Hidden Home Savings
Everyone says home ownership is fraught with hidden costs, but what are they? And how can you combat them? Today we’ll explore some ways to save when it comes to buying and maintaining a home, and minimizing utility costs.
Buying
I can’t recommend enough that you save a 20% down payment before purchasing a home. Sure, you probably know someone who bought with nothing down and lived to tell about it. But there are many good reasons to begin home ownership with some equity.
First, putting 20% down is the best way to avoid paying PMI, which is a form of insurance against your loan. In other words, you pay money to the bank every month that does not build any type of equity. Secondly, you could easily end up upside-down in your loan, owing more than you own, should your home value dip and you want or need to sell. While it may not seem likely, plenty of homeowners have found themselves in this unfortunate situation. Lastly, you’ll decrease your loan amount, and therefore your monthly payments and the amount of interest you’ll pay overall.
A home inspection is another important step before purchasing. It may be tempting to skip the inspection since they run $300-400 or more, depending on your location. But an inspectors’ knowledge can save you a lot of trouble and money over time. We passed on buying one house after the inspection revealed foundation problems. Many issues can be fixed, but it’s nice to have that information up front so you can ask the seller to make the repairs or lower the purchase price. It’s hard to determine a good price for a home without the inspection results.
Before purchasing, shop around for the best interest rate. Just be sure to get a fixed rate. If rates drop after your home purchase, crunch the numbers for refinancing. While finance fees will lengthen the time till you recoup the upfront expense, a lower interest rate over the long haul could be very beneficial. We refinanced to a lower rate in 2012 with a no-fee refinance for instant savings.
Insurance
Choosing a good neighborhood could not only improve your home value over time, but also reduce the cost of home owner’s insurance.
Researching insurance alternatives can help reduce this cost. For example, protecting your home with a wireless security system could save you nearly $700 in insurance fees over the course of a year.
Another indirect type of “insurance” is making sure your home’s electrical is updated to avoid property damage due to fire. Just last week, Neil’s cousin lost his home to a fire. Fortunately no one was harmed, but of course it if very difficult to start over after losing your home and belongings.
Energy
Updating insulation can make a big difference in energy bills. It’s very affordable to rent a machine and DIY installation of lose cellulose insulation to keep heat from escaping your home. Sealing leaks with caulk or weatherstripping is another low-cost way to reduce heating and cooling costs, while also making your home less drafty and more comfortable. Unlike updating windows, updating insulation, caulking and weatherstripping all have a relatively short ROI time. For more on home energy savings see our utility series: Pretend to Be Warm, The Electric Slide, Hippies, Hustlers, and Vampires, and Who Ya Gonna Call About Utility Bills?
We’ve also replaced our shower heads with low-flow shower heads that aerate water so it uses less water without feeling like you’re showering under a tiny trickle. Efficient shower heads are inexpensive and easy to install, making them a great way for homeowners to lower their water and energy bills.
Appliances
Keeping your refrigerator temperature at 38-40 will keep food safe while costing less than colder refrigeration settings. The refrigerator and other vents may be the last thing on your cleaning list, but it does help them run more efficiently. And softening your water can also lesson energy costs for all appliances that rely on water to run.
Stay tuned for more on home buying within the next month!
How do you save on home ownership and energy costs?
11 Responses to “Hidden Home Savings”
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- - January 23, 2017
Great overview. To save money on energy cost over the years we have drops the heating temperatures on the winter a few degrees and raised the AC in the summer. We also make sure we have regular maintenance and clean filters, etc.
We communicate to our children about shutting off lights and unplugging things when not in use. We make sure they understand the impact it has on our energy bill, so the realize we are not just being crazy parents. 🙂
We save so much by being “stingy” with the thermostat–though we are better at tolerating heat than cold.
My five-year-old just today suggested we use the lights less in order to spend less on electricity. I’m not sure what prompted it, but I’m glad he’s making the connection. Especially since he used to be better about turning off his bedroom light and needs to get back in the habit!
Great advice! We DIYed attic insulation last year and immediately saw the positive impact on our energy bills. It wasn’t fun, but it wasn’t hard either (it took about 3 hours, including picking up and returning the machine), and it’s already paid for itself in savings.
Same! Instant difference.
Contents insurance also plummeted as soon as I bought a house. I had to add house insurance as well of course, but it cancelled out much of that new bill.
Yes, home owner’s insurance is really not expensive considering what it covers.
Yes, the insulation is something most homeowners can do themselves and saves a lot!
We spent a few thousand dollars on our construction house to insulate our attic. We have a 6″ depth of spray insulation and it has made a world of difference in keeping our 2nd story very temperate during the winter & summer. For some things it’s better to pay the larger expense upfront instead of spending an even larger sum over a span of decades.
I’m glad your insulation choice is paying off. Sometimes it’s hard to fork over the extra cash up front, but definitely pays off in the long run.
Schools. We deliberately chose a neighborhood with a really great base school. When our daughter was in pre-K, I realized how many of the parents hadn’t done that. They were either strongly considering private schools (at close to $10K a year. For Kindergarten.) or moving to other neighborhoods with better schools in a hurry. By buying in a neighborhood with good schools when our kid was tiny, we were able to find a relative bargain and not scrambling or paying a premium as she got older.
That’s great that you were able to get into a good neighborhood and school system at a good price! Schools are definitely something we considered as well when purchasing. Private school is so expensive!