Owning a home is a goal for many who reside in the great state of Texas, but it’s important to understand that housing expenses go far beyond the amount you’ll pay for your home.
The true cost of ownership involves many additional considerations including taxes, homeowners insurance, maintenance, utilities, and more.
Even without rising housing costs, homeownership has plenty of costs to consider, but there are many ways for homeowners to keep them in check.
Learn more about not only the general housing expenses you can expect to pay but also how to avoid overspending on your place of refuge.
Housing Expenses and the True Cost of Home Ownership
How much does a house cost? The true cost of home ownership goes far beyond the price you pay for purchasing your home. This sentiment becomes ever apparent from the very beginning as closing costs alone can cost thousands of dollars more by the time your home purchase is complete.
The average cost of owning a home continues to rise and there are important considerations homeowners and prospective homeowners should be aware of, including:
- Closing costs (loan application fees, title fees, etc.)
- The cost of an appraisal.
- Inspection fees.
- HOA fees.
- Property taxes.
- Private mortgage insurance (PMI).
- Home insurance premiums.
- General maintenance and the cost of repairs.
These costs can really add up and homeowners are wise to reduce their housing expenses wherever they can.
Using a true cost of owning a home calculator can help you estimate home much you’ll need to spend to maintain your household.
11 Ways To Save On Housing Expenses in Texas
Now that we’ve covered some of the main housing expenses homeowners will face, let’s explore your options. Here are 11 great ways to cut costs for homeowners and renters alike:
1. Repair Smaller Problems Before They Become Bigger
An easy way for keeping your housing expenses in check is to not let the small stuff become bigger problems. Putting things off only makes things worse.
For example, a small roof leak might just mean a quick patch. You’ll be able to fix it for a minimal cost and stop the problem at the source.
Alternatively, failing to fix the leak can lead to much more serious problems including damage to your walls, mold, damage that spread throughout your roof, and so on.
It’s also worth noting that general wear and tear isn’t included in your homeowners insurance. By failing to keep up your home, you’ll have to pay for these incidents on your own.
Beyond having your claim denied, you’ll also risk losing your coverage on your home altogether in some cases.
Whether it’s a minor repair in your HVAC unit or just a small fix that seems to always get put on the back burner, handling it ASAP is a much better way to cut costs.
2. Manage Your Taxes
The Lone Star State is a great place to live, but property taxes continue to be a factor. Texas property taxes rank as the seventh-highest in the nation averaging $3,390 per homeowner.
Technically, there is no “state property tax” in Texas, but local authorities will still administer property taxes which will vary depending on the assessment of your home and where it’s located.
But luckily, there are options for homeowners looking to pay less in taxes to keep more of their hard-earned money:
- A variety of property tax exemptions are laid out by the Texas Comptroller. The most famous example would be the Residence Homestead exemption.
- Homeowners can also contest the appraisal value of their homes.
Additional tax breaks can apply to both homeowners and renters depending on your situation such as tax deductions that come from working from home.
We’re experts at saving you money from insurance, but we’re no accountants. For the best results, contact your CPA and discover the best course of action to pay less in taxes.
3. Stop Paying PMI
Mortgage insurance data at a glance from the Urban Institute shows that just about 49% of mortgages have some sort of mortgage insurance (PMI, FHA, or VA). Of these, 33.4% are mortgages with PMI.
PMI or private mortgage insurance is protection for your lender in the event you are unable to pay back your loan. It’s a standard additional cost that homeowners paying mortgages without at least 20% of the loan paid off will have to contend with.
This can mean thousands of dollars in extra costs each year for Texans. Though it may vary, you can expect to pay as much as 1% of the total loan for your home per year until you reach the 20% threshold.
$257,628 is the average cost of a home in Texas, according to Zillow. This means that PMI can cost the average Texan homeowner around $2,576.28 per year.
Everyone’s financial situation is different but if you can afford to put down 20% for your home, you can avoid paying this extra expense. In the same sense, you can use your money to reach this mark after purchasing your home with a mortgage to also drop the expense.
4. Be Mindful of Your Utilities
Paying for utilities is unfortunate yet necessary thing renters and homeowners all have in common. Housing expenses include various utility bills such as electricity, gas, and water.
While these fees may vary depending on where you live, there are still common techniques that can be applied to save. Here are some great examples:
- Do the little things such as taking shorter showers and turning off lights when not in use to save money.
- Texans have options. At Power To Choose, you can shop from various electrical companies to find the best rate for your home.
- If you are looking to stay in your home for a substantial amount of time, home improvements can save you money over time. Solar panels, energy-efficient windows, etc. can all help you save.
- Smaller things such as energy-efficient lightbulbs are also great options for saving money.
- Be sure to have your HVAC system periodically assessed semi-annually or annually.
- You can also control your HVAC settings better with digital thermometers that can connect to your phone. Some systems can even allow you to control room by room for better savings.
Texas may rank as one of the top 5 states when it comes to energy costs, but this is heavily offset as the Lone Star State is also a top five state when it comes to energy consumption. Saving on utilities is a must for anyone looking to cut housing expenses.
5. Refinance Your Mortgage
While your mortgage isn’t the only housing expense you’ll incur as a homeowner, it’s still a notable cost. Refinancing your mortgage can help you save serious cash over the life of your loan.
After making six payments in a row, you can refinance your mortgage, so, this is possible for anyone who has made their payments on time and has owned their home for at least seven months.
When you refinance, you’re replacing your original mortgage with a new loan. This can be advantageous at times, particularly when interest rates are lower than what your current loan is.
