Four Ways to Decrease Home Living Costs
- 4 min
What you'll learn.
- How to save on mortgage costs through home efficiency.
- How to save money with refinancing and recasting.
- The art of “unplugging” and its financial benefits.
It’s always a good idea to think about the ways you can decrease your home living costs. With owning a home, you know exactly how much you need to budget in order to pay your mortgage each month. It shouldn’t be too strenuous to plan your budget around your mortgage, but there are other routine payments that may not be as set in stone. Some costs of owning a home fluctuate, so if you’re not mindful of your expenses, they can severely damage your monthly budget. To combat these ever-changing payments, here are some easy ways to cut down on spending and lower your home living costs:
1) Home efficiency
Regardless of how old your home is, there’s a multitude of energy-efficient upgrades you can make to conserve and save money at the same time. By even making the smallest power-preserving changes, you’ll be helping the planet and your pocketbook in no time.
If you’re a new homeowner, there’s a good chance your brand-new appliances are only new to you. They might be outdated and eating up your home’s energy. By upgrading the appliances one at a time, you’ll be on the path to efficient home conservation.
(Bonus tip: When purchasing those new appliances, sell the older units and put the profit toward that state-of-the-art fridge you’ve been eyeing).
Add a programmable thermostat:
This project should be both easy and affordable, and you can undoubtedly accomplish it on your own. If you’re the one in control of your home’s heating and cooling, you’ll save a huge chunk of change over time.
Install new light bulbs:
Contrary to popular belief, incandescent light bulbs aren’t dead, and they may be hiding in light fixtures around your home. These days, investing in some more efficient and longer-lasting bulbs will save you energy and money. You’ll want to start by replacing the bulbs in the rooms you frequent the most, but some popular energy-saving bulbs include compact fluorescent lamps (CFLs) and LEDs. They may be more expensive than the traditional bulb, but they’ll save you cash in the long run.
Lower hot water heater thermostat:
A lot of manufacturers set water heaters at 140 degrees, but many homeowners find setting the thermostat to 120 degrees to be more comfortable. Saving money is only a byproduct of saving you and your family from being burned by water that’s too hot.
Sealing windows and doors:
If there’s a gap or open slit somewhere in your home’s windows and doors, you’re letting your paid energy fly, literally, right out the door. As the classic “dad-ism” goes, you’re not paying to heat/cool the whole neighborhood. Save on your energy bill now by picking up some weatherproof sealing to fill in the gaps.
Granted, there are other larger energy conservation projects you could take up to save an even greater amount of your money. Installing double-pane windows or new insulation may cost more up front, but they’ll be beneficial to your bank account in no time. Applying for an Energy Efficient Mortgage (EEM) is a way to secure funding for these types of large-scale projects. The EEM is a loan add-on, which means it’s attached to other mortgage loans like the FHA or VA. The EEM is tacked on simultaneously with your personal mortgage, so it’s better to plan for those energy-efficient updates ahead of time.
2) Mortgage refinancing
Refinancing a home loan is not something that should be at the forefront of every homeowner’s mind, as it doesn’t always make sense in every case. However, there are instances where it can help you save big. The main reason for refinancing your home loan is to obtain a better interest rate or term. A good rule of thumb for refinancing your interest rate is to look and see if rates were higher when you purchased the home than they are today. If this is the case, refinancing might be a good idea, as it could decrease your monthly mortgage payments.
3) Mortgage recasting
Recasting is only offered by some lenders, but essentially, it’s the process of paying a significant portion of your mortgage balance in one large sum. Similarly, the same process can be accomplished by making a series of extra payments. These payments will change your current mortgage loan. To recast your mortgage, the lender will recalculate your monthly payment using your lower loan balance, which means you’ll pay less every month since the principal balance of your loan will be smaller. Recasting your loan is simple, but it will come at the cost of a service fee from your lender. And just like refinancing, you must first qualify for recasting before the process can start.
A final way to decrease your home living costs is by unplugging your electronics when they’re not in use. All electronics left plugged in use power, often referred to as “phantom power,” even if they’re idle. They may not consume a whole lot of energy, but just think about how many electronics you have plugged in right now. Whether it’s your partner’s phone charger or your child’s video game system, it can all add up quickly.
As you can see, you don’t have to make drastic changes to your current way of living to save a few bucks on your energy bill. You’ll most likely see the outcome of these changes over time, as they may not make any immediate impact. To learn more about refinancing, recasting, and other potential ways to save money in your home, reach out to your mortgage banker.