As a homeowner, you know that financial obstacles aren’t just about paying your mortgage. Owning a home also comes with nearly $16,000 in annual housing costs, on average, including homeowner’s insurance, taxes and maintenance.
That works out to an extra $1,325 a month in homeownership costs on top of your mortgage payment, according to an analysis by Zillow and Thumbtack. Maintenance was the highest annual cost:
Of course, these housing costs are even higher in expensive cities, like New York ($24,000 a year) and San Francisco ($22,000), according to the study.
The good news is that there are steps you can take as a homeowner to reduce these expenses and help make homeownership fit into your budget. Read on for expert-backed tips.
Ryann Brier, a real estate agent in Grand Rapids, Michigan, said preparing your home for seasonal changes can help you save on energy bills.
“Seal any leaks in the house. Drafts in your house will make you throw money out the window. Get some caulk and a simple waterproofing checklist to prepare,” he added. “Changing HVAC filters regularly saves money.”
Restricted airflow causes your furnace or air conditioner to work harder, increasing your utility bill and the risk of damage, Brier noted.
Naeem Turner-Bandele, an energy solutions consultant in Indiana, recommends that homeowners who want to identify savings on their electric bills purchase a basic wattmeter or energy-monitoring smart plug for about $20 from Amazon, Walmart or other retailers.
“You can connect your appliances to these meters to see the exact monthly dollar cost of running specific appliances and home devices, from your washing machine to your TV, based on your actual electric rate,” he added. That could allow you to adjust usage by changing your habits, setting a timer on a device, or replacing an inefficient appliance to save money.
Kortney Paul of Ideal Partners in Dallas-Fort Worth, Texas, recommends a smart thermostat to monitor your HVAC system.
“A basic smart thermostat can be found for less than $150,” Paul said. “Many even have intuitive features that learn your habits and preferences, automatically adjusting to improve both the comfort and efficiency of the system.”
For low- to moderate-income families, federal rebates are available for significant energy-saving home improvements.
Two new programs are being implemented nationwide: the Whole House Rebate Program based on Home Energy Efficiency (HOMES) and the Home Appliance and Electrification Rebate Program (HEAR).
HOMES can help homeowners cover up to 100% of the cost of energy-saving improvements, depending on household income. “This can help families improve heating and cooling systems, water heating systems, lighting, insulation and more,” Turner-Bandele said.
HEAR provides low- and moderate-income families with up to $14,000 to install appliances and make other electrical improvements. “By taking advantage of these rebates, homeowners can alleviate significant financial burdens and make improvements that can reduce monthly utility bills for years to come,” he added.
State energy offices can provide details.
If you are having difficulty paying your monthly utility bills, especially during months of high winter heating and summer cooling demand, the Low Income Home Energy Assistance Program (LIHEAP) may be able to help. The program is federally funded but is available through state and local community action agencies.
The process can take 30 to 45 days to complete, so you may want to plan ahead if you’ve had financial problems in the past, Turner-Bandele said.
The cost of homeowners insurance has skyrocketed 48% over the past five years, according to the Zillow/Thumbtack report. The best way to reduce your home insurance costs is to periodically compare your current rate with other insurance companies.
Some tips to save on insurance:
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Increase your deductible. The Insurance Information Institute says increasing your deductible from $500 to $1,000 could save you 25% on your premiums.
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Ask about discounts. The Texas Department of Insurance says some companies will offer rate discounts if you have other policies with the company (such as home and auto), haven’t filed a claim in recent years, or have smoke alarms or a security system.
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Improve your credit score. The TDI says if your credit score improves, you may qualify for a better rate.
A small number of states are considering eliminating property taxes, according to Realtor.com. But don’t hold your breath; The Tax Foundation says proposals to abolish property taxes “would create more problems than they solve.”
“Property taxes are the primary tool for funding local governments and the largest source of state and local revenue in the United States, helping to fund schools, roads, police and other services,” the nonprofit said in an analysis.
Still, there are ways to make sure you don’t pay more than your fair share. Brier advises homeowners to carefully review their property tax assessments each year.
“If you need help, consult a professional, but you can do these three things yourself,” Brier said, highlighting these tips:
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Fight for an appeal if you believe the evaluation is wrong.
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Verify the data for each year.
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Look for any discrepancies between years.
Brier reminds homeowners that emergency repairs are much more expensive than preventive maintenance. Being proactive can help you avoid costly surprise expenses. She suggests:
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Periodically clean gutters and downspouts.
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Inspect the roof and attic space from time to time.
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Periodically checking under all sinks. You don’t want any leaks to go unnoticed and cause long-term damage.
The EPA also recommends comparing your current water bill to the same month last year. If your last bill is significantly higher, you may have a hidden water leak in your home.
The National Association of Home Builders offers a printable routine home maintenance checklist to help you organize a home care plan.
Additionally, consider these four potentially important ways to reduce your monthly housing costs: