The costs of buying a new house, renovating or decorating your old one can quickly put a dent in your wallet. But you don’t have to cut corners if you want to stick to your budget and save money around the house. There are easy ways to do it if you know where to look. Curious to find out more? Then read on to learn how to cut costs and save money on every part of your home, according to real estate experts.
Get a Zero-Down Mortgage
As the name suggests, a zero-down mortgage is a loan you can get for a home without a down payment. Yes, it is possible to qualify for such a loan if you meet certain conditions. For instance, if you want to buy a place in rural or suburban areas, the Department of Agriculture can help you with that. Veteran’s Administration provides loans with no money down for active-duty or prior-duty service members and, in some cases, their spouses and widows or widowers.
“The greatest features of a VA home loan are that there is no down payment required if you stay within the county loan limits, and there is no PMI insurance ever,” said Jim Schneider, former army officer and a loan specialist at NBKC Bank. “On any other type of loan, if you put down less than 20% of the purchase price you are required to pay PMI insurance on the loan. This can be hundreds of dollars per month, which can be totally avoided by doing a VA loan. On top of those benefits, the VA loan will also have the lowest rate available among all loan types because it is the least risky loan a bank can do.”
Find Down Payment Assistance Programs
Even if you are not able to cover a down payment or you are not eligible for any of the zero-down mortgage programs, you can still buy a home. How? By taking advantage of down payment assistance programs. “There are so many down payment assistance programs out there for buyers, so educate yourself,” said Dawn Houlf, realtor and owner of EXIT Realty Number One.
Another way to seal the deal is a 203k loan, which can also help you pay for renovation costs.
“First-time homeowners who want to renovate their homes on a budget, or homeowners who opted to buy a distressed property for a good deal, should strongly consider the 203k loan,” said Than Merrill, founder of real estate investment company CT Homes. “A 203k loan is a type of home renovation loan that is backed by the Federal Housing Administration. The loan includes both the cost of purchasing a property, plus the estimated costs for renovating it. Homebuyers that wish to rehabilitate an older or damaged home can get approved. Not only will this loan cover home upgrades, it also allows borrowers to put down 3.5% on their homes as opposed to the standard 20%.”
Negotiate Mortgage Fees
Everything’s for sale and everything can be negotiated. Especially mortgage fees. Shopping around and comparing mortgage prices can save you big bucks. Surprisingly, many homebuyers leave money on the table by going with the first lender they find.
But lenders are quite flexible with the rates they offer, so why not take advantage of that? For instance, certain lenders do not have origination fees while others do not charge processing fees. NBKC Bank, for instance, does not charge lender fees, origination fees, underwriting fees or processing fees for VA home loans.
“The most important questions a veteran should ask are what are the lenders’ origination fees, what is their current rate and does it contain discount points,” Schneider said. “All of the other costs are third-party fees and will be the same regardless of the lender, but origination fees, rates and points can vary wildly between lenders.”
Ask Your Real Estate Brokerage to Eliminate Fees
When money is on the line, it doesn’t hurt to ask, especially when you can pay less or nothing at all.
“When working with a real estate brokerage to purchase or sell your home, there are some fees associated with their services,” said April Kozlowski Palomino, a realtor with Coldwell Banker Residential Real Estate. “Ask them if they give discounts. Some waive their fees altogether for military families and veterans, and it doesn’t hurt to ask. This could save you around $500 just by asking.”
Negotiate Closing Costs
Unlike mortgage down payment, closing costs such as homeowner’s insurance, taxes and other prepaid charges are inevitable. Fortunately, there are ways to lower some of the closing costs that future homeowners are required to pay.
“Closing costs are paid either by negotiating with the seller to contribute toward a buyer’s costs or paid by the buyer out of pocket at closing. Additionally, the realtor can give a portion of their commission to be applied toward the buyer’s costs, the lender can give a credit to be applied toward the buyer’s costs or you can pursue a combination of these options,” said Amy Stuhr Paterson, military spouse and loan officer at NBKC Bank. “If a buyer is looking to minimize cost out-of-pocket, they can discuss with their realtor and lender to see which of the options is best for him or her.”
