If you are like most Americans, housing is your single largest monthly expense. If you are struggling to keep up with your housing costs or simply want to lower them, a few savvy moves and changes on your part could result in big savings.
Of course, one of the easiest ways to reduce your housing costs is to downsize or move to an area where homes are less expensive. Let's assume you're not looking to move, but rather to make your current home more affordable. In that case, here's how to do it.
1. Refinance your mortgage
Your monthly mortgage payment is a function of your loan amount coupled with its interest rate. If you can lower your interest rate, that expense will instantly shrink. And you can do that by refinancing.
Refinancing basically means swapping an existing loan for a new one. Imagine you have a $200,000 mortgage with a 5% interest rate. If you were to refinance to a 4% interest rate, you'd save yourself around $120 a month.
2. Appeal your property taxes
Your property taxes are determined by taking your home's assessed value and applying your city or township's tax rate. If your property taxes have gone up in recent years, consider filing an appeal.
Different cities and townships have different processes for appealing property taxes, so you'll need to contact your local tax assessor's office for more information. Generally, to lower your taxes, you'll need to prove that your home's assessed value is higher than it should be.
Say your home is assessed at $400,000, but you know of similar homes in your neighborhood that sold for $350,000 within the past year. You can use that information to argue that your home is overvalued from an assessment standpoint. If you win your appeal and get your home's assessed value down to $350,000, you'll reduce your property taxes.
3. Keep up with regular home maintenance
There are certain maintenance items that come with owning a home, like getting your air conditioning and heating system serviced or having your sprinkler system winterized. Failing to perform these tasks and other types of maintenance could result in costly repairs, so get ahead of issues before they arise.
If you’re new to homeownership, consult this list of maintenance items you may need to tackle. Also, be aware that annual home maintenance can easily cost 1% to 3% of your home’s value, according to HGTV, so budget accordingly.
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4. Stop outsourcing upkeep and repairs
If you're in the habit of paying other people to maintain or fix your home, a good way to lower your housing costs is to start doing some of that work yourself.
For example, rather than hire a landscaping service to cut your grass every week, bust out your lawnmower. Instead of paying for a power-washing service to clean your deck, rent a power-washer from your local hardware store for a fraction of the cost.
If you're handy enough, you might even manage to tackle certain repairs yourself -- easy fixes like leaky faucets and loose cabinet shelving.
That said, there are certain situations where it pays to hire professionals. For example, if you're looking at repairs that require electrical work or in-depth plumbing, you're better off with a licensed contractor who can ensure that the results are up to code. Similarly, if the work in question is dangerous, pay an expert rather than putting yourself at risk.
Case in point: A gutter cleaning might cost you $150, but if it means you don't have to risk your life balancing atop a tall ladder, it's worth paying for.
5. Become a landlord
If you're willing to become a landlord, the rent you collect can be used to pay some of your housing expenses and save you some cash. You're more likely to find a tenant if you have a finished basement to rent out or another space that's separate from the rest of your home.
If you don't want a full-time tenant living under your roof, see about renting your home out seasonally. For example, if you live close to the beach and plan to vacate your property for a two-week vacation, you can try finding short-term renters for that period.
The more you're able to reduce your housing costs, the less financial stress you'll have. It pays to employ these money-saving tips, especially if you've been having a hard time affording your home.