Saving – Homeowner Savings

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 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.

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.

A Guide to Owner Financing

Asking a seller to help you buy their home is not something most homeowners, or even their listing agents, usually consider. However, for a seller whose home isn’t selling or for a buyer having trouble with traditional lender guidelines, owner financing is definitely a viable option. Also known as seller financing, it’s especially popular if the local real estate scene is a buyer’s market.

What Is Owner Financing?

Owner or seller financing means that the current homeowner puts up part or all of the money required to buy a property. In other words, instead of taking out a mortgage with a commercial lender, the buyer is borrowing the money from the seller. Buyers can completely finance a purchase in this way, or combine a loan from the seller with one from the bank.

For the financed portion, the buyer and seller agree upon an interest rate, monthly payment amount and schedule, and other details of the loan, and the buyer gives the seller a promissory note agreeing to these terms. The promissory note is generally entered in the public records, thus protecting both parties.

It doesn’t matter if the property has an existing mortgage on it, although the homeowner’s lender might accelerate the loan upon sale due to an alienation clause. Generally, the seller retains the title to the home until the buyer has repaid the loan in full.

Sellers and buyers are free to negotiate the terms of owner financing, subject to state-specific usury laws and other local regulations; some state laws, for example, prohibit balloon payments.

While not required, many sellers do expect the buyer to provide some sort of downpayment on the property. Their rationale is similar to any mortgage lender’s: They assume that buyers who have some equity in a home are less likely to default on the payments and let it go into foreclosure.

Owner financing can take several forms. Some variations include the following.

Land Contracts

Land contracts do not pass the full legal title of the property to the buyer but give them an equitable title. The buyer makes payments to the seller for a certain period. Upon final payment or a refinance, the buyer receives the deed.

Sellers can carry the mortgage for the entire balance of the purchase price⁠—less the down payment, which may include an underlying loan. This type of financing is called an all-inclusive mortgage or all-inclusive trust deed (AITD), also known as a wrap-around mortgage. The seller receives an override of interest on the underlying loan. A seller may also carry a junior mortgage, in which case the buyer would take title subject to the existing loan or obtain a new first mortgage. The buyer receives a deed and gives the seller a second mortgage for the balance of the purchase price, less the down payment and the first mortgage amount.

A lease-purchase agreement, also known as rent to own, means the seller is leasing the property to the buyer, giving them an equitable title to it. Upon fulfillment of the lease-purchase agreement, the buyer receives the full title and typically obtains a loan to pay the seller, after receiving credit for all or part of the rental payments toward the purchase price.

Owner-Financing Benefits for Buyers

Buyers who opt for seller financing can enjoy several advantages.

Quicker Sale

Offering owner financing is one way to stand out from the sea of inventory, attracting a different set of buyers and moving an otherwise hard-to-sell property.

Little or No Qualifying

The seller’s interpretation of buyer qualifications is typically less stringent and more flexible than those imposed by conventional lenders.

Down Payment Flexibility

Down payments are negotiable. If a seller wants a larger down payment than the buyer possesses, sometimes sellers will let a buyer make periodic lump-sum payments toward a down payment.

Higher Interest Rate

The owner-financed loan can carry a higher rate of interest than a seller might receive in a money market account or other low-risk types of investments.

Faster Possession

Because buyers and sellers aren’t waiting for a lender to process the financing, buyers can close faster and get possession of the property sooner than with a conventional loan transaction.

Lower Closing Costs

Without an institutional lender, there are no loan or discount points, and no origination fees, processing fees, administration fees, or any of the other assorted miscellaneous fees that lenders routinely charge, which automatically saves money on buyer closing costs.

Owner-Financing Benefits for Sellers

A variety of advantages for sellers arise in owner-financing situations as well.

Higher Sales Price

Because the seller is offering the financing, they may be in a position to command full list price or higher.

Tax Breaks

The seller might pay less in taxes on an installment sale, reporting only the income received in each calendar year.

Monthly Income

Payments from a buyer increase the seller’s monthly cash flow, resulting in a spendable income.

