Home Owners’ New Year Resolutions

Posted on January 11, 2008
Filed Under Real Estate

Made any New Year resolutions? How about making some for your home? What of: ‘I will boost my savings’? How about: ‘I will look for economical ways to increase the value and livability of my home?’ and the big one: ‘I will get my home finances in order’?

With regard to getting our home finances in order, many of us have huge mortgages and at the moment the mortgage rate is relatively low. If you have a sub prime and/or an adjustable rate mortgage, you may be able to reduce your financial risk now that there has been some legislative help in this area.

If your mortgage is long standing, go back to your lender and ask if you can trade in on a better rate. If you have been lucky so far, with a variable rate mortgage, consider whether now is the time to switch to a fixed rate. This way you will know for sure how much to budget each month.

Do you have a large amount of equity built up in your home? If you have been paying your loan off for a few years, this fact, coupled with the property market increases now mean that you owe considerably less than when you started out. You can use this money to improve your home.

If you need extra room in your home, rather than risk moving house, you could take this cash equity from the lender and use it to re-model or to make an extra room. Moving home is an expensive business, and you can easily spend 10% of your home’s selling price on real estate commissions and various other settlement costs.

The interest on the cash that you have used for re-modeling is tax deductible. This is better than using your credit card, which is not tax deductible. If you have any money left over from the re-modeling pay off your credit card! Have you ever worked out that interest rate? Scary!

There are ways that you can boost your savings. One of them is to try each year and make the full tax deductible contribution to the tax-deferred retirement fund of your choice.

Depending on your salary and tax breaks, nearly 40% of all homes would have saved on average fourteen cents in the dollar, if they had invested in tax-deferred retirement accounts rather than pay down their mortgages.

Another way we waste money is to overpay our income tax. The IRS keeps our extra money all year and then gives it back to us with no interest.

If you have a long list of things that need repairing in your home, then prioritize them in order of economics. For instance if you can’t turn your hot tap right off, and it is always dripping slightly, you need to do it first. The cost of paying higher charges for hot water that you are not using is a complete waste of money.

Another way to prioritize is to write down the jobs that need to be done early on so that they do not gradually get worse. For instance a leaking roof that is not attended to may develop into a collapsed ceiling as well. A broken refrigerator seal will increase your electricity bill.

Now check the vacation brochures for ways to spend those savings.

This article was written on behalf of Maryland’s first "EcoBroker" designated REALTOR®, Branden Schroeder. For more information on Maryland real estate, or to search for homes in the Maryland MLS, visit Branden online at www.MarylandHomesAndProperty.com.