3 Money-Saving Tips Every Phoenix Homeowner Should Know

By Arizona Home Group

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Did you know there are three important things that could save you thousands of dollars as a homeowner? Today, we want to bring three of them to your attention because each one can directly affect your pocketbook, and most people have no idea they exist.

Most policies skip water and sewer line coverage. The first one catches a lot of homeowners off guard. Most homeowners’ insurance policies do not cover the water and sewer lines running from your house to the road, but you can add this specific coverage, and you absolutely should. If tree roots get into your lines, the repair can be very expensive, and standard policies typically exclude that kind of damage. In fact, a Nationwide survey found that nearly one in three homeowners wrongly assume their service lines are already covered. It is worth verifying whether you have this protection and adding it if you don’t, especially if you live in an older home.

A little extra principal can cut years off your mortgage. Here’s the second one. You can effectively turn your 30-year mortgage into a 20 or 25-year mortgage just by paying a bit more toward your principal each month. Putting an extra $200 a month toward principal can bring a 30-year loan down to around 25 years and save you somewhere between $90,000 and $110,000 in interest, depending on your loan amount and rate. That extra $200 a month works out to about $6.60 a day, which could be as simple as making your coffee at home instead of buying it out.

The reason this works is straightforward: as the CFPB explains, the more you pay down your principal, the less interest you owe each month, so every extra dollar compounds in your favor over time. Push it to $500 extra a month, and you could cut off 9 to 10 years and save up to $220,000. That’s the power of compound interest working for you instead of against you.

You can drop your PMI once you hit 20% equity. The third one can put money back in your pocket every month. If you have a conventional loan, you can have your private mortgage insurance, or PMI, removed once you reach 20% equity in your home. This applies to conventional loans only, which is worth keeping in mind when you’re choosing between an FHA loan and a conventional mortgage in the first place. Once you believe you’ve hit that 20% mark, you can request PMI cancellation from your mortgage company.

The process usually requires an appraisal, but it’s well worth it, because that PMI payment can run anywhere from $150 to $300 a month. Here’s our favorite part: since you’re already used to paying that amount, you can redirect it straight to your principal once the PMI is gone, and go right back to knocking years off your loan.

We hope these tips get you thinking about how you can save some money on your home. Keep in mind that the exact savings depend on your specific loan, rate, and policy, so your lender or insurer can confirm the details for your situation.

If you have any questions or want more information, don’t hesitate to reach out. Call or text us at (602) 571-3730, email us at john@arizonahomegroup.com, or visit ahgnationasks.com. We’re always happy to help you keep more money in your pocket.