Cutting costs of housing

When faced with the need to save many people assume that housing is not a variable expense. Homeowners feel that they are trapped in their homes while renters are often unsure as to how they can save money. But the reality is that with a little research and creativity you can save substantially on your housing freeing up money that you can use to create a cash reserve. Here is how you can go about cutting costs of housing-

• Consider taking in a boarder or a roommate. You can save a considerable amount of money if you are willing to share your space. If you are renting and have extra bedrooms renting that extra space can cut your rent by 50%. For homeowners who have enough space finishing a basement apartment and renting it out can cut your mortgage in urban areas up to 50% with less being made in suburban or rural areas due to lower rent. If a separate apartment is not an option than renting a room may be. Check in your area to see what comparable rents are so you know what to charge.

• If you are buying a home make sure that your housing costs do not exceed 30%. Financial experts caution that if your total housing costs (think mortgage payment, taxes and insurance) exceed 30% of your income than you are considering buying to much house or renting to much apartment. Having your housing costs at 30% or below frees up extra cash that you can then use to create a cash reserve.
• Downsizing can be done. Too many people are convinced that despite having housing costs that are too high that they are unable to downsize. You must ask yourself if the housing costs that are using up all of your extra cash and putting your entire financial picture at risk are really worth it. Many people are finding that they can downsize even in a slow economy and find housing that falls within the 30% rule. They then can use the freed up cash to create a savings. Remember that downsizing means not only saving money on rent or mortgage but taxes, insurance, maintenance, yard and home care as well. Those who have chosen to downsize often report that they have the added bonus of more free time as well.
• Renegotiate your mortgage or refinance. Lenders are much more willing to work with borrowers in an unstable economy. If your housing costs are becoming a burden check with your lender to see if they have payment protection programs or can renegotiate loan terms with you. Banks do not make money when homeowners foreclose so they are much more willing to work with lenders who contact them before serious trouble starts. In addition you can also refinance your loan to a lower interest rate if your loan fits certain criteria. Contact lenders in your area to see if you fit their guidelines for a refinance.
• Focus on all of the extra costs that contribute to your housing costs. While you may have a low interest rate, be unwilling or unable to downsize and not be able to take in a renter there are still things you can do to lower your housing costs and free up cash for a reserve fund. Start by having your homeowners insurance reviewed. Do you have the right coverage? Can you raise the deductible and free up some cash? When your next tax bill comes check to see the valuation of your property. If you feel the valuation is to high you can appeal (many taxpayers win their appeal) and have your property taxes lowered. While all of the options may not generate a huge amount of money in and of themselves all together they can give you a substantial amount to add to your emergency fund.