Money – Homeowner Savings

Being a Homeowner: Big Financial Benefits

Home is where the heart is. It’s also where a big chunk of your financial responsibility lies. Home ownership is a pillar of the American dream, and while many of those in younger generations either can’t afford to or actively choose not to pursue it, those who buy in to the housing market often see major financial benefits.

There is no doubt that becoming a homeowner is one of the biggest financial decisions you will make in your entire life. It’s also undeniable that simply getting to that point requires a certain degree of financial success. You need to come up with a down payment and closing costs (generally about 3 percent to 4 percent of the total home purchase price for buyers) before you can even turn the key in the door. But among those who take on the big task of home ownership, many see financial benefits that far outweigh their initial investment, especially during tax season. Here are 5 of them.

Amass equity

Every single month that you pay your mortgage you own just a bit more of your home. This is a big benefit over renting, where you’re paying comparable monthly fees without any comparable stakes. The equity in your home builds in two ways and often concurrently: (1) equity builds as the value of your home increases, and (2) equity builds as you pay off more of your loan. These two factors mean that after the first couple of years (when, again, you’re mostly just paying mortgage interest), every month you pay money toward your loan you are building up your financial resources for the future. It’s why some people refer to mortgage payments as “forced savings.”

Want to build equity even faster? Take steps to pay off your debt quicker (like financing with a shorter term loan or paying more than you owe every month) or increase your property value (think home improvements and a focus on routine maintenance).

Build up a stronger financial future

The recent recession threw a wrench into the idea that home ownership always builds wealth over time. But the fact remains that owning a home is one of the fundamental means of accumulating wealth as we age. The caveat: you have to buy a house that you can actually afford.
Asset-wealth is a much more secure predictor of future financial stability than income, which can—and often does, in today’s evolving economy—change from year to year. In a strong economy, home values generally increase by 3 percent to 4 percent every year, thanks to inflation and natural population growth. From 2011 to 2016, as the housing market has recovered from the bubble that contributed to the recession, home values have been increasing even higher at an average rate of 6.3 percent a year. Putting money into home ownership versus a rental is akin to the difference between putting money into an investment account versus a no-interest checking account, with the latter being only as valuable as it is in the moment while the former increases over time.

More control over day-to-day housing-related costs

Unless you change the terms of your mortgage, you know the base cost that you’re going to be spending to live in your home every month, both now and in the future. This affords more stability than rent, which is variable and can (and often does) change over time. And control over costs goes even further than that. As a renter, you don’t have a say over whether your landlord supplies you with energy-efficient appliances that can save you hundreds of dollars every year, but you do have to pay the utility bill either way. As a homeowner, you can make better short and long-term financial decisions that are geared specifically toward your own financial goals and abilities. While this isn’t likely going to help you save for your future in the same way building equity does, it should bring you peace of mind to know that you’re saving money everywhere that you can.

Home ownership tax deductions

You get a number of tax breaks for owning a home, most notably a deduction for the interest and property tax portion of your mortgage. This deduction is particularly useful for off-setting the initial financial blow that comes with purchasing your property, since in the first years of owning your home you’re mostly just paying off the interest on your mortgage, as opposed to the principal. The first year you buy your home you are also able to write off any mortgage points on your loan, which can lead to pretty considerable savings depending on how many points you claimed. And if you ever decide to refinance your home after building sufficient equity in it, you also have the option of taking out a home equity line of credit, which is itself tax deductible.

Do keep in mind: the Tax Cuts and Jobs Act, passed in 2017, limits mortgage interest deductions to $750,000 of your total mortgage debt, including any home equity credit you take out. Previously, the limit was $1,000,000 in mortgage interest deductions plus a $100,000 for home equity credit.

Positive perks

Home ownership has other financial benefits that may come in handy for you someday. For example, a mortgage is considered “good debt,” and as such, it is likely to increase your credit score, provided you always make your payments on time. It also proves your credit-worthiness for other things you may want to consider, like a business loan or a new line of credit. It can even lower your monthly car insurance payments. While perks like these should certainly not be deciding factors when determining whether or not you should purchase a home, they do add up as additional benefits if you choose to opt in to the housing market.

But what about the financial risks?…

Owning a home isn’t all equity building and cost cutting. Aside from the significant payments that have to be made in order to own a home in the first place, there are also some financial risks that all potential and current homeowners need to keep in mind when trying to balance their budgets.

The biggest financial risks for homeowners are in terms of maintenance costs. There’s no landlord to put the responsibility on if the roof starts leaking or the heating system goes out in the middle of winter. While you’re unlikely to face major repairs like this all of the time, they do occasionally come up and it’s important for all homeowners to have savings set aside to deal with them when they happen.

Then there’s the risk of home depreciation. Ultimately, it’s your home’s land that appreciates in value over time, barring any major negative changes in your area like a natural disaster or a school or major business closing. The structure of your home, however, tends to depreciate in value as things get worn out and lived in. While you don’t have a lot of control over what goes on in your neighborhood that may negatively impact the price of your land, you do, fortunately, have some control over maintaining and increasing value on your home’s structure by keeping up with maintenance and putting in certain home improvements. Don’t let your home’s value be something that you just tacitly accept—work toward making sure your home, and not just the land it sits on, is appreciating as the years go on.

Remodelling Your Home: Government Programs That Help

Federal, state, and local government incentive programs for home remodeling are aimed at helping homeowners improve the value of their homes, which in turn supports the economy and helps strengthen communities. These are official programs that provide tax relief, low-interest loans, and other incentives, but they can be hard to find. For example, you may find a notice of a program on a postcard for a property tax increase. Currently, three major programs may be available in your area.

What They Are: Home improvement property tax exemptions.

What They Do: These programs allow for total or partial exemptions from your local property taxes when remodeling your home.

Eligibility Requirements: Eligibility varies by county or town, but typically any owner of one property can qualify. The property usually must be owner-occupied but not always.

Counties rarely itemize which remodels are allowed; instead, they define them in broad terms, such as “material, actual, and permanent property improvements that increase value.”

Downside: Relief from property tax is only temporary.

Who Offers Them: Written into state law, these programs are administered by tax assessors and counties or towns.

What They Are: FHA 203(k) Rehab Loan programs.

What They Do: Typically, when purchasing a home that needs remodeling, your first mortgage covers only the cost of the purchase, not the subsequent remodeling. Concurrently obtaining a remodeling loan may mean long approval times, high-interest rates, and balloon payments. Also, lenders don’t like to approve remodel loans at this time because your intended house, in its current less-than-perfect state, cannot act as proper collateral. Through FHA rehab loan programs, the U.S. government will insure your loan, wrapping the purchase and remodel amounts into one package and insuring it all for the lender.

