How to Cut the Costs of Owning a Home

Posted on Monday 19 December 2011

If you own a home, there is a good chance that your mortgage is you most expensive monthly payment. Choosing to own a home is a long term investment, and most can expect their mortgage to consume a substantial part of their income. However, owning a home doesn’t need to leave you broke at the end of each month. There are several ways that you can save on your mortgage and reduce your monthly payments including:

Refinance to a Better Rate

If you are one of countless Americans with fixed rate mortgages, you probably obtained your loan when mortgage rates were much higher. As the economy has slowly declined, mortgage rates have decreased as well – allowing new homeowners to purchase homes at an exceptional rate.

However, it isn’t just new homebuyers who are able to take advantage of these rates. If you currently own a home, you could refinance your current mortgage into one with a better rate through refinancing. If the new rate is substantially lower, you could not only reduce your monthly payment, but save thousands over the life of your loan.

Nix the PMI

If you weren’t able to put 20 percent or more down on your home, there is a good chance that you were required to purchase private mortgage insurance. While private mortgage insurance is a must to curtail the bank’s risk should you default, you are no longer required to pay it once your mortgage falls below 80 percent of your home’s value.

If you know that you have paid off 20 percent or more of your mortgage, call up the bank and demand that they remove the PMI. Doing so can literally save you a couple hundred dollars a month on your mortgage.

Have Your Property Reassessed

While you want your home to have a high assessed value when you intend to sell it, having a higher value can lead to substantially higher taxes when you intend to live in a house for a long time. Property taxes can literally cost a homeowner a couple thousand dollars each year, and by having your home reassessed, you can shave a couple hundred dollars off your property taxes. However, you only want to do this if you know that the value of your home has decreased, and considering the housing markets in most areas, there is a good chance that your’s has.

Owning a home is expensive, but it doesn’t have to be a financial burden. Your home should be your place of comfort and solace. Not the money pit you avoid returning to. To reduce the amount of money you spend on your home each month, look for other ways to reduce mortgage, insurance, and utilities payments aside from the ones mentioned about. While refinancing or avoiding PMI can save you hundreds, simply going green can help you stretch your dollar too.

savvy @ 8:00 AM
Filed under: General Finances