Tailored Financing

Unlike conventional loans, sellers and buyers can choose from a variety of loan repayment options, such as interest-only, fixed-rate amortization, less-than-interest, or a balloon payment⁠—if the state allows it—or even a combination of these. Interest rates can adjust periodically or remain at one rate for the term of the loan.

Advantageous as it can be, owner financing is a complex process. Neither buyer nor seller should rely just on their respective real estate agents but instead should engage real estate lawyers to help them negotiate the transaction, ensuring that their agreement conforms to all state laws, covers every contingency, and protects both parties equally.

Amazing Money-Saving Tips For Every Homeowner

Owning a home doesn’t need to be as costly as it does. We all know that if you own a home, all of the costs from the mortgage, utilities, maintenance, and upkeep add up and are expensive.

Just to make your life easier, I’ve made one fascinating collection of amazing and useful energy saving tips that will save you money.

Besides that all of these tips are free or cheap. They won’t cost you a lot, but they will make a big difference. Most of them don’t take a lot of time, and you don’t have to be a home-improvement expert.

Here are 15 of the best energy saving tips that will make your energy bills shrink.

1. Repair leaky ductwork

Over time the joints and seals in ductwork can dry out and deteriorate due to temperature fluctuations in crawl spaces, basements, and attics.

Hire a HVAC service tech to check out the ductwork.

If you are a do-it-yourselfer, use a flashlight and shine the beam on the ducts where they connect to other ducts or registers. What you are looking for are areas where there isn’t any dust – a sure sign there is a leak in the area.

You can also do the incense test while the system is running too. Move the incense around each duct joint looking for air movement.

To repair the system yourself check out youtube by searching for ‘how to patch ductwork’.

Savings: 3%–10% on heating and cooling bills per year
Cost: $30 and up, depending on if you do it yourself or have your system serviced
Time: 60 minutes

2. Replace air filters

Replace your HVAC filters at least every 6 months, preferably every 3. Clogged, dirty filters block airflow and reduce your system’s efficiency. In the worst case scenario, a wrongly sized filter or dirty filter can cause your system to burn out, requiring replacement.

Savings: 5% – 15% / year on energy
Cost: $5-$30
Time: 10 minutes

3. Give your air conditioner some fresh air

Have you ever tried running really fast with a rag over your mouth? I haven’t either, but that’s what most people are expecting their AC units to do.

Many AC units are surrounded by shrubbery that can restrict the airflow needed to make the systems run optimally. Take a few minutes today or this weekend and look around your AC’s outdoor unit:

Provide at least 1’ of clearance all around the units.
Trim any bushes that are touching the units
Remove any leaves and dirt around the unit
Remove any other obstructions like that rotting pingpong table leaning up against it
If there is significant mud or dirt inside the unit have it professionally serviced

Savings: $20 / year
Cost: FREE
Time: 20 minutes

4. Block out the sun

All of those windows in your home are the largest source of heat flowing inside during hot summer days.

Closing the blinds and/or curtains blocks the sun from coming inside in the first place and will help prevent it from heating up, reducing the need for the AC to cool it down. Blocking the sun is especially important on the western and southern facing windows that receive the most direct sunlight.

Savings: $15-$35 / year
Cost: FREE
Time: none

5. Shower power

Do you take a hot shower in the summer steaming up the bathroom mirrors? If so you’re adding heat back into your home that needs to cool.

Take a quicker shower. And take a warm shower instead of a burning hot one. Using less hot water will also save energy.

Savings: $50 / year
Cost: FREE
Time: 10 minutes

6. Automate your thermostat or use a post-it note

In my first home, I would manually turn up the thermostat as I walked out the door to work, and I would manually adjust it down when I came home in the evening.

Last year I replaced all of the thermostats in my house with the Nest learning thermostat. It learns your schedule to keep your home comfortable when you are home. Nests’ are pricey, but according to the Nest website:

I wish I had known about this before buying mine. Oh well, my mistake for you to learn. Check with your utility provider to see what might be available in your area.

