Phoenix, AZ, is a great market in which to become a homeowner. The Southwest region is a beautiful place to live, and life in the city is affordable for families from many backgrounds. Buying a home is likely one of the biggest expenses you will ever face, so making wise decisions with your money is critical.
Since homes are so expensive, and you will need to spend money regularly on taxes, insurance, maintenance, utilities, and other fees associated with owning a home, it is important to know how you can save as much money as possible.
Here are a handful of strategies for making the right money decisions if you are becoming a homeowner or currently are one in Phoenix, AZ.
Financing Your Home
Most buyers cannot afford to cover the cost of a home upfront. In Phoenix, even the cheaper properties may still cost hundreds of thousands of dollars unless you want a massive rehabilitation project on your hands. Researching the various types of home loan products that can help finance your purchase is the best way to afford a new house.
If you have a poor credit score, you may consider FHA loans. Veterans, active service members, and surviving military spouses can find VA loans to make home financing easier. Conventional loans are the most common type of mortgage, but if you want to purchase a larger property, then there are also Phoenix jumbo loans.
Choosing the right financing option will determine your monthly payments, how long you will be paying off the house, and how much will be required upfront.
Alternative Energy Sources
Once you become a homeowner, you quickly learn about the cost of utilities like electricity, water, gas, and others. These services are essential for life in a home, but there are plenty of ways to cut down on these costs to save you money each month.
One strategy is to rely on alternative energy sources rather than the public electrical grid. Green energy is a very sustainable investment. Though it may be costly at the time of installation, the long-term savings can make up for it while also raising the value of the property.
For example, installing solar panels on your property is becoming common practice for homeowners. There are often tax incentives for doing so, and you will have less reliance on the grid for your home’s power, resulting in lower bills. Another option is to have a windmill on the property, though you will have to make sure local governments allow it.
Maintaining Home Insulation
Home maintenance is an unexpected cost that is unavoidable. Every building is made up of complex systems, such as plumbing and electricity, as well as appliances and structures that can lose their functionality over time. Insulation is a common aspect that needs maintenance and upgrading to keep the environment in your home comfortable.
Spending money on insulation upkeep will be beneficial for your wallet. Inspect the caulk around windows and doors to see if it needs a new application. If you feel drafts anywhere in the house, find the source and rectify it. These areas where air and moisture leak into or out of the home can raise your utility costs if they are ignored, so fixing them is a worthy investment.
Value-Boosting Improvement Projects
Not every home is forever. Many families will move several times throughout their lives, making it important to take care of each home so that it can sell in the future. One of the most effective ways to ensure property value climbs is to make improvements. Interior and exterior projects that improve functionality, aesthetics, or both will make the home more appealing to future buyers.
Some ideas for value-boosting improvements include bathroom renovations, kitchen remodels, new deck constructions, landscaping features, roof replacements, energy-efficient window upgrades, and HVAC system replacements.
Lump Sum Payments Toward the Principal
If you are like most homeowners in Phoenix, you probably secured a home loan to cover the costs of the purchase. Every month, you pay a certain amount toward both the interest and principal amount of the loan. However, making additional payments can save you money in the long run.
In the early years of your mortgage, the majority of your payments will go toward interest. This means the principal is reduced in very small increments. If you make a lump sum payment toward the principal at the end of the year, this can lower your monthly payments with a mortgage recast. It also reduces the total amount of money that will be spent over the life of the loan.
Wise Money Decisions Can Secure Your Future
Becoming a homeowner opens up many opportunities for saving money. Rather than throwing money away on rent, your monthly payments now build equity in the home. How you finance the house and the changes you make will affect how much you can save both now and in the future. Consider investing in alternative energy or value-boosting projects. Maintain the home’s insulation and make lump sum payments toward the principal so a loan recast can lower payments. These decisions will ensure you make the most of your home purchase.
Meg is an author at Cinnamon Hollow. She writes on a variety of topics sharing tips and ideas for daily life.
