There’s a lot of anxiety brewing about the economy right now. It’s understandable — inflation is high, interest rates increased quickly, companies have announced layoffs or hiring freezes. Homeowners, here are the ways that may help you save:
1. Drop PMI early
This is a good one the banks don’t want you to know about. If your mortgage is at least 2 years old, you make your payments on time, and your house has gone up in value significantly, you should check out this assessment. The good news is, it’s not a refinance — so, the process is simpler, your interest rate stays the same, and you don’t need to provide financial documents.
2. Set up refinance monitoring
Although it’s unlikely a refinance would benefit you now at current interest rates, you don’t want to miss an opportunity to lower your payment or save on interest when rates do come down. As recently as January 2022, there were still over 10 million people who were eligible to refinance and save $100s each month (but didn’t!). House Numbers does this for you.
3. Try to lower your property taxes
Shocked by the increase in your property assessments and new tax bill? Experts estimate that between 30 and 60 percent of taxable property in the United States is over-assessed, and this leads to higher property tax bills. Fewer than 5% of taxpayers challenge their assessments, even though the majority who do so win some relief when properly prepared.
4. Create a home maintenance savings account
These are inevitable and, if you don’t have money set aside to cover them, you’ll probably end up with credit card debt. The average credit card interest rates are ~20% (and rising!). So, don’t prepay your mortgage now to save a small amount, only to add even more interest costs later via expensive debt.
5. Try to lower your home insurance
The easiest thing to do is shop around — rates for identical coverage can vary a lot, and some homeowners save $1,000/yr by switching. But, there are other tricks, like raising your deductible a small amount, adding an affordable, monitored security system, taking advantage of a recent increase in your credit score, or dropping high-risk coverage (trampolines!).
6. Solar energy
There’s often a way to get solar panels installed on your home without paying any extra net expense now, and actually make money over the long term. This could be via low-interest loan, where your electricity savings offset the monthly cost of the installation. Or, it could be via solar lease or a power purchase agreement.
7. Use home equity to pay off or avoid high-interest debt
Similar to #4 above, if are carrying credit card debt, you’re very likely paying much more in credit card interest than you would pay in interest on a home equity loan or line of credit (HELOC) for the same amount. Today, the interest rate on a HELOC is likely around 5% compared to 20% for credit cards. That difference could save you $4,500 in interest on a $10,000 debt over 5 years.
8. Earn short term rental income
Have a room to rent? Want to make money while you’re on vacation? Check out this rental estimator and learn how much your home could earn. Personally, whenever I’m on vacation for more than a week I rent out my home on Airbnb. In many cases, it’s paid for our entire family vacation! It was easier than I thought, and guests always treat our home with respect.
9. Pay off your mortgage faster
For some people, paying off your mortgage faster to save on interest could be the right choice. At today’s interest rates, paying an extra $100/mo on a $400k, 30-yr fixed mortgage will save you over $45k in interest and pay off your mortgage 10% faster. In most cases, though, I recommend you instead put this extra money into a rainy day fund, IRA/401k, or other investment.
Honestly, each of these options is a research project on its own. Let us help!
At House Numbers, we specialize in helping homeowners save money, access cash, and build wealth — not just now, but we automatically monitor for new savings opportunities every month.