It’s no secret that buying and moving into a new home is a high-expense venture. From footing the down payment bill to preparing for your monthly mortgage installments, many would-be homeowners turn away from the home of their dreams due to the sheer amount of debt they’ll have to take on over the next 15 to 30 years.
Just because homes are expensive doesn’t mean you won’t find opportunities to save, however. Smart homeowners employ a number of personal finance strategies to keep their bank account in-check—both today and long into the future. With the right tools and tactics in mind, you’ll be better prepared to lower home-related costs or eliminate them completely, which can help you enjoy your new home stress-free.
Scrap the Professional Movers
Did you know that the average cost of a long-distance move into a new home is nearly $5,000? Movers aren’t the most expensive bullet on your new home’s list of expenses, but they are an upfront cost you’ll typically need to cover on move-in day.
Unless you’re able to find a cheap moving provider, cutting out the professional moving services from your budget will help you strategically tackle larger costs you’ll face with any new home. Every dollar spent on your movers is one less dollar you have for new appliances, furniture, and other home amenities.
If you want to save the most cash during your move, you’ll need to keep a few important strategies in mind. First, you should think about any belongings that you can bear to part with, as your moving costs will drop dramatically if you give up your bulky furniture, old clothing, or outdated home equipment. Enlisting a team of friends and family could also take several days or weeks, so you should budget plenty of time into your DIY moving plans. There are even certain days or seasons where moving services (such as trucks or storage bins) are in lower demand, giving you a particularly low rental fee.
In the interim, you can also look for nearby self-storage options to keep your belongings in check. This is a great option for those who need to move all of their belongings out of their old home but may not have the capacity to relocate everything right away.
Research your Mortgage Options
With so much information online at their disposal, new home buyers should always investigate the loan opportunities available to them to ensure they are getting the most value out of their investment. Contrary to popular belief, there’s more than one way to purchase a house, which means that you’ll need to find the right choice for your personal situation.
The three primary differentiators between loan options are the loan term, loan interest rate, and loan type.
As the name suggests, loan terms deal with the contracted length of your loan, which can give you more or less time for repayment. Shorter terms generally mean higher monthly payments, but longer terms will have you paying more over the lifespan of the loan thanks to interest. Loan interest types are either fixed or variable—the former giving lenders a constant rate and the latter offering fluctuating interest over time. Finally, your loan type can affect the amount you need for a down payment, the total amount you can borrow, and the size of your home that you can afford.
Your research shouldn’t stop there, however, as there are solutions to further reduce your monthly mortgage payment—even after you’ve settled into your new home. These opportunities primarily come in the form of refinancing, where an existing loan is replaced with new terms (and preferably a lower interest rate). A no-closing-cost refinance, for example, allows new homeowners to refinance their mortgage without having to deal with upfront closing costs yet again.
Look toward the Long Term
Even if you anticipate living in your home for only a few years, you should view your home (and the expenses that come with it) as a part of a larger piece of your personal finance puzzle. More often than not, a choice that saves you money today could be one that costs you more in the future, which is why it’s always important to consider both the short and long-term implications of your decisions.
A great example of a long-term expense strategy deals with your approach to your down payment. A majority of Americans allocate less than 20% of their home’s value toward a down payment, which contributes to a larger mortgage and longer repayment period. Putting less toward your down payment might save you cash in the immediate moment, but it comes at the risk of paying significantly more in interest fees down the line. Homebuyers with a long-term tactic in place may opt to save money for a few extra months before signing on the dotted line in order to put as much as they can into their down payment.
The same theory applies to decorating and renovating certain parts of your home. Not all home renovations are created equal, and some may actually add value to your living spaces that far surpasses the cost to renovate. As you finish moving into your home and begin to make it your own, you should prioritize projects that are proven to add value to your resale price. Popular options include remodeling your kitchen, replacing ineffective insulation, investing in smart home technology, and creating more accessible living spaces.
With these tips in mind, you’ll be ready to handle all the challenges that come with owning a new home.