Eligibility Requirements: Requirements are broad, ranging from minor (which HUD defines as $5,000 or more) up to a home that will be razed and completely rebuilt.

Downside: Inevitable red tape. However, independent consultants can help streamline the process for you.

Government home programs are limited to upgrades that increase a home’s value. Incentives do not apply to luxuries or amenities such as spas or outdoor kitchens. They also come with a few common rules for eligibility:

You must apply before doing the work. Incentives are not available for past renovations.
Types of remodels are limited. Programs primarily support basic rehabs that increase property value. For example, some property tax exemption programs will not cover replacing a composite roof with another composite roof but will cover an upgrade from composite to a higher-value material because this represents a property value upgrade. Some incentives even apply to tearing down a house and building a completely new one.
Oversight is required. At least one inspection is required to make sure that the project exists and that it is proceeding according to plans.
Home Improvement Programs

What They Are: Home improvement programs (HIPs); typically low-interest or no-interest loans.

What They Do: Help you save thousands when counties or other local governments subsidize the interest on home remodeling loans. Interest may be completely or partially subsidized.

Eligibility Requirements: Various eligibility rules may apply, but generally:
- You must be rehabilitating an existing structure; it’s not for buying a new home and not for building another structure on your property.
- Your gross income may not exceed a certain limit.
- The loan is not used for luxury items, such as pools or decks.
Downside: Not all areas offer HIPs.

Who Offers Them: Learn about loans offered in your area by contacting the local county tax assessor. You may be directed to a private lender to obtain a home equity loan, or HELOC, subsidized by the county.

How to Save Energy in the Summer

Most people expect higher energy costs in the summer. We crank up the air conditioning to get out of the sun; the kids are home from school and spend all day on their electronics; and, when you finally convince them to play outside, you find yourself washing extra loads of bathing suits, beach towels, and muddy clothes. The warm weather comes with a price. But, with a little preparation, you can manage your energy use wisely and cut down on your bill. We’ve shared 7 tips below that will help you use less energy in the summer and save you valuable money on your utilities.

1. Wash with Cold or Warm Water

Avoid using hot water whenever possible. Because 90% of the energy used by your washing machine goes toward heating the water, doing your laundry on either the cold or the warm cycle will save you a tremendous amount of electricity. When you’re done, take advantage of the warm weather and dry your clothes outside instead of putting them through the dryer. You’ll both save energy and avoid raising the temperature of your home with heat-generating appliances.

(Hint: the same logic applies to dishes as well. Use cold water and let them air dry instead of running them through the drying cycle.)

2. Be Smart with Your Thermostat

It feels good to blast the AC after getting home from a workout, time spent outside, or just a generally sweltering summer day. But it probably won’t feel so good later when you see that your utility bills have skyrocketed. Keep in mind that for every degree you raise your thermostat above 72º, you save up to 3% of your cooling expenses. Try setting your thermostat to 78º, or as high as your comfort allows.

When you’re away from home, set the temperature even higher or, if it’s not too hot, turn it off altogether so you don’t waste air conditioning on an empty house. If you install a smart or programmable thermostat, you won’t have to go through the trouble of manually changing the temperature each time you leave. These thermostats will automatically adjust your home’s climate control while you’re away.

3. Keep Your Home Easy & Breezy

Another easy way to cut down on cooling costs is by using fans. Ceiling fans are great for cooling an entire room, and many homes already come equipped so there’s no purchase necessary. Even if you don’t have one, portable fans are inexpensive and readily available at any home goods or big-box store. A good fan will allow you to raise your thermostat 4º while maintaining the same level of comfort. If you don’t mind the light breeze, go ahead and lower the temperature on your AC because fans can be very effective.

4. Consider LED Lighting

After you’ve blocked out the sun, you might find yourself turning on more lights than you normally do. Be careful which lights you choose, though, because incandescent bulbs actually turn 90% of the energy they use into heat. Consider replacing your incandescent bulbs with LED bulbs, which operate at a lower wattage and produce only half as much heat. LED bulbs also use 75% less energy and last 50 times longer than traditional bulbs, saving you money on electricity and replacement costs.

5. Use the Barbeque

Trying to cook in a hot, steamy kitchen can be unbearable, especially when it’s hot and steamy outside as well. Kitchens are full of heat-producing appliances: ovens and stoves can raise your kitchen’s temperature up to 10º. To save yourself the sweat (and the higher utility bills), try using the microwave whenever possible since it uses just one-third the energy that an oven does and produces only a fraction of the heat. Another great way to take the heat out of the kitchen is to cook outdoors. Pop some burgers on the grill or invite some friends over for a barbecue. You can enjoy the great weather while you avoid raising the temperature in your home.

6. Keep Track of Your Electronics

When you place heat-generating devices such as lamps or TVs near air-conditioning thermostats, you can trick them into thinking the room is hotter than it really is. Your thermostat will sense the heat from these devices and spend extra energy trying to cool the house down. Be mindful of where your thermostats are and try to keep electronics away from them. Devices like computers, curling irons, hair dryers, stereos, and televisions heat up your house as well, so make sure they’re turned off when they’re not being used.

7. Keep the Sun Out and the Cool Air In

The summer sun is great for tanning, great for your mood, and great for beaches, picnics, and sunsets. However, it’s not so great if you want to keep your house cool. Sunlight coming through your windows will heat up your home, causing you to spend more on air conditioning. Try drawing the blinds during the hottest parts of the day, especially if your windows are facing south. You can open your windows again at night when it gets cool; this will allow you to turn off your air conditioning. Just don’t forget to close them again in the morning to trap in the cool air.

Also, if you’re planning to invest in landscaping, keep in mind that trees provide great natural shade. Strategically placed shrubs, trees, and vines can block sunlight from your windows, roof, and walls, saving you $100 – $250 per year in cooling costs.

How to Save Money as a Homeowner

Your house gives you so much: security, pride, shelter. With all that on the line, it’s easy to assume the costs of keeping it up just are what they are. But wait. There are plenty of expenses you probably make to keep your home in good order that are simply a waste.

Here’s how to save money each month without putting a dime of home value at risk.

#1 Cut Back on Laundry Detergent

Never mind the barely visible measurement lines in the cap: You typically only need a tablespoon of detergent. And, clothes actually get cleaner when you use less, because there’s no soap residue left behind.

