23 Ways to Reduce Housing Costs

Being frugal works wonders. Frugality can help you get out of debt, build your savings, and reach your financial goals. Unfortunately, it’s too easy to obsess over plugging little money leaks while neglecting saving money on major expenses you can’t avoid, like housing. Significantly reducing your monthly housing expenses can help you meet your financial objectives. Here are some ways to lower housing costs.

Certain housing expenses are universal. But there are many ways to cut back on housing costs, whether you’re renting, thinking about buying a house, or already own a home. Here are the best tips for reducing housing costs, starting with a few universal tips for spending less on housing.

1. Live Where You Work

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At various points in my life, to get to work, I have routinely:

  • Walked
  • Biked
  • Rode the subway
  • Taken a commuter train
  • Taken a ferry
  • Driven in and out of the city through gridlock

For me, nothing beats living within walking distance of work. I had more free time, got more sleep, and spent less money. I could go home for lunch, and I didn’t need a car. Commuting takes so much time, is costly, and is generally just a drag. The longer your commute, the worse it is.

Live closer to work, and you could drastically lower your housing costs while improving your quality of life. It’s not worth it for everyone, but I’ve worked with people who commuted to Boston from Rhode Island and New Hampshire. Commuting that far is an expensive lifestyle that gets old fast.

2. Move to a Cheaper Place

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Rent, land value, property taxes, and the cost of living vary widely in the U.S. If your current living situation is becoming financially unbearable, it might be time to consider moving.

Moving from Boston to Georgia was eye-opening. For the same rent, I got a gated community, much bigger rooms, modern kitchen appliances, a washer and dryer in the unit, and a parking space. Plus, I didn’t need a roommate to afford rent, either.

If you rent and don’t want to move far, find a place that’s $100 cheaper. You might even be able to stay in the same neighborhood, complex, or building. Your quality of life probably won’t be impacted much, if at all, and you cut your annual living expenses by $1,200.

3. Cut Costs When You Move

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Moving presents the perfect opportunity to purge some stuff, like selling furniture you can’t or don’t want to take. The less stuff you pack, the less your move will cost. You can pack your own stuff and haul it to your new home in a rental truck or get multiple quotes from different movers and hire the most affordable.

4. Consider Renting Instead of Owning

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Homeownership isn’t always a better deal. Whether renting or owning is better depends on where you live, how long you plan on staying, and the opportunity costs of renting versus buying.

Sara and I have moved hundreds of miles for a job three times. Twice, we realized within two years that it was a huge mistake. If we had purchased a house in the locations we fled, we would’ve been miserable and stuck on many levels. Renting saved us from that.

5. Negotiate Your Rent

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Many people assume that rents are firm. In some markets, they are, but it is always worth asking. Research prices in your area and see if you can negotiate with your potential landlord.

Renewal time is also good for countering a proposed rent increase, especially if you’ve been a model tenant. Finding tenants can be an expensive hassle for landlords. They don’t want to carry rental properties that don’t produce income.

6. Sign a Longer Lease

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See if your landlord is willing to offer reduced rent if you’re willing to sign a multi-year lease. Your landlord gets income stability and doesn’t have to paint or find new tenants for a longer period. You don’t have to worry about a rent increase driving up your monthly housing expenses or moving all your stuff for a while. It’s a win-win situation with financial benefits for both parties.

7. Get a Roommate

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Cutting your monthly housing expenses in half might be as simple as welcoming a roommate. The extra money you save can go toward paying off student loans, building up your savings, or improving your financial life in other ways. Hopefully, they won’t leave forgotten half-full teacups everywhere, as my wife does.

8. Know Your Rights as a Tenant

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There are all sorts of laws that apply to rental housing. They cover things like evictions, deposits, rent increases, right of entry, repairs, utilities, and more. Know what’s legal and what isn’t where you live. You might need to rely on them someday. Knowing the laws allowed me to put cash in my pocket once.

Years ago, my roommate noticed there were too few meters for the number of apartments, so he called the city for an inspection. As it turned out, we paid for all the common area lighting and the washer and dryer in the basement. That might’ve been fine when the owner lived in our unit, but that setup wasn’t legal for us as renters.

Thanks to our landlord’s illegal metering practices, our electric and gas bills were immediately transferred into his name. We also got back every dime we paid for those utilities over the two prior years. My roommate and I each pocketed several hundred dollars from the refund. So, it pays to know what a landlord cannot do and understand the laws that protect you as a renter.

9. Work for a Property Manager

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Right after college, my wife worked as an administrator for a property management firm. She was able to score a nice discount on a one-bedroom apartment in one of their buildings.

Leasing agents who work for property management companies can also usually get reduced rent at the company’s properties. Maintenance staff who live on-site also often get reduced or free rent. You might get people knocking on your door at night, but it might be worth looking into if you’re handy and want to cut your monthly housing expenses.

10. Refer a Friend

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In some areas, apartment complexes offer incentives for referring new tenants. I’ve seen offers ranging from $200 to a free month’s rent for a referral. You don’t see this everywhere, but I’ve noticed these promos in college towns, bedroom communities, and growing cities where new apartment complexes are springing up.