Many personal factors can go into this decision as lenders can deny your attempt to refinance if you have too much debt, have missed payments in the past, have a weak credit score, etc.
But the option remains for many Texans and the monthly and lifetime savings you’ll experience make this a tremendous option for lowering your costs.
Looking to see how much your mortgage could be? Using the Texas Mortgage Calculator from SmartAsset is a great place to get started.
6. Don’t Become ”House Poor”
A great way to reduce many expenses at once is to avoid being “house poor”. This means you don’t live beyond your means by purchasing or renting a home that drains your finances.
Just because you can afford something, doesn’t mean there aren’t viable options for less available, which will help you spend less in more ways than you think.
Less expensive housing can lead to a domino effect. A cheaper home usually means repairs cost less. Your taxes are lower. Home insurance policies are typically cheaper as well.
Don’t add to your housing expenses with an unnecessary residence. Keep your costs down by living in a quality home without going beyond a comfortable point in your budget.
7. Bundle Your Home Insurance
Home insurance is a must-have for any homeowner. The protections you receive through your homeowners insurance policy is a critical step toward safeguarding your home, finances, and property.
Many homeowners will also own vehicles and if you aren’t bundling your coverage, you’re missing out on one of the most powerful ways to save money on coverage.
Home insurance providers reward clients for their loyalty and can offer steep discounts when you bundle your coverages.
8. Sublet a Room
If you’re renting, you’ll need to check with your rental agreement to see if subletting is allowed, but homeowners looking to save on their mortgage can use this technique to lessen their load.
You have many options available depending on your property. If you have a detached garage or guest home, this can provide everyone with ample privacy and even boost the amount you can charge for rent.
Renting a room within your home is another great option to help with the cost of housing. But be sure that you do your due diligence before renting your home to someone.
Homeowners using this technique will also need to familiarize themselves with the legal side of being a landlord. What you need to know about tenant/landlord law includes the rights of both parties, reporting taxes, and the responsibilities you’ll have to your tenant.
9. Get Your Hands Dirty
There are many instances in which home repairs should be left to professionals. If you don’t know what you’re doing, a job that is simple to a pro can turn into a nightmare leaving you frustrated and spending more than if you had hired them in the first place.
However, smaller jobs around the house can be completed by homeowners and save a ton in the process. Painting your walls, doing the yard work/landscaping, sealing drafty windows, etc. are all great opportunities to save some cash.
10. Sign a Longer Lease
Longer leases for renters can help with housing expenses by locking in a lower rate. You’ll be able to better plan and can even negotiate a lower monthly rate in some cases. Both are great benefits for those looking to spend less on housing.
11. Review Your Homeowners Insurance Policy
Having homeowners insurance go up yearly is a rising housing expense that must be dealt with. Luckily, homeowners have options.
There are many reasons to review your home insurance coverage. Things change, needs change, and so do outside factors that aren’t directly tied to you as a homeowner.
All of these factors and more can not only help you determine the right coverage for your needs but also affect how home insurance companies create your premium.
You can choose the same coverage among multiple providers and be given different rates for your policy. This is due to many factors but it all comes down to how home insurance companies calculate risk.
If you have more risk you can expect higher rates and vice versa. But because each company assesses coverage differently, you get different prices from different brands.
This is why it’s a great idea to shop around through many different homeowners insurance companies. You can avoid overpaying by comparing your coverage and the rates available to find the best price for your protection.
How Expensive of a House Can I Afford in Texas?
When determining your max budget for a home in Texas, homeowners need to remember the 28/36 rule when it comes to real estate:
- Your mortgage payments shouldn’t be higher than 28% of your monthly income before taxes.
- Your mortgage payments should never be higher than 36% of the total debt you possess. This is your debt-to-income (DTI) ratio.
This goes back to the idea of being “house poor”. When you have too much debt in your home, it hinders your purchasing power in other aspects of your life while also increasing the cost of homeownership.
Texas Housing Prices Soar With Rising Inflation
Housing market prices continue to be a tricky place to navigate for those looking to purchase homes in Texas. Making things worse is persistent inflation that only adds to housing expenses.
Particularly, inflation is causing the cost of new construction to rise. Builders have charged higher prices for housing due to the increase in costs surrounding both the price of supplies as well as elevated labor costs.
Inflation has also affected the cost of home insurance. The trend of homeowners insurance is to rise each year. Often, this can be tied to inflation and the rising costs after major weather events resulting in claims.
As we’ve seen, Texas, already home to more weather events than any other state, has had a rough go of it lately. There have been wildfires, flooding throughout various cities, hail damage, windstorms, and much more that have affected many regions in recent years.
Of course, inflation is also affecting any other aspect of homeownership, including repairs, paying for utilities, etc. Renters are also feeling the pressure as inflation and competitive housing markets also raise rent across Texas and the country.
Helping Homeowners in Texas Save On Housing Expenses
The true cost of home ownership may encompass more than we specialize in, but Freedom Insurance Group is here to help Texans find lower rates for their home insurance.
Our agents have helped homeowners throughout the Lone Star State save an average of 40% on their premiums since 2005.
Because each insurance brand assesses risk factors differently, it’s best to shop around. That’s why we’ve partnered with more than 25 of the top-rated insurance providers throughout the state.
Our insurance center allows agents to find you the best price on the market without compromising coverage. We’ll also help you gain access to more discounts and bundling opportunities for maximum savings.
Home insurance and renters insurance are among the housing expenses you have a say in controlling and we’re here to help you save the most. Get a free homeowners insurance quote or ask an agent today to learn more about saving money on your coverage.