#2 Clean Your Light Bulbs

What? Who does that? Well, smart people. A dirty bulb emits 30% less light than a clean one. Dust off both the bulb and fixture, and you might be able to cut back on the number or brightness of lights in each room without noticing any difference.

#3 Keep Your Fridge Full

Solid items snuggled together retain the cold better than air and help keep each other cold — requiring less energy overall. Leaving town for awhile and fridge is empty? Fill voids in the fridge or freezer with water bottles.

#4 Switch Your Bulbs to LEDs

By replacing just five of your most-used incandescent bulbs with uber-efficient light-emitting diode (LED) bulbs, you could save $75 a year on your energy bill.

And LEDs last 15-20 times longer than incandescents, so you won’t have to replace them nearly as often.

#5 Cut Scouring Pads In Half

Most clean-ups don’t require a full one.

#6 Use Power Strips

Appliances like coffee makers, TVs, and computers continue to suck power even when they’re off — which can cost you $100 a year. And did you know the AC adapter for your laptop keeps drawing power even if the laptop isn’t plugged in? Stop this slow money burn by connecting them to an easy-to-switch-off power strip.

#7 Use a Toaster Oven When Possible

Toaster ovens use 50% to 70% less energy than a full-size oven.

#8 Set Your Water Heater to 120 Degrees

Hot water heaters often come with a factory setting that’s higher than you need. You’ll cool your water heating costs by 3% to 5% every time you lower the temperature setting by 10 degrees.

#9 Insulate Your Water Heater

For $30 or less, an insulating jacket or blanket can shave 7% to 16% off your water heating costs for the year. Just make sure to follow the manufacturer’s directions to avoid creating a fire hazard.

#10 Use the Right Dryer Cycle

If you’re using a high-heat setting for each load, you could be using more energy than you need. Almost all fabrics can be dried with a lower heat setting, such as the permanent press setting. It uses less energy and has the added bonus of extending the life of your fabrics. Save the higher heat for items such as sheets and towels.

#11 Use Homemade Cleaners

Many commercial products rely on baking soda or vinegar for their cleaning power, so why not make your own? Most homemade cleaners cost less than $1.

#12 Ditch Disposable Sweeper and Mop Head

Stop throwing money away every time you clean! Refill your Swiffer Sweeper with microfiber cloths. Just cut to size and use them dry for dusting or with a little water and floor cleaner for mopping. Or switch to a microfiber mop with a washable head.

#13 Stop Buying Dryer Sheets

Another easy swap? Give up your dryer-sheet habit (about $7 for 240 loads) in favor of wool dryer balls (about $10 for six, which last more than 500 loads each). Of course, depending on your laundry preferences, you can always just go without either.

#14 Wash Clothes in Cold Water

Just switching from hot to warm water will cut every load’s energy use in half, and you’ll reap even more savings taking the temp down to cold. And don’t worry: Your clothes will get just as clean from cold water, thanks to the efficiency of today’s detergents (except in the case of sickness; you’ll want hot water and bleach then).

#15 Don’t Rinse Dishes

Two minutes of rinsing with the faucet on full-power will consume 5 gallons of water — the same amount efficient dishwashers use during an entire cycle. Shocking, right? And it’s an unnecessary step, since most newer models are equipped to remove even stubborn food debris. Just be sure to clean the dishwasher trap regularly to keep your dishwasher running efficiently.

#16 Keep a Pitcher of Water in the Fridge

You won’t have to waste time and money running the faucet, waiting for it to get cold enough for a refreshing sip.

#17 Set a Timer for the Shower

The average American takes an eight-minute shower and uses about 17 gallons of water. It’s easy to linger, so set a timer for five minutes. Or try this more entertaining idea: Time your shower to a song or podcast segment.

#18 Install Low-Flow Fixtures

In addition to water-conserving practices, low-flow showerheads, which cost less than $10, and other fixtures can drop your water use in the shower by 43%.

#19 Water Grass in the Morning to Save on Your Water Bill

Turning the sprinkler on midday is kinda like watering the air — especially when the mercury soars. Lose less to evaporation by watering during cooler hours (but avoid overnight watering, when too-slow evaporation can invite fungus growth).

#20 Hack a Water-Hogging Toilet

If you don’t have a water-conserving toilet, there are water-saving retrofitting kits that could yield about $110 in savings every year. Or place a half-gallon milk jug filled with water into the tank — in the corner and away from the flapper and ball-cock assembly. Every time you flush, you’ll save.

#21 Close Closet Doors

Each closet and pantry may hold a paltry amount of square footage, but you’re still heating and cooling it. Add up all the storage space, and you’ve got the equivalent of a small room. Shut the doors to keep the conditioned air out.

#22 Program the Thermostat

Program your thermostat to turn the heat down by 3 to 5 degrees when you’re not home and at night, and set it to bump the temperature up by the same amount when the A/C is cranking. You’ll save $10 to $20 a month and never feel the difference.

#23 Don’t Crank the Thermostat Up or Down Too Far

Varying the setting by 10 or more degrees when you’re gone for work or over the weekend is overkill. Your HVAC system will have to work overtime to get back to the ideal temperature, erasing your savings.

#24 Use Fans Year-Round

Ceiling fans can reduce your summer cooling costs and even reduce winter heating bills — but only if used correctly. Flip the switch on the base to make the blades rotate counterclockwise for a cooling effect or clockwise to help distribute heat in the winter. And in the warmer months, an attic or whole-house fan can suck hot air out and help distribute cooler air so you can give the A/C a little break.

#25 Caulk or Weatherstrip Around Doors and Windows

Caulk may not have the charisma of something like solar panels, but using it to seal air leaks around doors and windows will deliver immediate savings rather than a 14-year payback. You’ll spend $3 to $30 and save 10% to 20% on energy bills.

For gaps between moving parts that can’t be caulked, add weatherstripping.

#26 Add Insulation

This is a bigger weatherizing project than caulking or weatherstripping, but it could yield more than $500 in yearly savings. While your home should be properly insulated from the roof down to the foundation, prioritize the attic, under floors above unheated spaces, around walls in a heated basement and in exterior walls.

#27 Plant Shade Trees

Block the summer sun to lower cooling costs. Planting one shade tree on the west side and one on the east side of your home can shield your home from the sun during the summer months (but avoid south-side trees, which block winter sun). By the time they’re 15 years old, these two trees can reduce your energy bill by 22% , while adding value to your home.

#28 Cool with a Cross Breeze

On a breezy day, open a window on the side of your house that’s receiving the breeze, then open another on the opposite side of the house. Make sure the window on the receiving side is open a little less than the exhaust side to accelerate the breeze. You can also use a fan if there’s no breeze outside.

