Lower Housing Costs

tips to reduce housing costs

Your housing costs can run about 32-35% of your gross income. This includes your monthly mortgage or rental payments, escrow payments, utilities and overall maintenance.

You should try to reduce this percentage by 5-10%.

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Mortgage Refinancing

Refinancing your current mortgage can lower your housing costs if certain parameters are met

As a general rule, you can benefit from refinancing if your refinancing rate is 1-2% lower than your current rate.

But note that many lenders are offering the low- and no-cost refinancing programs — so it might be worth your time to refinance to obtain a smaller reduction in interest rates.

compare the numbers


Other Reasons for Refinancing

— shorten your loan term
— move from an Adjustable Rate (ARM) to Fixed-Rate mortgage
— consolidate and payoff debts
— pay for home improvements
— settle divorce or other claims


To see if refinancing can save you money, follow these simple steps:

1) check your rates
2) analyze the numbers
3) search for the right refinancing program


Step 1: Check Your Rates

You may be able to save $100s on your mortgage payment each month if your home mortgage rate is higher than current rates.

For example: for every $10,000 that you owe on your mortgage loan balance, you can save approximately $6.30 each month for every 1% drop in your mortgage rate.

For every $100,000 that you owe on your mortgage loan, that is a savings of approximately $63 each month.

view current rates


Step2: Analyze Your Costs

There is a cost to refinance, which can eat up your savings if the refinancing rate is not much lower than your current rate.

However, many lenders and mortgage brokers are no offering zero closing costs refinancing. Meaning, you won't pay any closing costs or fees. You will pay a higher rate. So analyze the numbers.

Use these online calculator to run your numbers:

Download this Home Refinancing checklist:
home refinancing checklist


Step3: Find Your Refinancing Program

Link to our network of mortgage refinancing programs:

Apply now and let's search
for the right lender
or dial toll-free:

Home Improvement Financing

and connect to a network of lenders who can provide competitive rates and refinancing terms.

you can view more information at the mortgage lending process:
PickMyMortgage: home mortgage guide

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What If Your Rent is Too High

Rent is simply money being poured down the drain. No equity is being built and rent increases are sure to follow each year or so.

Start a "home buying" savings plan. Link to our savings module to review setting up a savings plan for your home purchase. You will need to save up the following funds:

  1. down payment:
    most lending guidelines require at least 20% down of the home purchase price. Anything less that 20% will require Private Mortgage Insurance (PMI) that can add to your monthly cost.
  2. closing costs:
    closing costs on a home purchase can run anywhere from 3-6% of the home purchase price, depending on your region. Closing costs include origination fees, appraisals, title fees and more.
  3. out-of-pocket costs:
    you need to plan for out-of-pocket costs that are usually paid up-front when searching for a home. These costs include credit pulls, home inspections, travel and stay if you are moving to a new city and state, etc.

    you can view more information at our home buying center:
    SayHomeBuy: view discussion on home buying costs


Want to buy your first home? Let's get started:

Review our Home Buying Center for a complete 7-step guide for buying your new home:

search real estate listings
search the FSBO network
look for home in foreclosure
shop home market values
understand the mortgage loan process
review 10-tips on home affordability


Housing Expenses:

Housing expenses will likely be your largest expense item, especially if you own a home. Housing expenses include:

  • your mortgage payment with escrow (taxes, insurance)
  • monthly rental payment if you do not own
  • utility services (electric, gas, oil, water, sewage, garbage, etc.)
  • telephone, internet, cable
  • house repairs and maintenance

How much for the budget?

  • about 32-35% of income if you own; 15-20% if you rent

(note: budget percentages can vary by region and situation)
link to our budget worksheet (excel file) to estimate housing expenses


Lowering your rent

If your rental costs are choking your monthly budget, you might consider two things:

  1. Find a less expensive place to live
  2. Consider sharing your rent with someone else

Find a less expensive place to live. Use these online guides to start your search:


SayRelocate:  check the classifieds for apartment listings


You might consider sharing the rent with someone else:

Find a roommate:

Roommate resources and advice:

SayRelocate: check the classifieds for rent sharing

Attention Renters: it is critical to establish a good credit rating prior to buying your home. Make sure you get your on-time rental payment noted by the credit agencies. See our credit management module for information.

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Too Much Taxes and Insurance Costs

These are tough expenses to reduce. But with some work, you might reduce some of these costs

Taxes are assessed on the fair market value of your home. Fair market value is the amount an informed buyer is willing to pay, and an informed seller is willing to take for property in an open market without undue influences.