Apart from these closing costs, you can also negotiate other variable costs such as the seller’s attorney fee, transfer taxes, mansion taxes for purchases above $1 million, common charges and third-party services.
Profit from Tax Benefits
One of the perks of buying a house, apart from the obvious one, is the tax breaks.
“Talk to your financial planning professional about potential tax benefits, including mortgage deductions and other write-offs,” said Jordan Barkin, a former residential realtor with Harry Norman Realtors. See also 6 Major Life Events That Influence Your Taxes to find out what happens to your taxes when you buy a new house.
Get Multiple Quotes on Home Insurance
Getting multiple quotes on home insurance can help you choose the policy that suits you best and save some money in the process. “Home insurance is one of the most underrated areas to save money,” said Robert Benenati, a real estate broker and owner of 365 Realty, Inc. “I recommend my clients to get multiple quotes.” One thing you need to pay attention to is for liabilities and replacement costs to not exceed the property’s actual value.
Get a Home Warranty from the Seller
A home selling warranty usually benefits all parties involved. “During the negotiation process, ask the sellers to provide a one-year home warranty,” said Jill Higgins, a realtor with The Closers. “Home warranties start at about $300 and go up to $600 or more for advanced coverage. Buyers can save money two ways: one, by having the seller pay for the home warranty, and two, by having the home warranty to help cover the cost if things break down unexpectedly.”
Be Smart When It Comes to Renovations
Renovating a house can be expensive but if you are smart about the changes you are going to make, you can increase the equity of your home. “The top areas to spruce up are the kitchen, bathrooms, roof and exterior paint,” Benenati advised.
“The kitchen is the focal point of the home, and most people will forgive outdated areas if the kitchen is updated,” added Ralph DiBugnara, president at Home Qualified. “Minor fixes that can help are repainting and/or refinishing the cabinets, as well as adding under-the-counter lights.”
Don’t Forget about Preventive Maintenance
If you want to keep your house in tip-top shape and save a lot of money down the road, don’t disregard a home maintenance schedule.
“Create and maintain a preventative maintenance calendar,” said John Bodrozic, co-founder of HomeZada, a digital home management platform. “Most people forget or don’t know a number of important preventative maintenance tasks. This causes your utility bills to be much higher than they need to be because air conditioning units, hot water heaters, appliances, etc. are not running efficiently. In addition, these equipment[s] and appliances will break down sooner, forcing you to pay more for replacement or fix-it costs.”
Consider Energy-Efficient Improvements
If you’re looking to cut costs on your monthly energy bill, consider making energy-efficient improvements. It’s true they might seem expensive at first glance, but in the long term, you’ll get every invested dollar back and then some. A smart thermostat, better insulation or new windows will help you waste less energy and money, said Amber Harris, a real estate agent and interior decorator with At Home DC.
“Even with newer construction, a smart thermostat can help save a noticeable percentage on your monthly heating and cooling bill, and that’s an upgrade you can do on your own for around $200,” she said. “Other homeowners may want to investigate solar energy options, especially in jurisdictions that offer incentives to homeowners who invest in solar. Make sure, however, to weigh the cost-benefit of renting panels versus purchasing, and ensure you comply with all local, community and neighborhood regulations.”
Don’t Remodel or Renovate Without Having a Clear Budget
If you don’t want to spend thousands of dollars on remodeling or renovating your house, the first thing you should do is draft a budget. The second: stick with it! “Shop for different product brands at different price points,” Bodrozic said. “Not doing this level of upfront planning gets people way over budget on projects.”
When drafting your budget, consider the changes and remodeling ideas that add value to your home as well as the ones that might decrease your property’s value. This post on 10 Unexpected Things That Decrease Your Property Value can also help you make the right choices.