#29 Check Your Mortgage’s PMI

If your mortgage was for more than 80% of your home’s purchase price, you could be paying more than $50 a month, and as much as $1,000 a year, for private mortgage insurance (PMI). So as soon as you have at least 20% equity in your home, contact your lender to terminate the policy — they aren’t necessarily required to notify you when you reach that threshold.

Another option for ditching PMI? If your credit score or debt load has improved since securing your mortgage, look into refinancing with more favorable terms.

#30 Check Your Home Insurance for Savings

Your homeowners insurance should change as your life changes. Buying an automatic generator or installing security alarms could reduce your premium by 5% or more.

Bundling your home and auto coverage could save even more — up to 20% off both policies. But the point is to compare and do a price check to see if you can save.

Surveys have found you could be paying a lot more than what another insurer would charge for the same coverage. So you could save by going with a new company, or by using their quote to bargain with your current provider.

#31 Borrow Tools Instead of Buying

How often are you going to use that $600 demolition hammer once you remove your bathroom tile? Not so much? Rent it from a home-improvement store for a fraction of the cost. Be sure to do the math for each tool and project though; sometimes the rental price is high enough to justify buying it.

Or join a tool lending library or cooperative to borrow tools for free or much less than retail stores.

#32 Cut Back on Paper Towels

Two rolls of paper towels a week add up to about $182 every year! Instead, try machine-washable cotton shop towels. They clean up messes just as fast and cost less than $2 for five. Save paper towels for messes that need to go straight into the trash, like oil and grease.

#33 Stop Buying Plants for Curb Appeal Every Year

A pop of color in your landscaping perks up your curb appeal. But instead of wasting household funds on short-lived annuals, invest in perennials that will keep giving for years to come.

#34 Make Your Yard Drought-Tolerant for Long-Term Savings

Save $100 or more yearly by replacing water-hogging plants and grass with drought-tolerant and native species, and beds of rock or gravel. You’ll save time on maintenance, too.

#35 Use Curtains as Insulation

Another way to practice energy-saving passive heating and cooling? Open curtains on sunny windows in the winter and close them up in the summer.

How to Increase Your Home Value

Making your house more efficient, adding square footage, upgrading the kitchen or bath and installing smart-home technology can help increase its value.

Nearly two-thirds (65%) of U.S. homeowners believe the value of their home will continue to rise over the next 10 years, according to a NerdWallet survey conducted online by The Harris Poll among over 1,400 homeowners in August 2018.

That may be optimistic, considering that some factors that determine what a house is worth, like its location and the popularity of that market, are out of your control.

If, like 70% of American homeowners, you believe your house is your biggest asset, taking care of it is probably a top priority. The good news is, keeping up with repairs and making smart improvements are both proven ways to increase home value over time.

Whether you want to build equity or get top dollar when you sell, use the tips below to raise the value of your home.

1. Make it low-maintenance

Since many home buyers worry about buying a home that will need constant maintenance, replacing a major component before putting it up for sale — like the furnace, water heater or even the roof — may calm fears of an emergency repair in the near future and help get you a higher price.

Improvements that make things easy to clean and maintain may also increase home value. Consider replacing easily stained carpet with hardwood floors or replace high-maintenance wood siding with vinyl siding.

2. Make it more efficient

Energy conservation features can have a significant impact on home value, depending on what area of the country you’re in, Joanne Theunissen, chair of the National Association of Home Builders Remodelers, said in an email. Energy-efficient mortgages (EEMs) allow borrowers to take on additional debt to cover both the purchase of the home as well as energy-efficient upgrades. EEMs can also offer lower mortgage rates to increase purchasing power, according to Energy.gov.

Consider double-paned windows, enhanced attic insulation, LED lighting and efficient appliances as a way to increase home value and entice energy-conscious buyers.

If you’re willing to go bigger, put solar panels on the roof. Thirty-nine percent of agents surveyed recently by the National Association of Realtors said solar panels increased perceived property value. But since solar panels are a big financial and structural commitment, they only make sense if you’re hoping to increase value over the long term, not looking for a quick boost in resale value.

Schedule an assessment with a certified energy auditor or your utility company to determine where your home is wasting energy and which upgrades will save you the most money.

3. Make it more attractive

Curb appeal — how your home looks from the street — is your first chance to make a good impression, says James Murrett, president of the Appraisal Institute, a professional association for real estate appraisers. A home’s exterior needs to make a prospective buyer want to walk through the front door.

Make sure existing landscaping is well-maintained. If your yard seems dull in comparison with your neighbors, consider planting flowers or repainting the front door.

Once the exterior looks good, focus on the kitchen and bathroom. When these two rooms are outdated, they can keep a property from reaching its highest valuation, Lori Noble, a senior residential appraiser (SRA) in Charleston, West Virginia, said in an email.

And you don’t have to spring for heated towel racks or marble floors, either. A minor kitchen remodel recoups 81% of its cost in added value on average, versus 53% for an upscale kitchen remodel with stone countertops, custom cabinets and commercial-grade appliances, according to Remodeling magazine’s “2018 Cost vs. Value Report.”The same is true for bathrooms; a midrange remodel — new flooring and a few updated fixtures — delivers a 70% return on investment, while an upscale bathroom remodel — heated flooring, custom cabinets and designer fixtures — sees 56% on average.

4. Make it smarter

Safety-enhancing gadgets top the list of “smart” technologies buyers want in their new homes, according to a 2018 survey by Coldwell Banker. These safe and smart devices include thermostats, fire detectors, carbon monoxide detectors, security cameras, door locks and lighting.

While smart tech doesn’t always increase home value, it does add appeal, Tavia Galvin, a licensed Realtor in Arvada, Colorado, said in an email.

Those who see themselves as “techies” are more likely to pay more for these items, Martin said.

Unlike replacing the roof or renovating the bathroom, you can usually install these devices yourself for about $1,000 or less.

5. Make it bigger

“Square footage has a huge impact on value,” Angie Martin, director of operations at Hales and Associates in Overland Park, Kansas, said in an email. Price per square foot is one way she helps clients compare homes that are similar in style and upgrades.

Bigger homes often command higher values, and even if an appraiser doesn’t officially acknowledge the full value of added space, a buyer will likely notice.

Adding a room is the obvious way to make your house bigger, but you can also create additional living space by finishing the basement or building a deck.

