Owning a home is a huge investment. From monthly mortgage payments to maintenance and repair costs, there always seems to be a house-related expense you have to meet. Fortunately, there are some strategic things you can do to save yourself money and enjoy your house with less stress. Here are five smart financial moves every homeowner should make.
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1. Upgrade Old Appliances
Since this article is about ways to save money as a homeowner, this suggestion may come as a surprise. Appliances aren’t cheap, so upgrading old models can be a significant investment upfront. However, newer, more energy-efficient appliances can potentially help you save money in the long run by utilizing less energy each time they’re used.
If your appliances are very old, they could be making your monthly energy bills unnecessarily high. This is especially true if you’re heating and cooling areas of your house that aren’t even being used, like a basement that you don’t go into often. Consider something like a mini split that allows you to temperature control specific regions of your home. So, even if that decades-old machine is still operational, it may be worth investing in a newer, more efficient model.
2. Compare Home Insurance Policies
Home insurance is an important monthly investment for most homeowners. It helps protect your home, belongings, and finances in the event of weather damage, vandalism, and other similar problems. There are no laws in the United States that mandate homeowners insurance coverage. However, most mortgage lenders do require it. Therefore, if you’re taking a mortgage on a home, prepare to purchase homeowners insurance.
If you already have your house paid off, you may be tempted to ditch your homeowners insurance policy because you’re not required to have it. But doing so could prove to be financially disastrous if something happens to your home or belongings. If you’re trying to save money, don’t get rid of your policy altogether. Instead, shop around for a policy that offers good coverage for a reasonable amount. Request a home insurance quote from at least three different companies to make sure you’re getting a great policy for the price.
3. Keep a Maintenance Binder
Many features of and in your home require regular maintenance to continue working properly. For example, your roof may need to be reshingled every 15 years and your HVAC system should be maintained twice per year. Similarly, you should plan to maintain the weather stripping around your doors and windows each year and replace it as needed. Keeping track of all the items on and around your house that require maintenance can be difficult. Unfortunately, failing to keep things well-maintained often results in the need for expensive repairs or replacements.
To avoid this all-too-common scenario, consider keeping a maintenance binder. Include the industry-recommended maintenance schedules for everything from your major appliances to your flooring and everything in between. Keep a record of every maintenance service that’s performed on anything inside your home and when the next one is due. If you know you’ll need to invest in any major repairs or replacements within the next couple of years, start saving up for it now.
4. Decrease Monthly Energy Costs
Big investments like a new roof or water heater require a lot of money up-front. But your smaller monthly bills can also become a huge financial burden when you add them all up. Monthly energy costs can be particularly burdensome for the average person to pay each month, especially in extreme weather conditions. If you bring your total energy bill down by just $20 per month, you could save $1,200 over the course of 5 years.
There are many ways to decrease your monthly energy costs. Ideas include installing new weather stripping on all doors and windows, installing smart appliances and thermostats, and upgrading your insulation. If you have old, drafty doors and windows, upgrading them to more energy-efficient models could also decrease your monthly energy bill. Consider hiring an energy auditor to assess your home and give you cost-effective recommendations for improving your home’s energy efficiency.
5. Refinance Your Mortgage
If you took out your mortgage loan when interest rates were high, you can potentially save money by refinancing when rates are low. This involves replacing your current mortgage with a new one that (ideally) has a lower interest rate and more favorable payment terms. If done at the right time, refinancing can:
- Lower your monthly payments
- Help you pay off your loan faster
- Reduce the interest you pay over the total life of your loan.
- Shorten the total lifespan of the loan
Despite these potential benefits, refinancing isn’t always a good idea. It costs money to refinance (typically somewhere between 2% and 6% of the loan amount). Use a refinance calculator to help you determine whether the potential long-term savings justify the initial expense of refinancing. It’s also important to check with your bank or other loan provider to see if you even qualify to refinance your mortgage.
Owning a home can be expensive, but it’s generally a wise investment. Purchasing and maintaining a house is an important way to achieve independence, security, and belonging. Follow these tips to decrease your monthly and long-term costs and make home ownership more affordable.