If you are like most Americans, housing is your single largest monthly expense. If you are struggling to keep up with your housing costs or simply want to lower them, a few savvy moves and changes on your part could result in big savings.
Of course, one of the easiest ways to reduce your housing costs is to downsize or move to an area where homes are less expensive. Let's assume you're not looking to move, but rather to make your current home more affordable. In that case, here's how to do it.
1. Refinance your mortgage
Your monthly mortgage payment is a function of your loan amount coupled with its interest rate. If you can lower your interest rate, that expense will instantly shrink. And you can do that by refinancing.
Refinancing basically means swapping an existing loan for a new one. Imagine you have a $200,000 mortgage with a 5% interest rate. If you were to refinance to a 4% interest rate, you'd save yourself around $120 a month.
2. Appeal your property taxes
Your property taxes are determined by taking your home's assessed value and applying your city or township's tax rate. If your property taxes have gone up in recent years, consider filing an appeal.
Different cities and townships have different processes for appealing property taxes, so you'll need to contact your local tax assessor's office for more information. Generally, to lower your taxes, you'll need to prove that your home's assessed value is higher than it should be.
Say your home is assessed at $400,000, but you know of similar homes in your neighborhood that sold for $350,000 within the past year. You can use that information to argue that your home is overvalued from an assessment standpoint. If you win your appeal and get your home's assessed value down to $350,000, you'll reduce your property taxes.
3. Keep up with regular home maintenance
There are certain maintenance items that come with owning a home, like getting your air conditioning and heating system serviced or having your sprinkler system winterized. Failing to perform these tasks and other types of maintenance could result in costly repairs, so get ahead of issues before they arise.
If you’re new to homeownership, consult this list of maintenance items you may need to tackle. Also, be aware that annual home maintenance can easily cost 1% to 3% of your home’s value, according to HGTV, so budget accordingly.