It’s expensive to be a homeowner. According to NerdWallet, the average homeowner pays $1,443 on average each month on costs such as their mortgage, homeowner’s insurance, and property taxes. Despite having anxiety about all of the bills associated with owning a home, 75% of people surveyed by NerdWallet say homeownership is a priority.
“The way I look at it, homeownership is kind of like having a child,” says Holden Lewis, NerdWallet mortgage analyst. “You really enjoy the experience, but you also worry a lot.”
The best way to cut down on the anxiety? Lewis says you should conduct a yearly audit of your housing costs to see if there are ways to save money.
Make sense of your mortgage
Lewis says your mortgage may be a good place to start cutting costs. Mortgage rates recently hit a 7-year high, so you need to decide if it makes sense to refinance. If you have an FHA loan and are approaching 20% equity, he says you should target that loan for refinancing as well. Are you having trouble paying your mortgage? According to NerdWallet’s analysis, late payments could cost U.S. homeowners over $500 million each year. If you can’t make your mortgage payment, don’t dodge calls from your lender. Mortgage companies don’t make money foreclosing on a home. Lewis says you should contact them as soon as possible to explain the issue. While it won’t result in a waived late payment fee, he says lenders are required to have procedures in place to help people who are falling behind on their mortgage.
Get the best deal for homeowner’s insurance
According to the NerdWallet survey, 40% of homeowners don’t know how much their homeowner’s premium is. Lewis says the premium is typically included and overlooked – in our monthly mortgage payment. If you contact your current insurer, you can discuss ways to lower your bill. You can pay less by bundling your home and auto insurance. You can save money making your home more disaster resistant, improving your home security and maintaining a good credit record. Repairs on a new roof, for example, could also lower your yearly premium. Comparison shop to find the best deal.
Managing home repair & maintenance costs
What is the top cause of anxiety for homeowners? Unexpected home repair costs. NerdWallet suggests saving 2% of your home’s value every year to cover bills. Some years you will find you spend very little, but you need to be prepared. Lewis says if you don’t have a rainy day fund, it’s important to start one.
He says another option is to apply for a home equity loan or home equity line of credit (HELOC.) A HELOC acts like a credit card and uses your home as collateral. You can keep it with a zero balance. When you have a big expense, you can charge that to your HELOC. Lewis says not only are interest rates relatively low, but you will only pay interest when you borrow from that money.
“When people own a home, they feel proud about it, they have a sense of accomplishment,” says Lewis. “But they also feel anxiety over some of the costs associated with homeownership. But on balance, people feel really good about the homes that they own.”
Linda Bell joined FOX Business Network (FBN) in September 2014 as an Assignment Editor. She is an award-winning writer of business and financial content. You can follow her on Twitter @lindanbell.