11. Buy Below Market Value

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Fixer-uppers, foreclosures, and motivated sellers looking to unload offer unique opportunities to buy property below market prices. But do your due diligence thoroughly before you sign. In some cases, you’re not just getting a cheaper house; you’re getting whatever problems are attached to the property.

12. Buy a Smaller House

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Before shopping for a new home, you should know how much house you can afford. Even if you can afford a big house, that doesn’t mean you should buy one.

A smaller house is generally cheaper to purchase and maintain. Less square footage usually means lower insurance costs, property taxes, and utility bills. Rooms are smaller, so you can cut back on the amount of stuff you need to buy.

Buying a larger house thinking you’ll grow into it might leave you house-poor. You could spend so much of your income on housing and its associated costs that you won’t have money left to put toward your financial goals.

13. Put 20% Or More Down

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Putting a down payment of 20 percent or more on a house will save you thousands in interest over the life of the loan. You also won’t have to pay for private mortgage insurance every month for the first several years of your loan. If you can swing a down payment of 20% or more, you save a lot of money in the long run.

14. Opt for a Fixed Rate Over an Adjustable Rate Mortgage

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Adjustable-rate mortgages offer below-market interest rates initially, which makes them attractive. After the first few years, that low initial rate will go up. Depending on the loan terms, your payment could rise frequently as interest rates increase, which could lead to trouble.

With a fixed interest rate, your payment stays the same for the life of the loan. The terms are simpler to understand. You’re also protected from sudden and significant increases in your payments regardless of mortgage interest rates fluctuating.

15. Choose a 15 Year Mortgage Instead of a 30 Year Mortgage

Bank Manager
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You pay significantly less interest if you opt for a 15-year fixed-rate mortgage over a 30-year fixed-rate mortgage. While mortgage interest is tax-deductible, doing some math will tell you if you’ll save more by paying off your mortgage faster or taking out a longer mortgage and deducting interest on your taxes.

The major downside of a 15-year mortgage is higher monthly payments. A 30-year mortgage makes your payments more affordable, but the long-term loan costs are higher than a 15-year mortgage.

16. Consider House Hacking

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House hacking is a real estate investment strategy where you buy a multi-unit property, live in one of the units, and rent out the others. House hackers use the cash flow from the rental income to offset the mortgage and maintenance bills.

The goal of house hacking is to earn more in rent than your expenses. It may not always be an option, but owning a multi-unit property with its additional income could vastly improve your financial situation. House hacking is a way into real estate investing and being a landlord if you’re interested in that.

17. Pay Your Mortgage Biweekly Instead of Monthly

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If you make your standard monthly mortgage payment on the first of every month, that’s 12 mortgage payments a year. With 52 weeks in a year, paying half your monthly payment biweekly works out to 26 payments or 13 total payments per year. You probably won’t even notice it. That one extra payment a year saves you thousands in interest. You’ll also retire your mortgage early.

18. Make One Additional Payment on Your Mortgage

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Making one additional lump sum mortgage payment yearly can also make a significant impact over time. You can shave years and several thousand dollars in interest off your mortgage debt.

If you get a yearly bonus, tax refund, or windfall, apply the extra cash toward your principal. If you get paid biweekly, during your 3 paycheck months, you can put one whole paycheck on your loan if you budget as though it’s a typical, two-paycheck month.

19. Refinance Your Mortgage

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When mortgage interest rates fall, you might want to think about refinancing. By refinancing, you’ll reduce the term of your mortgage and pay less in interest. Since refinancing has associated costs and fees, you’ll have to do some math. Determine how much the interest rate must drop for a refinance to make sense.

20. Rent Out a Spare Bedroom

Rent
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If you have a spare bedroom, you can turn that extra space into extra money. If you’d rather be a host than a landlord, you can use a service like Airbnb for short-term rentals. Renting out extra bedrooms will boost your monthly income and ultimately help you save money on housing.

21. Learn Basic Home Repair

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Fixing leaky faucets yourself and being able to check other regular home maintenance items off your list will save you tons of money. The time, money, and energy you spend when you DIY seems like a lot, but it’s often a drop in the bucket compared to what a contractor would cost you for their services. Just be mindful of the risks and your limits when it comes to electricity and water. 

22. Review Your Property Records

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Check the record of your property with your local real estate assessor’s office. Ensure your square footage, number of bedrooms, and all other information on file are correct. Your property taxes are based on this data, so any errors could mean paying higher taxes. 

23. Appeal Your Assessment

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Property tax assessments determine how much you owe in property taxes. If you feel your assessment is too high, you have the right to appeal within a period after receiving it. Where we live, we have 45 days from the date of the notice to appeal.

If your home’s assessed value is out of line with houses in your neighborhood or comparable properties in your area, you might be able to appeal to lower your assessment.

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Author: Jerry Graham

Title: Freelance Writer

Expertise: Personal finance, side hustler, and freelance web developer

Bio:

Jerry is a personal finance enthusiast, side hustler, and freelance web developer who began his career in financial services. He co-founded a personal finance and frugal living blog that he recently sold. His insights have appeared on MSN, Newsweek.com, HerCampus.com, Mashed.com, and many others.