5 Easy Ways to Make Housing More Affordable

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The following savings strategies provide welcomed relief, leading to lower housing costs and will allow your family to live affordably.

Widespread spending commitments such as groceries, credit card payments, and other bills define most families’ budgets, but some obligations stand out more than others.  

In particular, housing costs are among the most substantial monthly expenses faced by millennial homeowners and renters alike.  

For homeowners, the cost of a home is only the beginning, setting the stage for further spending on homeowner expenses such as updates such as bathroom remodels, repairs, taxes, and other residential expenses.

And renting a home also carries costs beyond monthly rent charges, including money spent on homeowners insurance and utilities.  

With so many individual expenses pulling at your monthly budget, the following savings strategies provide welcomed relief, leading to lower overall housing costs.

Reducing Your Major Housing Costs

Here is a list of ways to trim spending with lower housing costs.

1. Buy Right

lower housing costs

There are many costs associated with homeownership, but your first major concern as a would-be buyer relates to the asking price.  

Paying a fair price for property establishes an affordable cost foundation, on which to build equity in your home.

For the best results in potentially volatile housing markets, study trends in desirable neighborhoods.

Ask yourself the following questions:

  • How long do homes stay on the market before selling?  
  • What is the average sale price for the style of home you’re looking for?  
  • Are prices moving up or down?

Answering these and other questions about prospective purchases gives you the tools needed to make informed buying decisions.

Related: 14 Things to Consider When Buying a House

2. Create Affordable Conditions

lower housing costs

Sometimes creative solutions are required, in order to make your financial dreams come true.

If you are committed to homeownership, but can’t afford a conventional arrangement, there are several cost-saving measures to consider, for example:

  • Multi-unit property – In some cases, becoming a landlord leads to lower housing costs. Owning a duplex, triplex or another type of multi-unit residential rental property enables you to lease part of the building to offset your own expenses. Although it can save you money, serving as a landlord and caretaker are not passive roles. On the contrary, be prepared to earn the money you save on house payments, administering to the needs of the property.
  • House hacking – Renting out portions or your primary residence with a roommate(s) can dramatically reduce living expenses when compared to living alone. Not only is it possible to share the cost of rent or mortgage payments, but utilities, insurance, and even food costs can be equitably divided among residents, reducing everyone’s financial burden. If you don’t have a particular individual in mind, turn to online resources that match roommates with affordable spaces.

Related: How Millennials Can Affordably Build Their First Home In 2021

3. Watch Out for Vampire Energy

There are monsters lurking within our homes. They are not under our beds or in our closets, but rather sitting in plain view within many of our rooms. They come in all shapes and sizes but are most commonly known by another name. Electronic devices.

While they may seem harmless enough, there is something going on every time we power them down but fail to unplug them. During this time, devices will actually use energy and run up our bill, even though we believe they are no longer able to use electricity.

This occurrence is known by many names including standby power and the phantom load, but most commonly it is called vampire energy. Vampires take many forms like televisions, microwaves, and desktop computers. They come in less obvious forms too, including electric toothbrushes, coffeemakers, gas ranges, and even the household furnace.

With all of these devices using energy without our knowledge, it is no surprise that the phantom load totals to over $19 billion in energy costs. In terms of overall household energy usage, vampire energy is believed to account for over twenty percent of the electricity consumed in the home. This number is only expected to increase, as more and more smart appliances are being used within homes now.

But as is the case with all monsters, there are ways to get rid of vampire energy to lower your housing costs and save $200 to $400 per household every year. One method that requires a little upfront investment in energy-saving appliances. There are many of these out on the market and some of the best will have an Energy Star label.

These will use less energy than non-efficient devices and will reduce the total amount of electricity sucked. An even simpler method to stopping vampire energy is unplugging electronic devices when they are not in use. This will completely cut them off from draining energy. By thwarting vampire energy, you’ll ensure yourself greater monthly savings and a monster-free home.

4. Find Favorable Financing

There are many ways to get money for a down payment on a house.

And since market conditions continually evolve, you may be able to secure better terms today, than you did when you bought your home by refinancing.

