Cut costs on your mortgage, renovations and decorating.
By Gabrielle Olya Jan 24, 2022
The expenses that come with buying, renovating and decorating a home can add up, but fortunately, there are ways to save money every step of the way.
GOBankingRates asked real estate insiders for their best tips on how to save money on every part of your home, and their advice can help cut costs for anyone looking to buy a new home or renovate the one they currently have.
1. Get a Mortgage With No Down Payment
Find out if you qualify for a government home loan, as there are options that require no down payment at all. U.S. Department of Agriculture loans are available for borrowers in need who want to purchase a home in rural or suburban areas. Veteran’s Administration loans are available to active-duty or prior-duty service members and, in certain cases, their spouses and widows or widowers. VA loans are available through private lenders, such as NBKC Bank. VA home loans and USDA loans do not require a down payment.
“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.”
2. Take Advantage of Down Payment Assistance Programs
If you can’t afford a down payment and don’t qualify for a mortgage with no down payment, that doesn’t mean you can’t buy a home.
“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.
One option is a 203k loan, which can also help cover 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%.”
3. Negotiate Mortgage Fees
When buying a home, compare several mortgage companies, as each company has different fees and some might cost you more than others. Fortunately, there are some lenders who do not charge origination fees or processing fees for certain loan types. For example, NBKC Bank does not charge lender fees, origination fees, underwriting fees or processing fees for VA home loans, a perk available to veterans who meet certain requirements.
“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.”
4. Negotiate Closing Costs
As you can see, some of the biggest ways to save on your home happen before you even own it.
“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.”
There are other costs a buyer should try to negotiate, such as the seller’s attorney fee, transfer taxes, mansion taxes for purchases above $1 million, common charges and third-party services.
5. Ask Your Real Estate Brokerage To Waive Fees
Sometimes you can avoid paying fees just by asking.
“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.”
6. Take Advantage of Tax Benefits
One of the pros of becoming a homeowner 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.
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7. Get Multiple Quotes on Home Insurance
“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.”
Benenati added that it’s important to make sure the liabilities and replacement costs are not higher than the actual value of the property.
8. Get a Home Warranty From the Seller
“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.”
9. Be Strategic About Renovations
Although renovations will cost money, if you invest in the right ones, they can add to the equity of your home, Benenati said. “The top areas to spruce up are the kitchen, bathrooms, roof and exterior paint,” he said.
“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.”
10. Don’t Neglect Preventive Maintenance
“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.”
11. Invest In Energy-Efficient Upgrades
When making upgrades to your home, especially if it is an older home, it could pay to invest in energy-efficient upgrades such as a smart thermostat, better insulation or new windows, 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.”
12. Don’t Remodel or Renovate Without Figuring Out a Budget First
Establish a budget for remodeling projects based on the materials required.
“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 putting together your budget, take time to research which renovations will increase your home’s value and which renovations will hurt your home’s value. This could save you money immediately, as well as when it’s time to sell.
13. Shop Around for a Contractor
If you don’t plan on doing the renovations yourself, it’s just as important to comparison shop for contractors as it is to comparison shop for the 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.”
14. Do Inexpensive Renovations That Have a Large Impact
If you don’t have the budget for large-scale renovations, you can easily freshen up the look of your home with inexpensive fixes.
“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.”
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15. Borrow or Rent Tools for a Remodeling Project
“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.”
16. Choose an Interior Designer Who Charges Hourly
If you plan on using a professional to help with your interior decorating, choose a designer who charges by the hour instead of one who charges a percentage of the project budget and purchases, said 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.”
17. Repurpose Furniture You Already Own
Rather than buying all new furnishings for a new home, consider making use of things you already have — even if they don’t work where you initially intended them to go.
“A cabinet that looks weird in your new kitchen might work perfect in your basement or garage,” said Shane Lee, statistical data analyst at RentHop.
18. Blend Investment Pieces With Lower-Cost Accents
You don’t have to spend a lot to make your living spaces look luxurious.
“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.”
19. 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.
Before you decide to rent out part of your home, consider your lifestyle and comfort level, as well as the local laws that apply and any associated costs, she said.
“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.”
20. Rent Out Extra Space in Your Home for Storage
If you don’t want renters living in your home but still want to turn extra space into cash, consider renting out a spare room, basement or attic as storage space, Lee said.
Commercial storage units tend to be overpriced and have strict rules. By offering a competitive storage price, you could bring in extra cash every month.