How to pay for improvements that increase value

When thinking about how to increase home value, root your expectations in reality. Updates rarely recoup 100% of their cost, but they can make your family more comfortable and even help your home sell faster.

If you can’t pay for home improvements in cash, be sure to choose the right method of financing for you.

Cash-out refinance: This popular refinance option may be a good fit if you want to tap equity but don’t fancy a second mortgage. Of the 36% of homeowners who reported taking a cash-out refinance in the NerdWallet survey, over half (52%) used the funds for home improvements and repairs. A cash-out refinance doesn’t make sense if your equity is limited or current cash-out mortgage rates are higher than your existing rate.

Credit card: Putting home renovations on a credit card may be OK as long as you’ll be able to pay off the entire balance in a short amount of time.

Home equity loan or line of credit: These second mortgages turn your home’s equity into easily accessible funds. Home equity loans pay out in a lump sum while home equity lines of credit, or HELOCs, are a line of financing you can borrow against over time. Both home equity loans and HELOCs have interest rates, fees, monthly payments and tax advantages to consider.

Personal loan: If you don’t have enough equity for a home equity loan or HELOC, consider a personal loan. The interest rate will be higher than home-equity-based financing, but lower than a credit card in most cases.

How to Save Money for a House

Buying your first house is the pinnacle of adulthood. But as you’re probably well aware, the road to home ownership isn’t exactly easy to navigate. Unless you’re completely debt-free and disciplined enough to live below your means to save money, buying your first home in the near future can seem more like a fantasy than an actual possibility. In fact, a 2017 Zillow survey of 13,000 adults found that only 39% of millennials are able to make the standard down payment on a home, and just one in five can pay the bare minimum to secure a home loan. Yeah, it’s tough out there.

The good news is that buying a house doesn’t have to be something you only wish you could do. You can definitely make it a reality. But it may require you to make a bit of an adjustment. Fortunately, experts shared some sneaky ways you can save money for a house — and the timing’s perfect, since April is Financial Literacy Month.

What you need to know before you even think about buying your first house

When you’re looking to buy your first home, it is crucial to understand how to save money. As Dottie Herman, finance expert and CEO of Douglas Elliman, one of the largest real estate companies in the United States, tells us,

But before you even begin your search, Herman says it’s in your best interest to meet with a qualified mortgage lender. They’ll be able to help guide you through the process of qualifying and buying a home. Most importantly, constantly check your credit score. The higher the score, the better interest rate you will receive.

“For most people, buying a home is an exciting time. But it can also be a very long process that may seem like a financial hurdle that requires short-term sacrifices for long-term success,” Herman says. “By following a few smart and savvy ways to lower your expenses, you will be able to save enough money to purchase that dream home in less time than you think. In the end, it all comes down to discipline, desire, and you.”

So how can you save up for a house without making it seem like such a huge sacrifice?

Sneaky ways to save up for a house

1. Use cash as much as possible

Using cash may seem like such a hassle, but Adam Jusko, founder and CEO of ProudMoney.com, tells us it can save you a lot of money down the line.

“Many studies show that people spend more when paying with credit cards, so use cash instead,” Jusko says. “You’ll not only spend less on food and other items, but taking away the convenience of using credit means you simply won’t buy frivolous impulse purchases.”

According to him, the pain of going to the ATM to get cash will have a way of slowing down your spending. Just think, when you only have $10 in your wallet and no credit cards, you start to think of ways to prevent that money from being spent.

2. Split your paycheck into two separate accounts

This may not seem like a sneaky way to save at first, since you know you’re doing it. But if you have direct deposit, have your paycheck deposited into two accounts.

“I have my employer put the bulk of my paycheck into my everyday checking account, and then I have a specific amount from each paycheck that automatically goes into a savings account at another bank that I rarely use,” Jennifer Beeston, VP of mortgage lending at Guaranteed Rate Mortgage, tells us. “When it comes to saving, out of sight, out of mind can be very powerful.”

3. Skip online shopping every other month

Online shopping is the number one way people “mindlessly spend” money these days, Beeston says. Just think about your own online shopping habits. Are your purchases typically impulse buys, or do you mostly buy things you actually need? According to Beston, the nature of online shopping makes it difficult to truly understand or feel the cost of purchases.

That’s why she suggests banning online shopping every other month. Do a digital detox on your wallet. “This is a great way to save extra money,” she says. Just try it one month and see how much you end up saving. If it’s a lot, you might be more motivated to make it a regular thing.

4. Be flexible with your grocery list

When you’re trying to save money, flexibility is key. For example, if you really like Heinz Ketchup but there’s a sale on the generic store brand, go with the generic store brand.

Same goes for meals you’re trying to make. “When you see a sale, try to swap out a meal you’d planned to make with a cheaper meal using the discounted food,” Jusko says. This allows you to be a little creative, and can save you a bit of money at the same time.

“What are little things you can do to constantly remind yourself of the goal so you keep doing the right thing? No matter how frugal you are, there is one thing you are buying that you could leave at the store,” he says. “Make a game of figuring out how you could replace that item with things you already have at home or how to simply live without it.”

5. Make a calendar of things you’re not going to do

Most of us like to plan events on our calendar, but more often than not, those events mean spending money. Instead, Jusko suggests making a calendar of what you could do, but won’t. For instance, put down, “Not having dinner with Kim and Sam at that new restaurant on Friday.” Then, calculate how much money you saved by not doing those things.

“This may sound corny, but one of the hardest things about saving money is filling the time that would normally be spent on entertainment,” he says. “Being silly about the process by making it a game is key to making it happen.”

6. Buy a French press

If you’re a coffee lover, you probably know your daily drink of choice can seriously add up. You can even check your bank or credit card statements to see just how much you’re spending. But there is a way to save money without having to forego your caffeine addiction altogether.

“Instead of going to Starbucks in the morning and then again for your afternoon pick-me-up, go to Starbucks or another coffee specialty shop and buy the coffee grounds to make make your drink at home,” JJ Choi, an agent at real estate brokerage firm Triplemint, tells us. “A French press is an easy alternative vs. a big expensive machine. Coffee will net out to less than a dollar per drink compared to the $8 to $10 daily expense.”

Saving money to buy a house may take work and a lot of discipline, but if it’s something you really want, you can definitely do it.

7. Lock money away in a certificate deposit (CD) account

A CD is a savings account with a fixed interest rate and fixed date of withdrawal. Essentially, these are savings accounts with a catch. “A lot of people can save money, but they can’t avoid the temptation of spending the money when it’s sitting there,” Holden Lewis, home financing expert, tells us.