Online resources such as LoanDepot highlight various funding options, including rates for new home loans and mortgage refinance options.

To land the best terms, use LoanDepot to compare your financing options.

By the time you apply for a loan, your credit history is already established, providing references lenders use to evaluate creditworthiness.  

More than any other financial commitment, building and protecting your credit rating will keep you eligible for the best mortgage rates.

LoanDepot

LoanDepot offers new home loans and mortgage refinance options. Along with their easy-to-use platform, applying for a home loan has never been easier. Compare rates with LoanDepot today.

Compare Rates →

5. Downsize for Savings

There comes a point in one’s family life when the nest empties and residential needs change. If you find yourself living in more home than you need, there is no sense in continuing to pay the cost of occupying and maintaining it.  

Downsizing may have other financial benefits, such as tax breaks, but you can definitely lower housing costs immediately by reducing your payment and associated residential expenses.

Depending on your home’s size and layout, renting a room may present a viable alternative to selling; enabling you to generate the supplemental income you can use to pay housing costs.  

And in some cases, turning your home into a rental property and hiring a property management company may also be feasible, allowing you to downsize to a smaller home while building rental income from your original residence.

Affordable housing is central to effective personal financial management. As you establish residence or make changes to your living conditions, use these moves to increase your chance of success.

About the author

Brian Meiggs
Brian Meiggs is a personal finance expert, and the founder of My Millennial Guide, a personal finance site helping you put more money in your pocket. He helps millennials follow the smart money in order to increase their earning potential and start building wealth for the future. He regularly writes about side hustles, investing, and general personal finance topics aimed to help anyone earn more, pay off debt, and reach financial freedom. He has been quoted as a top personal finance blogger in major publications including Yahoo! Finance, NASDAQ, Discover, MSN Money and more.
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2 COMMENTS

  1. My first property was a 4-unit using FHA 3.5%-down financing in a suburb of Los Angeles. I lived in one unit and rented out the other three. Single at the time, I also rented out the bedroom in my unit and slept on a mattress in the living room.

    This was an incredible deal and has proved to be a major boost to my net worth. I’ll give you 4 reasons: 1) I was living for free while my friends were paying through the nose for L.A. rent, 2) I was building equity as my tenants paid down my mortgage, 3) I was cash flowing hundreds of dollars a month, and 4) I got 4 units an hour from Downtown L.A. for a mere $15,000 out of pocket, and the property has already substantially appreciated.

    And because I only put 3.5% down, I still had a lot of money saved up (+ cash flow from the tenants) to put into “real” real estate in the form of two private placements — a beachside luxury spec home development deal along the coast + a buy, rehab, retenant, refi apartment syndication in Arizona — the returns on which have blown the stock market out of the water.

    The FHA fourplex strategy really is a no-brainer for single Millennials. If one does nothing else in real estate, they will have succeeded by getting into a fourplex as a young man or woman with only 3.5% down.

    Assuming the rents cover their expenses, in 30 years when they’re in their 50s and the mortgage is paid off, and they’ve done the smart thing by raising the rents over the years, they will be sitting on a million-dollar asset that cash flows thousands of dollars per month at the cost of a measly $15k or so out-of-pocket when they were 20-something.

    I can’t think of any better way for young people with limited resources to prepare for their future so early on in life with so little cash out-of-pocket.

    • Owning property is generally always a great investment. Especially a duplex or a fourplex in your case. I can’t deny that getting a FHA or even conventional loan on a duplex and renting out the other unit is a personal pursuit of mine. I have years of experience in the mortgage industry at SunTrust Mortgage HQ and the largest credit union in the US in the mortgage department so I know the benefits and ins and out of all mortgage products.

      I just haven’t gone that route because the area that I live (Washington, D.C.) in is so expensive. I might not be living here in the next 1-2 years as I have a travel bug that I haven’t satisfied yet. I see that as “settling down” and I want the freedom to get up and move at the drop of the hat. For now, I’m enjoying my freedom but I may go down that route in the next decade! Thanks for the comment.

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