If you can’t get a free or discounted smart thermostat from your utility provider, you can go the manual route like I used to. Go get a sticky note, and put it on the door you take to leave your home. Write a reminder to change the thermostat as you walk out the door. Simple and free.

Savings: $173 year (average for a programmed thermostat)
Cost: $0 – $250 per thermostat
Time: Varies

7. Hang out your laundry

Yeah, I don’t do this either. It takes too long. In the summer, it’s too hot out.

For a long time, I used a clothes rack but now I have an even more ingenious way to dry my clothes.

I bought a bunch of plastic hangers to hang up ALL of my shirts, shorts, and pants. Now that I have to hang my clothes up anyway, I just pull them out of the washing machine and put them up on the hangers to dry. Boom! I’m just skipping the drying part because they dry in my closet – for free.

For the things I don’t hang up (socks) I’ve got a drying rack. It takes up very little space.

Savings: $80 – $250 / year depending on household size
Cost: $30 for hangers or racks
Time: Varies by method

8. Grilled to perfection

In the summer consider cooking primarily using the microwave, crockpot, or grilling outside to avoid heating up your home with the oven and stove.

Savings: At least a few bucks and your kitchen won’t be as hot.
Cost: FREE
Time: None

9. Fix leaky windows

If you have a 1/64 inch gap around a single window – which is REALLY TINY – it is the equivalent of a 3.27 square inch hole in your wall – which is REALLY BIG.

If you have a 1/32 inch gap around a single window, it is the equivalent of a 6.5 square inch hole in your wall. That’s big enough to put your fist through!

If you have ten windows in your house, that’s a lot of big holes that are draining your wallet year after year.

To determine if your windows are leaky close all your windows, doors, and the flue damper in your chimney if you have a fireplace. Use a stick of incense and move it around each window to see if there is air flow. If there is, you’ve got a leak!

Weatherstripping is an easy and cost-effective way to save money on energy costs and improve comfort by reducing drafts. It’s something any homeowner can do. Peel-and-stick weatherstripping is easy and useful for sealing drafts:

Remove any dirt and grease from the window jambs or sash.
Dry the areas with a rag.
Cut the weatherstrip to the right length
Peel off the back
Press the sticky part to the surface.

Now check your windows from the outside

Inspect for any cracked or damaged caulking around the windows where the casing meets the house, and around the window frame.
Scrape and clean away any damaged caulking
Apply a fresh bead of paintable acrylic latex to reseal the window.

Savings: 10%–20% of your heating and cooling costs per year
Cost: $30-$50
Time: 2–3 hours

10. Child proof your outlets – even if you don’t have kids

My first home which was built in 1999 had this next problem. The inside outlets located on the exterior walls were like mini vacuums when it came to transferring air from the inside to the outside.

If you have an older home or a poorly constructed home you’ve probably got the same problem.

Electrical outlet boxes typically don’t have any insulation behind them, creating what is basically a hole in your wall. On a windy day take some incense or a match and put it in front of an outlet (one without a plug in it of course) and see if you can see air movement. In my situation I noticed this during the winter when I felt a cold breeze coming through the outlets.

The simple solution? Install socket sealers to improve energy efficiency. All you have to do is remove your outlet cover with a screwdriver, put on the outlet sealer, and put the cover back on. Easy!

The second step is to put in those plastic child-proof outlet plugs.

Savings: 2% of heating and cooling costs per year
Cost: $8.51 for outlet sealers, $2.49 for outlet plugs
Time: 20 minutes

11. Get a heating and cooling service contract

My neighbors A/C unit ran him $8,000 to replace. I had to replace one after getting married for $3,000. Hire a professional HVAC maintenance company to ready your AC unit for the summer and your furnace for the winter. There is no better way to insure this investment, and you they usually give you discounts on parts if anything breaks. This is one of the very few maintenance contracts I recommend people to buy.

Savings A lot if your HVAC unit crashes and burns
Cost: $250-$400 per year
Time: Just a phone call

12. Use fans

A ceiling fan can make your room feel up to 7 degrees cooler. Fans will allow you to turn your AC up a couple extra degrees, saving even more money.

