A lot of us try to save money by skipping a cup of coffee or something small like that daily. But if you own a home there are three big ways you can be saving hundreds or thousands a year:
1. HomeStead Exemption - One of the great things offered to home owners in Philadelphia is the Homestead Exemption. This is only offered to people who own their primary residence in the city limits of Philadelphia. If you own an investment property this one is not for you.
The exemption itself allows you to reduce your tax assessment by $45,000. Your tax assessment is the value the county deems your home to be worth. They then have a millage rate which varies per county and using those two numbers arrive at your tax bill.
Once you apply for the Homestead Exemption you never have to apply again as long as you continue to live there.
The below is info that can be found on the Philadelphia housing website: www.phila.gov/services/property-lots-housing/property-taxes/get-real-estate-tax-relief/get-the-homestead-exemption/
2. Getting rid of PMI - PMI is private mortgage insurance you are paying if you put less than 20% down on your loan. It can be $50 a month or a few hundred a month depending on the loan size. You probably forgot you are even paying it! But if you have done work on your home or the home has appreciated over the last few years you should get rid of your PMI. You can reach out to your Realtor aka me to get you comps and get an approximation of what your home is worth to see if it is worth applying for.
How to Get Rid of PMI: Once you have 20% equity in your home you can let your loan company that you want to apply to get rid of your PMI on your loan. When I did this my lender sent me two options either to do a BPO for $150 or have an Appraiser come out for $350. Appraisers are a lot busier now and it would probably be $550. I went the BPO route which is a broker price opinion aka the lender has a realtor look over the comparable properties to see if you have enough equity in the property. I sent a packet of renovations we made to the property and comps in the area that sold well above what I bought at! It cost me $150 but I was able to save around $764 a year!
3. Refinance - Interest rates have dropped significantly over the past few years. in 2018 went from around 3.75 to almost 5%. This year I have seen rates as low as 2.25% for homeowners! This is something that slips through the cracks and if you are not in the real estate industry you may forget you can refinance. This can save you a huge amount of money monthly depending on your interest rate and PMI situation. There are a lot of ways to refinance you can do a simple rate reduction, you can go back to 30 years to lower your payment more, you can reduce the amount of years you owe by going down to a 20 or 15 year loan. Our second house we bought in 2018 and got an interest rate of 4.75% and ended up refinancing in 2019 when our lender suggested it. We still had 29 years on the loan but we ended up refinancing to a 20 year loan at 3.75% and increasing our payment a little. This is saving us an estimated 170k over the life of the loan!!! Another home I was able to go from 3.75 to 2.625 which reduced my payment 200 a month or 2400 a year!!! It is a great time to refinance take advantage of it before rates start going back up!
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