“You can buy a certificate of deposit for six or 12 months, and there’s a penalty for withdrawing the money early. That can help you keep your hands off it.” It’s definitely a good option if you’re known to tap into your savings account every now and then.

How to Organize Your Home

There’s no right way to organize your home. Whatever strategy you choose just has to work with your lifestyle, habits, and tastes. But there are a few tried-and-true strategies that can enhance the effectiveness of any system. From being aware of clutter hot spots to identifying red flags that your organizing method isn’t working, we learned some smart approaches to getting organized from the pros so you can save the time, money, and stress that come with living in a den of disorder.

1. Take a step back.

Often clutter becomes such a fixture, you look right past it. For a new perspective, imagine you’re a guest in your own home. Take note of things a visitor would notice that you’ve been ignoring, like the paper pile that has claimed the corner of the kitchen counter for months or the blankets strewn all over the couch. Then, refresh the room back to its original state by eliminating what’s making it appear disorganized. Still not seeing the junk? Snapping a picture of the room will force you to view your space through a different lens.

2. Make it easier to put things away.

“It always surprises me how difficult people make organizing for themselves,” says Kate Brown, certified professional organizer and owner of Impact Organizing LLC. Her suggestion: “Make everything a one-handed operation.” For example, don’t hide your laundry basket in the back of the closet. Instead, use an open bin that you can throw your clothes into from across the room. “And avoid lids at almost all costs,” she urges. Using open containers for things you use often like toiletries and cooking supplies makes it easier to put them away. This advice even applies to garbage cans. Brown recommends investing in one with a lever you can step on to pop the lid open. “The fewer steps, the better the organizing system,” she says.

3. Arrange items according to how frequently they’re used

Keep the items you use every day in plain sight—or at least at eye level. “The things you use daily should be the easiest to get to,” says Lowell. “While the things you use once in a while should require a step stool.” This is where high shelving comes in handy. “Things you use only once a year should require a ladder,” he adds. (Think attics or out-of-reach shelving in a garage.) Not only will this storage system make it easier for you to find the things you use often, but the items you don’t use regularly will stay organized until you need them.

4. Don’t buy storage containers until you’ve purged.

“When people want to get organized, the first thing they usually do is run out and buy storage supplies,” says Julie Isaacs, a professional organizer and founder of Uncluttered Home. “But that’s actually backwards.” The point, she explains, is to evaluate why you have so much stuff to begin with—not find new ways to house your junk. “You won’t have any idea of what you really need in terms of containers or shelving until you’ve purged.” While deciding what to keep and what to toss, always remember the “80/20 rule.” “It’s the theory that most of us only use 20 percent of what we have. That’s a good starting point to realizing you are surrounded by a lot of things you probably don’t need,” Isaacs says. Plus, not only will slimming down your stuff save you money on storage supplies, but it’ll save you the headache of going through excess items in an emergency or last-minute situation.

5. Eliminate clutter hot spots

Flat surfaces like your dining room table, entryway table and kitchen counters tend to accumulate piles faster than any other spot in the house, explains Isaacs, who advises clients to make clearing all flat surfaces part of their nightly routine—right along with washing their face and brushing their teeth. But if that doesn’t work, her last-ditch trick is to physically block any surface that has become a clutter haven. “For instance, if you put a flower arrangement in the middle of the dining room table and set it with placemats, you’re sending the message that the space is no longer a dumping zone,” Isaacs says.

6. Don’t treat drawers like catch-alls.

“There isn’t a drawer in your house that should not have container organizers in them,” says interior decorator Christopher Lowell, author of Seven Layers of Organization. They can be any material you want—wood, wire mesh or clear plastic—and are available at most home goods stores. “This allows you to separate the drawers into defined areas for specific things verses throwing everything into one big space,” says Lowell. For the bedroom, store everyday items—like underwear and socks—in top drawers, workout clothes in the second or third drawers and pants in the bottom drawers. In the bathroom, keep cotton swabs and other daily use items on the counter within arm’s reach, and tools you use occasionally under the cabinet. “With the things you only use now and then separated out and away from the things you need every day, those daily essentials will be better organized and easier to get to,” Lowell says.

7. Store a discard bag in the closet.

“I keep a shopping bag with a handle in the front of my closet. Every time I try on a piece of clothing and then take if off again because it’s unflattering, doesn’t fit, is pulled, stained or out of style, I put it in the bag,” Brown says. “If you’ve taken the piece of clothing off for any reason other than that it’s dirty or doesn’t match, that means it’s not right and will probably never be,” she says. When the bag is full, Isaacs explains, donate the clothes or trade them with a friend at a swap party.

8. Be picky about items in your home

Think carefully about what you allow into your home. Consider your needs before accepting hand-me-downs or agreeing to store a friend’s kayak for the off-season. If shoes aren’t your size, skip ’em. If you do have space to hang on to something temporarily, set a pickup date so your basement doesn’t become a free storage unit.

9. Sort smartly

When you’re ready to roll up your sleeves and take on an organizing project, follow these steps to restore (and keep!) order: First, do it in one shot. Set up a staging area, like the dining table, then empty whatever you’re organizing so you can spot doubles, giveaways, and must-saves fast. Then use organizers like clear containers and baskets without lids so you can quickly access what’s left of your pared-down collection. Lastly, label everything—even if you think you’ll remember, mark boxes and bins with easy-to-read descriptions so there’s no second-guessing later on.

10. Set limits for everything.

Assign things like memorabilia and craft supplies to a single shelf or bin, then let the designated area’s size dictate how much you keep.

11. Use your calendar

Give yourself real motivation to finally hang those family photos by planning to host a dinner party. Or try creating a deadline for the DIY project sitting in your basement. If the date comes and goes, donate the piece and any materials and move on.

12. Learn to make quick decisions.

Trying to determine what can stay and what should go? If at least one of the following statements is true about an item, then it’s a keeper:

I’ve used it within the last year. That’s enough time to have gone through all four seasons and special occasions. If you still aren’t sure, put the item in a “Donate Later” box, seal it and mark it with the date of one year from now. If you haven’t opened it by then, drop off the box at Goodwill without peeking inside.

I need it or I love it. If you don’t, there’s no real reason to hang on to it. Resolve to fill your space only with things that really work, give you pleasure or celebrate your family. Remember that you can’t appreciate what you have if it’s hiding in a dark corner of a closet. You should frame or display what you deem worth holding on to.

It fits into the life I want to live. If something supports you and your future goals (think exercise equipment or a book about starting a business), it can stay. If it’s a painful reminder of the past (think clothes that don’t fit anymore or items that belonged to an ex), let it go.

