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Owning a home gives a sense of fulfillment and security, but at a hefty price. Aside from paying an upfront cost, you also need to pay a long list of expenses. These include your monthly mortgage payments, utility costs such as electricity and water, HOA fees, and homeowner’s insurance premiums.
Bankrate reports that Americans spend an average of $21,409 a year to cover these expenses. You could be paying more depending on the size of your home, the number of family members living there, and the neighborhood you are in. Added to this is rising inflation which can raise other daily expenses.
The American Dream can be an American headache if you don’t know how to manage your homeownership finances properly. By using the right strategies, you can save more money for the future as well as other long-term investments such as a small business. Here are a few of these strategies:
Control your energy and water spending
Energy and water costs may not comprise the bulk of your housing expenses, but you may still need to keep them low. As inflation rises, homeowners are expected to pay more for energy and water. To prevent losing more money down the line, you should change your consumption habits and make waste-reducing improvements.
You can start by replacing outdated bulbs with LED ones and checking your water lines for leaks. Moreover, make sure to keep your HVAC system in good condition and your home well-insulated. Applying these improvements should set you back a few hundred dollars each month.
Tweak your mortgage
Getting a standard 30-year fixed-rate mortgage is good when real estate values are on an uptrend. On the other, you are set to lose money when median home prices dive. In this case, you could end up paying more than the fair market value of your home. A solution to this is to refinance, but only if you have built at least 20% in home equity.
In case you opted for an adjustable-rate mortgage, you can have your lender switch it to a fixed-rate term. The process can be too complex for a first-time homeowner like yourself, so getting a loan modification lawyer should help you renegotiate your mortgage and reduce your monthly dues.
Consider debt consolidation
Credit card expenses can eat up a large chunk of your housing budget. Your interest rates could climb higher as your debts build up. This also gives you a long time to settle your debts. For this, consider consolidating your debt so you only need to make a single monthly payment.
You can do this by taking out a debt consolidation loan so you can settle smaller debts and bring your interest to a more manageable level. Keep in mind that you will need a good credit score to qualify for a debt consolidation loan. Otherwise, talk to a credit expert and learn how you can improve your financial standing.
Homeownership doesn’t come cheap, but considering the benefits of living in a home, you should stay on track and use the tips above so you can save more money in the long run.