How to Make Homeownership Affordable
When job loss, health problems or other life changes take a toll on your finances, your home expenses can suddenly seem like a huge burden. If the costs of homeownership become unaffordable, try these tips to make them more manageable:
Cut unnecessary expenses. Keep a detailed list of your expenses for a typical week or month and really look at where your money is going. Do you buy a cup of coffee every morning? Do you pick up fast food several times a week? When you scrutinize your expenses line by line, you’ll likely find many items you can cut back on or even eliminate altogether. Preparing meals at home rather than getting take-out can save you hundreds of dollars over the course of a month, leaving you more money for your mortgage and bills. Some expenses, such as gym memberships or salon appointments, can be cut out entirely for even more savings. You may not enjoy sacrificing these luxuries, but it could make the difference between losing your home and being able to stay.
Reduce home-related expenses. Your home may also be costing you more than it has to. If you’re paying for cable, Internet and a landline phone in addition to a cell phone, canceling some of these services is a great way to save money.
You can also take steps to make your home more energy efficient. Find out if your utility company offers free energy audits. They may be able to offer you simple tips on how you can save money on energy, such as weather-stripping your windows and doors and insulating your water heater. You can also replace your incandescent light bulbs with energy-efficient light bulbs or turn up your thermostat a few degrees to save money on air conditioning in the summer (and vice versa in the winter). Small changes like this can add up to big savings over the course of a year.
Get a second job. If you’ve cut your expenses down to the bare minimum and you’re still having trouble affording your homeownership expenses, it might be time to find another source of income. Consider getting a part-time job. This will give you extra cash, plus it will keep you busy so you have less time to spend money.
Get a roommate. If you have an extra room in your home, rent it out. Having someone to chip in for the mortgage and utilities can take a huge financial burden off of you.
Consider refinancing. If you’re struggling because of a high interest rate on your mortgage, refinancing can help you lock in a better rate, resulting in a lower monthly payment.
Look into a loan modification. A loan modification can help you change one or more of the terms of your mortgage. You may be able to extend a 30-year mortgage to a 40-year mortgage, lower your interest rate or convert an adjustable rate mortgage to a fixed-rate mortgage. Contact your lender’s loan mitigation department to get the process started.
If you still can’t quite afford your home, it might be time to sell and downsize to a more manageable space.