13. Look for signs that tell your system isn’t working.

If a room still somehow looks messy after you’ve cleaned, it’s time to improve your organizational system, which, according to Brown, should allow you to tidy up in 15 minutes or less. Once you’ve pulled out what you don’t need—to either throw away or donate—the next step is to group things together based on use or occasion and store them in open containers.

Homeowner Tricks: Save Money on Mortgage Payments

Whether you’re new to homeownership or have been making mortgage payments for years, it never hurts to find ways to slash your costs. Here are three tips that can help you save thousands.

1. Pay your mortgage every two weeks instead of once a month

The typical 30-year loan comes with 360 payments, or 12 payments per year. But if you take your monthly payment, divide it in two, and pay that amount every two weeks, you’ll wind up making the equivalent of one extra monthly payment each year while saving yourself a huge chunk of interest in the process. And that single extra payment won’t hurt much, unlike a big lump-sum payment, especially if you work your new payment schedule into your monthly budget.

Say you’re looking at a 30-year, $200,000 mortgage at 4%, which would normally translate into 360 monthly payments of about $955 each, or roughly $11,460 a year. If you were to switch to a biweekly payment schedule, you’d pay $477 every other week, or roughly $12,400 a year. But in doing so, you’d actually save yourself over $23,000 in interest over the life of your loan.

2. Refinance to a shorter term

One drawback of refinancing a mortgage is that it often resets the clock on your repayment schedule, which can not only cost you more money than necessary in interest, but drag out the repayment process so that you’re less likely to have shaken your housing debt by the time you retire. For example, say you’ve been making payments on a 30-year loan for five years, and then you refinance to another 30-year loan at a more favorable rate. While you’ll lower your monthly payments, you’ll also be five years older when you finally get that mortgage paid off.

On the other hand, if you refinance to a shorter term (say, from a 30-year loan to a 15-year loan) to take advantage of a more favorable rate, you’ll save money on interest and avoid extending the amount of time you’re saddled with mortgage debt. Of course, this strategy only works if you can actually afford a larger monthly payment. (Remember, while you’ll benefit from a lower interest rate, your actual payment will still be higher if you switch from a 30-year loan to a 15-year mortgage.) But if your earnings have increased substantially since you first signed your loan, and you have room in your budget for higher monthly payments, you’ll come out ahead in the long run.

Homeownership is an expensive prospect, so it pays to take steps to lower your costs. These tricks will help you spend less on your mortgage and keep more of your money where it belongs — in your pocket.

3. Accelerate a 30-year loan when you can’t afford a 15-year term

One major advantage to getting a 15-year mortgage, as opposed to a 30-year loan, is that you’ll generally be eligible for a much lower interest rate. For example, last week, 30-year fixed mortgage rates averaged 3.97%, while 15-year fixed rates averaged 3.23%. The downside, however, is that because you’ll be paying off your loan in half the time, despite the lower interest rate, your individual monthly payments will be considerably higher.

If you’re looking to benefit from some of the interest savings of a 15-year loan but are afraid to commit to a more sizable monthly payment, a good solution is to get a 30-year loan and simply pay it off faster. You can accomplish this by doubling your monthly mortgage payment when you have extra cash available or by making extra lump-sum payments toward your mortgage as you’re able.

Say you have a 30-year, $200,000 fixed mortgage at 4% interest, and you use a performance bonus you receive at work to make a $5,000 payment toward your mortgage during the second year of your loan. That move alone will save you close to $10,000 in interest and shave more than a year off the life of your loan.

If you want to attempt to pay off your mortgage early, just make sure your loan doesn’t come with prepayment penalties. Otherwise, you’ll be charged a fee for the privilege of wiping out your mortgage debt sooner.

Save Money on Homeowners Insurance

The price you pay for your homeowners insurance can vary by hundreds of dollars, depending on the size of your house and your insurance company. From shopping around to making home improvements, here are some ways to save money while you adequately protect your home and assets.

Stay with the same insurer

If you’ve been insured with the same company for a number of years, you may receive a discount for being a long-term policyholder. But to ensure you are getting a good deal, periodically shop around to compare your premium with the prices of policies from other insurers.

Do not confuse what you paid for your house with rebuilding costs

Your homeowners policy is based on the cost to rebuild your home, not its real estate value. While your house may be at risk from theft, windstorm, fire and the other perils, the land it sits on is not, so don’t include its value in deciding how much homeowners insurance to buy. If you do, you’ll pay a higher premium than you should.

Don’t skimp—but do shop around

Having homeowners insurance is undoubtedly an expense—but it is also your protection against potential disaster and financial ruin. Homeowners policy prices vary from company to company, so do some comparison shopping and get the best deal you can.

Get quotes from at least three companies.
Contact the state insurance department to find out whether they make available consumer complaint ratios by company. If they do, check into the insurers you’re considering doing business with.
Check the financial health of prospective insurance companies by using ratings from independent rating agencies and consulting consumer magazines for reviews.
Don’t shop price alone. Remember, you’ll be dealing with this company in the event of an accident or other emergency. When you need to file a claim you’ll want an insurer that provides good customer service, so test that while you’re shopping, and choose a company whose representatives take the time to address your questions and concerns.
For price quotes, call companies directly or access information on the Internet. Your state insurance department may also provide comparisons of prices charged by major insurers.
Ask friends and relatives for recommendations for insurers and then do your due diligence.

Raise your deductible

A deductible is the amount of money that you are responsible for paying toward an insured loss. The higher your deductible, the more money you can save on your premium, so if you can pay above the minimum $500 or $1,000 deductible, for example, you may reduce the cost of your homeowners policy.

If you live in a disaster-prone area, your insurance policy may have a separate deductible for damage from major disasters, so be sure you take this into account when considering whether to raise your standard homeowners deductible.

Make your home more disaster resistant

If you live in a disaster prone area, you will have more insurance options to choose from if you take certain preparedness steps— for example, installing storm shutters and shatterproof glass or reinforcing your roof. Older homes can be retrofitted to make them better able to withstand earthquakes. Consider modernizing your heating, plumbing and electrical systems to reduce the risk of fire and water damage. These precautions may prevent excessive damage and the related work and stress involved in rebuilding.

Ask about discounts for home security devices

Most insurers provide discounts for security devices such as smoke detectors, burglar and fire alarm systems or dead-bolt locks. As some of these measures aren’t cheap and not every system qualifies for a discount, consult your insurance professional for recommendations.

