Smart Money Moves: Financial Tips for Homeownership
Although owning a home is an exciting financial step for many people, it can often become a little intimidating after closing. You suddenly realize there is not a maintenance tech on hand and all repairs are now your responsibility. You get nervous when the news forecasts inclement weather and wonder if your homeowner’s insurance is adequate should a disaster strike. While the costs of homeownership are real, the good news is that they can be significantly mitigated with the proper planning. Keep reading for 6 smart money moves that can be financially beneficial for homeowners!
#1 Invest in Energy-Efficient Features and Builder Warranties
While the initial costs of purchasing a new home may seem daunting, investing in a property equipped with energy-efficient features and backed by a builder’s warranty can provide substantial financial benefits in the long run.
Energy Efficiency Equals Cost Savings
Consider opting for a newly constructed home that incorporates energy-efficient technologies. From advanced insulation options like xps vs eps for walls to radiant floor heating systems and modern windows designed to enhance natural light transmission, these features not only reduce utility bills but also increase the overall value of the property. By prioritizing energy efficiency, homeowners can enjoy lower monthly expenses and potentially higher resale values down the line.
Builder’s Warranty for Peace of Mind
Another significant advantage of purchasing a new home is the inclusion of a builder’s warranty. Typically lasting for at least one year, this warranty covers repairs and maintenance, offering homeowners peace of mind and protection against unexpected expenses during the initial stages of homeownership. Whether it’s fixing structural issues or addressing malfunctioning appliances, having a builder’s warranty in place can save homeowners significant sums of money on repairs, especially in the critical first year after moving in.
By choosing a new home with energy-efficient features and a builder’s warranty, homeowners not only reduce their immediate financial burdens but also safeguard their investment for the future. These smart decisions not only contribute to a more sustainable lifestyle but also ensure long-term financial stability and peace of mind.
#2 Keep Close Tabs On Your Home’s Value
Many homeowners mistakenly believe that an appraisal is only valuable when preparing to list the home for sale. However, this could not be further from the truth. Keeping running tabs on the value of your property can prove beneficial in securing various types of home equity loans. In addition, it can help expedite the removal of private mortgage insurance (PMI) from your monthly mortgage payment. Most homeowners are required to pay PMI insurance when their equity in the home is less than 20%. While rates are variable, PMI insurance can increase monthly mortgage payments by as much as 10% in some cases. A favorable appraisal can get this PMI insurance removed if it shows that equity is above this threshold, saving homeowners significantly on their ongoing monthly payments.
#3 Know Which Renovations Hold Value
The minute they close on a house, many homeowners start work on turning it into their “dream home.” While there is certainly nothing wrong with creating your ideal living space, it is important to understand that your dream may not necessarily be the next buyer’s dream. Lavish master bedroom suites and grandiose kitchens with quaint features have consistently proven to be renovations that recoup comparatively little of the project’s costs. In terms of value-adding projects, it is better to focus on features that enhance both form and functionality, such as installing nonporous quartz countertops, exterior wood cladding, and fire resistant roofing materials.
#4 Understand Your Interest Rate
Should I be making extra principal payments on my mortgage? Should I put a windfall directly into my home? When is the right time to refinance?
The answer to all of these questions is “it depends on your interest rate.”
Prior to the COVID-19 pandemic, many homeowners were getting locked into historically low-interest rates of just over 3%. The cost of financing a home had never been cheaper, and those holding onto these amazing rates would be ill-advised to try and throw extra money at their mortgage when many banks are currently offering yields close to 5% on savings.
However, with mortgage interest rates now over 7% for most homeowners, the appeal of paying down the mortgage as fast as possible is increasing, as there are likely to be rate drops in coming years on which they can pounce for lower monthly payments.
It’s all about understanding the time value of money and having a clear picture of how your interest rate is working for or against you.
#5 PROTECT YOUR INVESTMENT
In an era of explosive real estate prices in many markets, the dream of homeownership is becoming more difficult to attain for most families. A down payment on a home requires many to commit an increasingly larger portion of their life’s savings. And with interest rates reaching heights not seen in years, making monthly mortgage payments stretches most budgets to the limit.
After sacrificing so much to make your dream a reality, it is critical to safeguard your home by enlisting an asset protection attorney. Without the proper protection, unexpected hospital stays and other emergent debts can result in liens against your property. With the help of professionals trained in asset protection, you can help ensure that what is yours stays yours in the most dire financial climates.
#6 FIND WAYS TO SET YOUR HOME APART
One of the keys to creating an in-demand home is by offering features that other properties cannot match. However, when you are working with limited square footage, there is only so much that you can do. One great idea is to turn your home improvement efforts outdoors. Explore the benefits of trellis vs pergola shading, concrete walkways vs permeable pavers, and outdoor kitchens vs stone fire pits. By creating functional exteriors that residents can enjoy, homeowners can effectively extend the square footage of their home and create features that buyers are willing to pay more for.
*BONUS* The Smartest Financial Tip for Homeownership
Although there is a cost that comes with being a homeowner, your home can retain its rightful place as a long-term asset with the proper financial planning. For more resources that will help take the mystery out of homeownership, explore the content at Pacific Communities for the leading insights in the industry!
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Ready to begin your journey? Contact us today and let’s embark on this exciting adventure together! We can’t wait to welcome you to your new home.
Author Bio
Brian Jeffries is a freelance writer who loves sharing his knowledge and expertise on construction projects and materials. He lives in Winter Park, Florida where he enjoys spending time with his wife and working on projects in his spare time. Brian’s work as a freelance writer can be found on Building Product Advisor, a construction industry resource site.