Look for a Contractor
With so many online DIY videos, no wonder most of us feel like we’re more than capable of renovating our homes on our own. But large renovation projects are better left to the hands of professionals. However, some contractors are more skilled than others, therefore it’s important to choose the one that best suits your budget and criteria. No shame in “shopping” for contractors just as you would shop for renovation materials.
“Get at least three qualified bids,” Bodrozic said. “You can save 10% to 30% on your project if contractors know you are getting multiple offers.”
Do Inexpensive Renovations with Major Impact
If you can’t afford to do major renovations, you can still give your place a fresh look by doing minor and cheaper improvements. “A fresh coat of paint in a light color can make an interior seem brighter and larger, as can LED bulbs,” Barkin said. “Other affordable renovations include new drip cups under stove burners, swapping out switch plates for white ones, adding evergreen plants, installing dimmers and doing an exterior power-wash.”
Borrow or Rent Tools for a Remodeling Project
Don’t worry if you lack the tools for your renovation project and the money to buy new ones. There’s always a solution!
“When you are trying to save money with a DIY project on your home, most people will need a tool that they don’t yet own, and most likely won’t use that often in the future,” said Misty Weaver, a real estate agent with Samson Properties. “Finding a neighbor to borrow from or checking into renting the tool can save money.”
Choose an Interior Designer You Can Pay by the Hour
Not everyone has an eye for colors and is up to date with the newest trends in terms of interior design. Therefore, if you can afford it, you can create an eye-catching aesthetic in your home with the help of an interior designer. Just make sure you choose one who charges by the hour instead of one who you’ll have to pay a percentage of the project budget and purchases, advises Susan Matthews, a realtor with Carolina One Real Estate.
“The latter may lean toward higher-priced items for a higher markup,” she said. “An hourly consultant is usually more willing to shop all price points, and the homeowners can get more bang for their buck. For even more savings, homeowners can limit the designer’s hours by choosing to personally handle certain aspects such as contractor management, shopping and receiving deliveries.”
Repurpose Furniture You Already Have
New furniture can be expensive so why not transform what you already have into stunningly new furnishings for your freshly renovated home? You can repurpose your old furniture and even change its location, to give you the feeling of something new. “A cabinet that looks weird in your new kitchen might work perfectly in your basement or garage,” said Shane Lee, statistical data analyst at RentHop.
Blend Investment Pieces with Lower-Cost Items
Your house can look expensive and luxurious without you going into bankruptcy for that. With the help of some smart pairings, you can turn your home into a stunning place. “Even if you are set on having a magazine-ready house after moving, it doesn’t have to be cost-prohibitive to decorate,” Harris said. “Blend investment pieces, such as a nice new sectional, with lower cost accents, such as side tables and wall art.”
Rent Out a Room
“Many homeowners are happy to share their home with non-family members, and will rent out rooms or a separate basement suite to long- and short-term renters,” Harris said. It’s a space you’re not using which could bring you some extra cash.
Before putting up the ad, think about the lifestyle you’re used to having, how comfortable you would be with a stranger in your house, as well as the local laws that apply and any associated costs, she recommended.
“If you are planning to rent out a space intermittently, make sure there are no restrictions on this, especially if you live in a condo or other community, and take into account the time and money required to manage the property,” Harris said. “If you live in a city that has an upcoming high-profile event such as the Super Bowl, a large conference or festival, you may be able to head out of town and make enough for a mortgage payment or more in a week or less.”
Rent Out Extra Space in Your Home for Storage
If you are not comfortable with renting out a room, there are other ways to cash in on your excess space. If you have a spare room, a basement, a storage shed or an attic that you do not use, then think about renting it out, advises Lee. Many people are looking for storage places that are cheaper than the overpriced commercial storage units. Consider it an Airbnb for storage!
Speaking of property, these are the Top 10 States With the Lowest Property Taxes. Find out if your state is one of them!