Seek out other discounts

Types and levels of discounts vary from company to company and state to state. Ask your insurance professional about discounts that are available to you—for example, if you’re 55 years old and retired, or you modernize your plumbing or electrical systems, you may be qualify for a price break.

Look into group coverage

Does your employer administer a group insurance program? Check to see if a homeowners policy is available. In addition, professional, alumni and business groups may offer an insurance package at a reduced price. Whatever the offer, do your homework to make sure it is a better deal than you can find elsewhere.

Buy your home and auto policies from the same insurer

Many companies that sell homeowners insurance also sell auto insurance and umbrella liability policies. If you buy two or more insurance policies from the same provider, you may be able to reduce your premium. To be sure you’re getting the best price, make certain any combined price from one insurer is lower than buying the coverages separately from different companies.

Review the value of your possessions and your policy limits annually

Review your home inventory and any upgrades to your house or condo. Make sure your homeowners or renters policy covers any major purchases or additions to your home and also check that you’re not spending money for coverage you don’t need. For example, if your five-year-old fur coat is no longer worth the $5,000 you paid for it, you’ll want to reduce or cancel your floater and pocket the difference.

Another great way to save money on your homeowners policy is to take into account the cost of insurance while you’re shopping for a house and before you buy. These home buyers’ insurance guidelines provide tips on the locations, types of construction and other factors that will help keep down the cost of your coverage.

Homeowner Tips: Tax Deduction

Owning a home is a big financial responsibility, and it’s one of the largest investments you’ll probably ever make. Knowing the tax deductions and credits available to homeowners can help ensure your big investment pays you back a bit at tax time.

“Many homeowners miss out on a lot of deductions every year because they aren’t aware of all the savings opportunities available to them,” says Josh Zimmelman, president of Westwood Tax and Consulting.

These tax tips could help you make the most of the many tax breaks for homeowners and maximize any income tax refund you may be owed.

1. Save your tax records

Here’s one tax tip for homeowners: Once you take advantage of all the available tax benefits you’re able to claim in the current tax year, hold onto the documentation for those expenses.

“You never know when you might get audited,” Zimmelman says. “It’s important to have the documentation to back up your deductions.”

The law requires that you keep all the records you use to file your tax returns for three years from the date a return was filed. That’s typically how far the IRS goes back when doing an audit. But keep in mind that the IRS can go back further (usually no more than six years back) if it identifies a substantial error in a return.

2. Make energy-efficient updates

Adding a solar energy system to your home is not only good for the environment — it can also be good for your tax refund. The IRS allows you to take a tax credit worth 30% of the cost of installing a solar energy system.

If you’re thinking about holding off on taking advantage of this federal tax credit, don’t wait too long. The credit amount for residential improvements decreases to 26% in the year 2020, and then to 22% in 2021, after which it’s set to go away entirely.

3. Stay organized

Many of the federal income tax deductions or credits you can take as a homeowner require you to keep detailed records of your home-related expenses. Start saving receipts and other information right away — don’t wait for tax time to roll around.

“If you take a few minutes to set up an organization system for your tax paperwork and financial records, it should be quick and easy to maintain,” Zimmelman says.

To stay organized, keep hard copies of all your financial documents and receipts. Or if you’d rather go paperless, you can scan and store your documents digitally.

4. Hold onto home improvement receipts

If you make any improvements to your home, the expenses aren’t deductible for the current tax year. But when you sell the home in the future, they can help lower your tax burden then.

That’s because you can add home improvements expenses to your adjusted basis. This is generally what you paid to buy the house, plus the cost of construction, renovation or other improvements you’ve made, minus any losses you’ve experienced from damage to the home.

For the tax year in which you sell the home, your taxes on the sale are based on the sale price plus any concessions you get from the seller (such as them paying closing costs) minus your selling expenses. If the amount you gain from that equation is higher than your adjusted basis, you have a capital gain on the sale. So the higher your adjusted basis, the less taxes you may have to pay on your profit from the sale.

5. Track your home office expenses

If you’re self-employed and work from home, you may be able to deduct some of the expenses you incur for your business use of your home.

“Not every person who works from home can claim a home office,” Zimmelman says. “The home office must be used regularly and exclusively for business and be the primary site of the business.”

Because tax reform suspended certain deductions, including unreimbursed employee expenses (with some exceptions), until Dec. 31, 2025, you can’t take a home office deduction if you work from home as an employee.

Types of expenses you can deduct include the actual expenses you incur for the home office and depreciation for the portion of the home used.

6. Think ahead about deduction options

Deductions can help you lower your total tax obligation by reducing your taxable income. For the 2019 tax year, the federal standard deduction is $24,400 if you’re married filing jointly, $12,200 if you’re single or married filing separately, and $18,350 if you’re filing as head of household.

As a homeowner, though, you may have enough in eligible expenses to itemize your deductions. If those itemized deductions add up to more than the standard deduction, you could lower your tax bill even more.

Eligible expenses could include the following:

Charitable contributions — If you made a tax-deductible donation to a qualified charity, you can add it to your total itemized deductions. In most cases, you’re allowed to deduct cash contributions that equal up to 60% of your adjusted gross income.
Medical expense deduction — You may be able to write off some medical expenses that insurance didn’t pay for.
Home mortgage interest — If you took out a mortgage on or after Dec. 15, 2017, you may be able to take a mortgage interest deduction on up to $750,000 of mortgage debt for your primary residence. If your mortgage predates Dec. 15, 2017, the limit is $1 million. Interest paid on your home equity loan or line of credit may also be deductible if you used the money to buy, build or substantially improve the house that secures the loan.
State and local taxes — Real estate taxes can be high in some areas, but you may be able to deduct some (or all) of your property taxes. For federal tax returns, the law allows taxpayers to deduct up to $10,000 ($5,000 if married filing separately) of the total of your state and local property taxes plus either income taxes or state and local sales taxes.

Keep in mind that the Tax Cuts and Jobs Act of 2017 limited the amount of certain deductions, which may make it harder to come up with an itemized deduction total that will exceed your standard deduction amount. In that situation, itemizing might not give you the most tax benefit. That said, if you have deductible expenses that exceed your standard deduction amount, there’s no longer an income-based limit on the amount of itemized deductions you’re allowed to claim (though there may be other limitations).

Bottom line

Owning a home can be expensive — but fortunately, the tax breaks can help make up for the extra costs. As a homeowner, it’s critical to know which deductions and credits you qualify for and to make sure you maximize them to your benefit. Using Credit Karma Tax to file your taxes for free, and following these tax tips for homeowners could help.