Savings: $35-$53 / year
Cost: FREE (assuming you have ceiling fans)
Time: none

13. Insulate leaky kitchen and bathroom sinks

If you have a sink, toilet, cable or phone line in an external wall, chances are they are uninsulated around behind the wall. Warm and cool air is escaping from these exterior openings.

This one is a bit trickier to determine if you have an air leak. You can use a thermal leak detector to determine if there is a temperature difference by comparing the area near the hole and then the hole itself. If there is a big difference you might want to fix that leak.

Or if you don’t want to spend the money on a thermal imager you can do what I do as soon as I move into a new house. Buy some expanding foam insulation and spray it into every crevice I can find in my exterior walls.

I use Great Stuff. Around the bathroom sinks in your house spray where the sink drain goes into the wall. Also where the water lines came out.

I used about 2 cans for my house that was built in 2009.

Savings: Up to 17% of your energy bills per year
Cost: $10.13 and up depending on how many cans you use
Time: 30 minutes

14. A bright idea?

LED lighting runs cooler than incandescent bulbs. Only about 10% to 15% of the electricity that incandescent lights consume results in light. The rest is turned into heat, and that heat needs to be cooled by your AC system.

Last year I made the switch to LED lights – but not all of the lights in my house, and that’s key for saving money. Check out ‘Are LEDs worth it?’

I use Cree LED light bulbs in my house. I found them to have the most natural lighting (I tried four different brands).

Don’t forget to factor in the cost of the bulbs!

Savings: Varies on usage
Cost: $9 – $20 / bulb
Time: 2 minutes / bulb

15. Remove gaps under your doors

There is probably a hole under your door and you don’t even know it.

Most homeowners don’t even think about the bottom of their doors, and instead focus on the sides and top. But the bottom of the door sees just as much action each day as the sides and top, and it’s got that rubber gasket which is prone to deteriorating faster because it has more exposure to dirt and moisture.

You can use the incense test on this area of your home too. Run it near the bottom of any exterior doors on a windy day to see if there is air movement.

To fix you’ll need to replace your door sweep. Take pictures and measurements of your existing door sweep before heading to the home improvement store.

If it’s a nice day just take your existing one off and bring it with you so you can match up the size perfectly. They are pretty easy to replace. I’m not Mr. Fix-It and even I managed to do it.

Savings: Up to 11% of outside air is blocked
Cost: $10-$20
Time: 30 minutes per door

16. Insulate the hole in your attic

You have insulation between your exterior walls. Yet what separates from your conditioned home and the attic is usually a ½” piece of plywood – otherwise known as the attic stairs (or hatch).

Plywood isn’t a good insulator.

If you have a hatch:

Add a gasket around the opening.
Attach some rigid foam insulation to the top of the hatch

If you have a pull down attic staircase:

Get an attic tent that has a zipper to seal it up.

Savings: Up to 30% on your energy bills per year
Cost: $20 (hatch) – $158 (stairs)
Time: Beats me, I had someone install mine as part of an energy audit

Tips Every New Homeowner Should Know

Congratulations! You’ve just purchased your first home. Buying a home is a smart investment and offers a lot of benefits for you and your family. But owning a home also comes with a few disadvantages, like not being able to call your landlord when something goes awry.

But don’t worry. We have some homeowner tips and tricks that will help you prepare for those surprises and maybe even save you a few dollars down the road.

Use these new homeowner tips to make your transition to property owner a little smoother.

1. Change Your Air Filter Regularly

This probably sounds obvious, but it is an often overlooked homeowner maintenance tip. When you move into your home, change your air filter right away. Mark the date on your calendar and change it every 90 days moving forward. Consider changing it every 60 days if you have pets or if you suffer from allergies.

Changing your air filter not only helps keep your air clean, but it also reduces dust in your home and extends the life of your furnace.