The three approaches used to assess market value are the sales, the cost, and the income approach. Your county appraiser may consider all three when determining value.

Sales Approach:
The county appraiser reviews similar properties that have sold, compares them to your property and may make adjustments for differing characteristics. This approach is typically applied to residential property in an area with a substantial number of sales.

Cost Approach:
In the cost approach, the county determines replacement cost of the property less depreciation. This approach is used when property is new or unique, or with few sales in the area.

Income Approach:
In the income approach, the value of the property is estimated using the income the property is expected to produce in the future. It is used to value commercial property and apartments when sufficient market rent information is available.

Review your county/city property tax policy and calculation link to your local jurisdiction: click here


Making Property Assessment Appeals

If you feel your property taxes are too high or assessed too frequently, you may consider challenging your property tax assessment:

understanding property taxes
cutting your property assessments
online guides for property tax appeal
review your jurisdiction tax appeal information


You might consider reviewing your existing home insurance policy. A comparative pricing analysis may find some savings.

Note however, that your home is probably your most value possession. Make sure you carry adequate insurance. When comparing policies, make sure you make an "apples-to-apples" comparison.

You can also make an online comparison with multiple providers to compare overall best cost:

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Paying Your Mortgage Off FAST!

How would you like to pay off your mortgage in about 1/3rd of the time saving you thousands in interest?

By paying off your mortgage early, you can save a lot of money by not having to pay all that interest to the banks

click here for quick slide presentation on how you can payoff your mortgage FAST

Includes a FREE, no obligation profile analysis of your current mortgage payoff position

  • Early payoff means big savings for you.
  • Plus you get the added security that your home is free and clear from any bank action
  • You can pay down your mortgage quickly without having to refinance or change your cash position

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Reduce Your Heating and Cooling Costs

Up to 40% of heating and cooling costs are wasted. Three places to close that gap:

connect to this government publication on home energy savings and tips:

Link to: heating and cooling
Link to: insulation
Link to: windows and doors
Link to: home office and electronics

Another resource center: Home Energy Savings Guide
Renters guide: www.espenergy.com


weatherize your home to reduce energy cost:

LetsRenovate: insulation / weatherizing your home
LetsRenovate: view new windows and doors


check out the new heating and air conditioning systems for a more efficient home:

LetsRenovate: heating and cooling
LetsRenovate: water heating systems

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Reduce Electricity Costs

Cutting your electrical costs means conservation and better lighting. Fluorescent and other energy-saving lighting is better and cheaper lighting

The most efficient way to reduce electric costs is to install energy efficient lighting elements and turn off unnecessary lighting.

According to the U.S. Government, if you replace 25% of your lights in high-use areas with fluorescent lighting, you can save about 50% of your lighting energy bill:

Link to: lighting
Link to: appliances

Renters guide: www.espenergy.com

LetsRenovate: view new lighting elements


Your area may offer utility deregulation for shopping current electricity.

There is also great information on energy savings.

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Reduce Water Heating Costs

Check out some alternative heating sources for water heating systems.

There are four ways to reduce your water heating costs:

  1. use less hot water,
  2. turn down the thermostat on your water heater,
  3. insulate your water heater,
  4. buy a new, more efficient water heater.

    Link to: more water saving tips available

    Renters guide: www.espenergy.com

  • New water heaters (including tank less and solar) can help reduce costs and water usage.

    LetsRenovate: water heating systems

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Reduce Mobile and Internet Connections

Shop your phone and mobile carrier. There are plans that can drive your costs down:

3 ways to cut costs

  1. Shop for local and long distance services:

    Connect to saveonphone.com for price comparison: click here
    Check local utility services in your area: click here

  2. Use calling cards for long distance and international calls:

    Link to: www.nobelcom.com
    Link to: www.callingcards.com

  3. Use the Internet for your phone service:

    Link to: web.net2phone.com
    Link to: www.dialpad.com
    Link to: www.vonage.com


Internet Connections

High speed Internet access costs have been dropping in price in some markets. See what might be available in your area

High-Speed Internet: compare broadband plans

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Keeping Home Repairs Down

We maintain a complete directory of home improvement ideas and repairs directory.

Find the right home improvement project and do-it-yourself tips at our Home Improvement Center:

attic basement
upstairs garage
main floor exterior home
"how-to" magazine yard / gardening

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