Housing is a significant part of almost everyone’s financial pie chart. The basic need for shelter can also wreak havoc on our budget if we aren’t careful.
When you want to save money, it makes sense to start at the top and determine where you’re spending the most money. Often, where you are spending the most money is also the best place to make some cuts.
Trim Your Housing Costs
If you want to trim your housing budget, here are 16 places to look, ranging from simple to extreme, and everything in between:
- Refinance. Have you refinanced to lock in a lower interest rate yet? We talk about it all the time, but there are still many of you who just haven’t gotten around to it. Whether it’s a fixed rate or an ARM that makes sense, be sure that you are getting the best possible rate in today’s low rate environment.
- Negotiate your real estate taxes. After we bought our vacation home for $63,000 less than the assessed value, I took our numbers to the tax assessor and asked for a lower assessment. The result will be a lower real estate tax bill in the fall. If your assessment is higher than it should be, now is the time to work with the tax assessor on an adjustment.
- Shop homeowners insurance. When was the last time you sent your homeowners insurance out for quotes? I routinely shop our insurance to make sure we’re getting the best price. We’ll continue our homeowners insurance with Allstate as long as it remains the most inexpensive.
- Get rid of PMI. Even though PMI is deductible, it’s an avoidable cost. Call your lender to see if you qualify to have it removed.
- Lowball. In the process of buying right now? Stop and read the reader tips for making lowball offers. We used these strategies on our last home purchase to get the house for almost 40% below list price.
- Negotiate repairs and improvements. My neighbor just finished telling me about how she got her backsplash for almost 1/3 of the original price she was quoted. With a bit of time and effort, shopping around and comparing quotes is still a money saver.
- Modify your mortgage. We recently did just this with Penfed. It’s a new name for what used to be called a streamlined refinance. You pay a modification fee and get a lower interest rate without any requalification. We had originally applied for a refinance, and one of the processors mentioned it to me; we modified our rate to 3.375%. Call your current lender to see if they have something similar (I know Chase does). Note, that this is different than any hardship modifications and it doesn’t have any adverse consequences, this is really just the bank giving you a lower interest rate without all the paperwork of a refinance.
- Do something about homeowner dues. Are you on the board for the homeowners association? If not, chances are you didn’t give input into your new homeowner dues for this year. Get on the board and get involved in the budgeting process for your neighborhood.
- Rent part of your house. Or the whole thing, if you have somewhere else to live cheaper. Taking on a roommate can also help alleviate expenses. Have you seen the HGTV show Income Property where they convert basements into rentals to help the homeowners with their mortgage payments?
- Move. If you’ve been through all the steps above, but your house is still sucking the money out of you, maybe it’s time to downsize and move to a cheaper house.
- Optimize payments for taxes. Mortgage interest and property taxes are deductible in the year they are paid. This gives you some tax planning options to pay them in the year that will benefit you the most if you have variable income.
- Government programs. If you qualify, the Making Home Affordable Program is still running to help people underwater or facing financial hardship to refinance or modify your mortgage.
- Work out a short sale. Two houses in our neighborhood were recently listed as short sales. If you can’t sell your house because of the mortgage, maybe you can work it out with the bank and list it as a short sale.
- Educate yourself on walking away. Strategic foreclosure is obviously the most extreme and very controversial; when I asked readers Would You Walk Away from Your Home? there was a very passionate discussion. No matter how you feel about it, the white paper in that article was worth reading just for the education on the topic.
- Rent your house for 2 weeks. If you are near a big event that will draw in visitors for a long weekend, you can rent out your house tax free for two weeks.
- Earn cash back on your property tax. I just recently found out that I can pay our property tax with a credit card. Now earning cash back on our property tax is a good way to make some extra money.
What other ways have you found to lower your housing costs?