In the last decade, there has been a profound shift in the way we see our homes.
Sure, it’s the place we’re tied to emotionally. We raise our families there, and create lives for ourselves. We get involved with the community, and help make it a better place to live.
But many homeowners also see their home as a checkbook of sorts. As home values soared in the past eight to ten years (depending on where you live), many Americans refinanced their mortgages, pulling out as much as $80 billion in equity. Some $50 billion of that equity went to buy new stuff, pumping up the economy. Thirty billion went to pay off other debt.
As with the stock market, when home values rise, Americans feel richer. With home prices rising at double-digit speeds (as opposed to the more "normal" 3 to 5 percent average annual appreciation), homeowners see their net worth increasing – in other words, they are worth more. In some cases, it’s enough to make up for the dismal performance of the stock market over the past three years.
Unless you’re paying private school or college tuition, your home is the place where you’ll spend the most money in your life. You’ll make regular mortgage payments for thirty years, pay property taxes, and spend thousands of dollars every year maintaining, renovating and updating your property.
Being a homeowner can have a fairly significant time cost as well, depending on the type of property you buy. Your involvement in the maintenance of common property areas will be less if you live in a condo, co-op, or townhouse. On the other hand, you may want to sit on the board of directors of your homeownership association – just to make sure that the jobs that need to get done are done right the first time.
Still, there’s work to be done – changing lightbulbs, fixing leaky faucets, oiling hinges, repainting, replacing broken or damaged appliances, and keeping everything reasonably clean.
Single family homes, even those that are brand-new, require a significant amount of maintenance and upkeep of the property’s interior and exterior. If you don’t immediately fix a small leak in your roof, you could end up replacing an entire wall of your home, as one New York homeowner discovered.
The regular maintenance and irregular bouts of renovation and upgrading are expensive. Add that into the mortgage, taxes and insurance you’ll regularly pay and it quickly becomes clear that your home is not only your single largest investment, but is also where you’ll spend the largest portion of your take home pay.
Since that’s the case for most homeowners, it’s important to find as many ways to save as possible:
Â· Refinancing your mortgage can help lower your monthly payments and save you thousands of dollars over the life of your loan. Don’t be afraid to try a different type of loan, like a 5-year adjustable rate mortgage, if you can save even more money.
Â· Fighting your property tax increases can help save you hundreds of dollars per year, and thousands of dollars in the future, since future increases will be based on a lower assessed value.
Â· Stick to your budget for each renovation or upgrading project you tackle. It’s too easy to get sucked into spending a little more here and there, but it all quickly adds up.
Â· Find ways to spend less and save more on the every day expenses, including light bulbs, filters, and cleaning supplies.
Â· Do minor maintenance jobs, like regrouting your bathtub, to prevent a major problem down the road.