanent home.
But homeownership also carries significant responsibilities and expenses. Here are some tips to help you save money on your home.
1. Pay Off Your Mortgage Early
There are many ways to pay off your mortgage early. Some people make additional payments throughout the year, while others use windfalls like tax refunds or work bonuses to increase their monthly payment. This method can cut years off of your mortgage and save thousands in interest costs.
Another option is to refinance your mortgage to a shorter term. This can also help you save on interest costs, but it is important to weigh the pros and cons of this approach before making a decision.
Deciding whether or not to pay off your mortgage early is a personal decision that depends on your risk tolerance and long-term goals. However, it is always worth exploring options to reduce your baseline expenses and improve your financial position.
2. Get a Good Insurance Policy
The value of your home and possessions may change over time, so it is essential to review your homeowners insurance yearly. This ensures you are properly insured in the event of a disaster. It’s also a good idea to consider raising your deductible, which is the amount you pay out of pocket before the insurance coverage kicks in.
Your credit score and risk factors can impact your premiums, so it’s worth checking your report for errors, paying bills on time and keeping credit card balances low. Additionally, many insurers offer discounts for security features like alarm systems, extra smoke detectors and stronger bolt locks.
Finally, it’s always a good idea to shop around for different providers. Insurance companies weigh things differently, and new customers often get better deals.
3. Get a Home Inspection
With the spring buying season upon us, homebuyers are preparing to start their search for new homes. However, before you buy your next property, it is vital to get a home inspection.
A home inspection will help you find hidden problems that could cost you money in the future. It will also help you decide whether a particular home is right for you.
For example, a home inspector will be able to tell you if renovations were done without proper permits, which may affect your insurance costs and tax rates. Often, these issues can be addressed prior to closing by flagging them during the negotiation process. This gives you an out from the deal if necessary, without losing
your earnest money deposit. This is why a home inspection is a standard part of the buying process for a reason.
4. Get a Home Warranty
Home warranties are service contracts that cover repair and replacement costs for certain appliances and systems in your home. They usually cost a yearly fee and some have copays for service calls. Review the contract carefully to see exactly what is covered, what is not covered, actions that can void your warranty and any caps or maximum payout amounts per year.
Some homeowners can negotiate a warranty with the seller as part of closing negotiations or even find that their mortgage lender offers a home warranty as an incentive. In any event, getting a home warranty is one of the best ways to protect your budget against the risk of unexpected expenses.
5. Keep a Budget
As a homeowner, it is your responsibility to make sure your finances are under control. Budgeting is one of the best ways to keep track of your expenses and income. This tool can be used on paper, a computer spreadsheet, or an app on your phone to help you track your spending and savings goals.
When it comes to a budget, it is important to remember that monthly and yearly expenses should be included. You should also take into account any increase in expenses from becoming a homeowner such as property tax, homeowner’s association fees, higher utility bills and maintenance costs.
Homeowners also tend to stay in the same area longer than renters, which can boost the appearance of neighborhoods and communities. This stability can also encourage civic participation.