7 Ways to Make Home Ownership More Affordable

Buying a new home is a huge financial milestone. Having a place of your own provides a sense of stability, security, and personal achievement.

However, if you’re used to renting, the new expenses of homeownership might feel daunting. Planning ahead financially can help you defray some of these costs so you can stick to your budget.

Here are seven ways to make homeownership a little more affordable. 

1. Make a Higher Down Payment

It might seem counterintuitive to suggest paying more upfront for your home when you’re trying to save money. However, making a higher down payment can actually help you save money on your mortgage in the long run. Consider waiting a few extra years to purchase your home so that you have time to build up your savings. 

Because you’ll need to borrow less money to purchase the home, your monthly mortgage payments will be smaller. You’ll also pay less in interest. If you put down 20% or more of your home’s purchase price up front, you won’t need to pay for private mortgage insurance. This can save you hundreds of dollars each year, depending on the size of your loan. 

2. Shop Around For Insurance

Buying a new home is a huge investment, and you’ll need homeowners’ insurance to protect it. Most lenders will actually require you to have homeowners’ insurance in order to qualify for a mortgage. However, the cost of homeowners’ insurance can vary widely between lenders. Shop around to make sure you’re not overpaying each month. 

Get a home insurance quote from multiple providers in your area to see who can offer the best value. You can also look into bundling your home and auto insurance. Getting both plans from the same provider can help you save even more money. 

3. Negotiate Closing Costs

Closing costs are all of the fees you’ll pay when the sale closes and you purchase your home. This includes appraisals, loan origination fees, title searches, and anything else necessary to seal the deal. Closing costs are a significant expense, typically ranging anywhere from 3-6% of the home’s purchase price. 

Many closing costs are negotiable with the help of a good real estate agent. They can help you identify which fees can be reduced or waived. Your real estate agent can also negotiate with the seller to see if they will cover some of the closing costs.  

4. Choose Properties With Low or No HOA Fees

Homeowners association fees can add a significant amount to your monthly housing costs. HOA fees are designed to cover the cost of maintenance and amenities in your community. While these services might be desirable, they’re not always necessary. 

When searching for properties, take HOA fees into account. It’s possible to find properties that aren’t in an HOA community, which could potentially help you save hundreds of dollars each month. In addition to saving money, you also won’t have to worry about HOA restrictions when it comes to landscaping and decorating. 

5. Refinance Your Mortgage

If you’ve already owned your home for a while and are looking to cut back on your expenses, consider refinancing your mortgage. Refinancing can help you get a better interest rate, which means you’ll pay less in the long run. This option is best for those who plan to stay in their home for many years to come. 

Interest rates fluctuate over time, and the market may have changed since you initially took out your mortgage. You might also want to consider refinancing if your credit score has gone up significantly, as this can help you obtain a much lower interest rate. Talk to a mortgage expert to see what your refinancing options might look like. 

6. Take Advantage of Homeowner Tax Credits

Federal and state tax codes offer deductions and credits for homeowners, some of which can lead to significant savings. For instance, you may be able to deduct your mortgage interest and property taxes from your taxable income, which will reduce the amount you pay overall. Energy-efficient upgrades like solar panels may also qualify for tax credits, which can offset their high installation costs. 

Work with a tax professional to find and claim the tax credits that make sense for your household. Even small tax deductions can add up over the years to significant savings. You should also keep an eye on your property taxes and see if you qualify for property tax exemptions or reassessments. 

7. Make Your Utilities More Efficient

Utility bills like electricity, water, heat, and trash are another big monthly expense for homeowners. To reduce the amount you pay, try making your home more energy-efficient. This will also have the benefit of minimizing your impact on the planet. 

For example, things like installing Energy Star appliances or low-flow faucets will help you cut back on your utility usage without changing your lifestyle. You could also install a smart home system, which uses automated technology to find ways to cut back. If you’re not sure where to start, consider getting an energy audit for your home to find ways to improve.  

Final Thoughts

Homeownership is a bigger financial responsibility than renting, so it’s important to be prepared for some additional costs.

However, some advance planning and financial savvy can prevent you from spending more than you need.

By cutting back on these homeownership costs, you’ll have more money to save or to spend on the things you love.