2. Know How to Turn Off Your Water Valve

Picture this: You wake up in the middle of the night to find a busted pipe filling your basement with water. It takes you five minutes to locate your main water valve and two more minutes to turn it off. That’s seven additional minutes of water flowing into your basement.

It’s a good idea to locate this valve when you move in and learn how it works to save yourself time during an emergency. Learn how to shut off your power and gas lines while you’re at it.

Another homeowner tip is to turn off your main water valve whenever you leave on vacation. This will prevent flooding if something should go wrong when you are out of town.

3. Create a Homeowner’s Binder

You may have noticed during the purchasing process that there is a lot of paperwork involved in owning a home. Before you move into your new home, create a binder for important documents, such as mortgage and home insurance paperwork.

After your move in, use the same binder to store all of the guides and warranties for your new appliances. Store receipts for any home improvement and moving expenses here as well. You’ll want to hang on to these for your taxes. You can also start collecting contact information for reliable contractors in this binder.

4. Wait to Start Any Large Projects

One thing every homeowner should know: home improvement projects are expensive. Avoid completing unnecessary projects. Unless your new home is not livable, hold off on any major construction projects until you’ve lived in the home for at least six months.

Waiting a few months to make any huge changes will allow you to get a feel for your home and put your priorities in order. After a few months, you may learn that the floor plan doesn’t bother you as much as expected, but you’ve discovered you can’t live with the current bathroom configuration. Waiting will also give you time to save for the cost of any upcoming projects.

It is a good idea to complete small projects such as painting or removing carpet before moving into your new home.

5. Start an Emergency House Fund

You never know when something is going to go wrong, or how much it is going to cost. A great homeowner tip is to start an emergency savings account as soon as possible.

The longer you live in your home, the more likely you are to experience a surprise plumbing, heating or roofing issue. Start saving early to take a little stress out of this typical homeowner experience.

6. Pay Attention to Your Energy Usage

Owning a home means paying your own utility bills. Pay attention to how your home is using energy and use the information to reduce your carbon footprint and save money. You’ll be surprised how small changes can affect your electric bill.

Homeowner tips and tricks for reducing your energy costs:

Move your refrigerator away from your oven.
Schedule a home energy audit.
Lower your water heater’s thermostat to 120 degrees.
Switch out lightbulbs for energy-efficient LED lightbulbs.

7. Learn How to Identify Potential Issues in Your New Home

One of the best homeowner maintenance tips is to detect minor problems before they become huge issues. After purchasing your home, take some time to learn about some of the common issues homes face, especially if you’ve purchased an older home or one that was unoccupied for a period of time. Being able to identify a potential problem early on could save you money later.

Learn to recognize:

Basement leaks and flooding.
Signs of a roof leak.
Foundation issues.

If you can catch these issues early, you can prevent further damage to your home and save yourself a lot of headaches.

8. Make Friends With Your Neighbors

As many homeowners know, having bad neighbors can make your living situation less than pleasant. Work to be a good neighbor right away by introducing yourself and making friends as soon as you move in. Building a relationship with your neighbors will help you learn about your neighborhood, find reliable contractors and maybe even allow you to borrow tools when you need them.

Knowing your neighbors will also make it easier to address any issues that arise later, such as property line or noise concerns.

9. Invest in New Tools

Now that you’re a homeowner, it’s time to get yourself a toolbox. From measuring for a new couch to hanging curtains and photographs, you’re going to need tools even if you’re not planning any big DIY projects.

Best tools for new homeowners:

Ladder
Electric drill
Measuring tape
Hammer
Stud finder

Owning these tools will make following the rest of these new homeowner maintenance tips easier.

10. Complete One Project at a Time

Don’t work on multiple home projects at once. You may want to get all your improvements finished as soon as possible, but this isn’t the answer. Not only will you exhaust your finances, but you will also make your new home unlivable and add unnecessary stress to your everyday life.

Instead of starting all your projects at once, learn how to plan a home remodel that won’t make you miserable.

Property Tax Exemptions

FHA Rehab Loans

Basic Requirements

Home Improvement Programs