by Maurie Backman | Updated July 19, 2021 - First published on Jan. 10, 2021
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Want to spend less on your home budget? Here's how.
Buying a home is a great way to snag some stability and build equity in a place of your own. But owning a home can be more expensive than you bargained for. In addition to your mortgage, you'll need to cover expenses like property taxes, homeowners insurance, and ongoing maintenance and repairs. If you're worried about paying all of those bills, here are a few things you can do to make owning your home easier to manage.
Mowing your lawn every week takes time, as does resealing your deck every summer, repainting your wooden fence every fall, and power-washing your siding. But if you're willing to put in the time, you could save a bundle compared to what you'd spend to outsource that work.
Now, one thing to keep in mind is that certain maintenance tasks can be hazardous, and those are the ones worth hiring a professional for. Cleaning out your gutters, for example, could require you to perch on a tall ladder while keeping your balance. A fall could easily land you in the hospital, so that upkeep is worth paying for. But for things you can do safely, you'll save money by tackling them yourself.
Sometimes, minor home repairs can save you from major ones that cost a lot more. Be sure to check up on your heating and cooling system, water heater, and other major appliances. If things start to go haywire, call in a repair person before they break altogether. You may find that a $200 repair, for example, lets you avoid replacing your $1,500 fridge for another two years.
Homeowners insurance can be a costly ongoing expense, but a few modest investments in the near term could lower your costs over time. For example, something as simple as installing water leak sensors for $60 or $70 apiece up front could knock a substantial amount off your homeowners insurance each year, not to mention save you thousands of dollars in potential water damage. It pays to contact your insurance company and ask about ways to lower your costs. That way, you'll know which specific safety upgrades are worth making.
PMI, or private mortgage insurance, is a premium you'll pay on top of your regular mortgage payment when you take out a conventional mortgage and don't make a 20% down payment on your home. PMI can equal up to 1% of your loan amount so with a $200,000 mortgage, you're looking at an extra $2,000 a year. To avoid PMI, wait to buy until you've saved 20% of your home's price to put down at closing. Doing so will also help you build equity in your home faster, which you'll then have the option to borrow against as the need arises.
If you're used to renting, buying a home can be a huge shock to your budget. The good news, however, is that there are steps you can take to make owning your home more affordable. Remember, too, that if mortgage rates have dropped since you signed your mortgage, you can also look at refinancing your loan to a lower interest rate. That could decrease your monthly payment substantially, thereby easing that burden.
Chances are, interest rates won't stay put at multi-decade lows for much longer. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase.
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