3 Ways to Reduce Housing Costs
Quick Ways to Save Money
We all want to save money. As a homeowner, there’s a good chance that you did anything necessary to get into your home, including putting down as much of a down payment as you could, but not quite enough to avoid mortgage insurance.
Or maybe you bought an older home in a nice, quiet neighborhood. The home is perfect until it’s age begins to show, and the cost of maintenance and emergency repairs slowly add up.
This quick guide gives you 3 ways you might be able to save on housing costs:
1. Review your Homeowner’s Insurance Policy
Many insurance companies offer discounts for bundling other products, like your automobile insurance. You may also be able to find a lower cost, or better coverage policy that will prevent unexpected costs.
NOTE: It is important that you contact your lender if you intend to change the homeowner’s insurance carrier or coverage. Your lender will have requirements for loss payee and minimum coverage rules.
2. Invest in a Home Warranty
Much of the cost of homeownership is ongoing maintenance and unexpected repairs. A comprehensive home warranty will run you around $300-$500 a year depending on what level of coverage you’re looking for.
If you are a new homeowner, chances are that a home warranty was included in your home purchase. It is a common practice for the seller to pay for the cost of a 1 year home warranty for the buyer of their home.
As a homeowner, you have the ability to extend or upgrade that policy. I am suggesting that you do exactly that.
If you allowed that warranty to expire, assess the need for that type of “insurance” based on the age and wear on your home. 2-3 service calls for maintenance or repairs on your home over the course of a year, you’re investment has more than paid for itself.
3. Remove FHA Mortgage Insurance
FHA Mortgage Insurance Premiums are the same regardless of the loan to value of your home loan. If you have less than 20% equity in your home, consider refinancing into a conventional loan with private mortgage insurance.
Private Mortgage Insurance, or PMI, is based on the Loan to Value. If you have 5%, 10%, or 15% equity in your home, your PMI premium will go down significantly as your equity increases.
Maybe you purchased your home using an FHA loan and 3%, or 3.5% down payment, depending on when you bought. You may have 15% equity in your home now. Private mortgage insurance could be as much as 1/4 of the cost of FHA mortgage insurance depending on your credit score.
Reduce Housing Cost Questions
If you have questions now, or would rather do more research before speaking to a mortgage professional, please leave a comment below, shoot me an email or give us a call.
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