If it is time to either lower the interest rate on your mortgage or if you are thinking of doing a significant renovation, then it may be wise to consider refinancing your home. Before you contact a mortgage broker, consider these tips for getting prepared.
Calculate the Math
Be sure to assess your budget and overall finances before you refinance. A mortgage calculator online can help, but there are other things to take into consideration. Consider the loan term in the number of years and your age for when you plan on retiring. Opting for a 30 year loan may not be a great move if you are closer than that to retirement. There are other loan terms and packages like a 15 year mortgage term which may be more appropriate. Just make note that this will be a higher monthly payment due to the shorter term.
Check Your Credit Score
The three credit bureaus include Experian, TransUnion and Equifax and Federal law allows you to check your credit report once per year at no cost to you. It is a good idea to check your credit annually so you get learn your credit’s strengths and weaknesses. This will also give you the opportunity to fix any errors that may be on the report which can help you improve your score.
Lenders will want to know that you have credit available so paying down your debt is best. It is also a good idea to increase your savings so that you have a few months of living expenses in case of a job loss or the like. Even if you are not able to have a lot of money in savings, a refinance still can be a good option. Speak with your lender about your whole situation and they will help decide what is best.
Your Home’s Value
Lenders will want to see that you owe less than 80% of your home’s value on your existing loan. An appraisal will be conducted to obtain a fair market value. Before you embark on this process you may want to estimate yourself what your home is valued at by looking up recent sales of similar homes in your area.
Research Mortgage Lenders
Unless there is a good reason not to use your current lender, they would be the best place to start. Most mortgage lenders will want to retain your business so they will usually match the lowest rates that are available. In the end, be sure to do your own homework on rates and shop around so that you know you are get the best deal.
As your real estate resource, The Mendosa-Balboni Team is pleased to share the latest trends in the market. According to a recent report from the National Association of Realtors, pending home sales have sprung to their highest level in nearly a year and second-highest level in over a decade. Positive activity was found widespread with all major regions having experienced healthy gains in activity.
The Pending Home Sales Index has displayed a large increase of 5.5% to 112.3 in February up from 106.4 in January. This surge was 2.6% higher than last year and is the highest point since April of 2016 and the second highest since May of 2006.
NAR chief economist, Lawrence Yun, shared that the increase in activity is a sign that spring market is nearly upon us. “Buyers came back in force last month as a modest, seasonal uptick in listings were enough to fuel an increase in contract signings throughout the country,” he said. “The stock market’s continued rise and steady hiring in most markets is spurring significant interest in buying, as well as the expectation from some households that delaying their home search may mean paying higher interest rates later this year. Last month being the warmest February in decades also played a role in kick-starting prospective buyers’ house hunt.”
Yun anticipates there to be ebbs and flows this spring market as the supply is challenged to meet demand. Homes are going under agreement at a very fast pace particularly in the lower and mid price range markets. Housing stock is still thin and prices are escalating due to multiple offer situations.
“The homes most buyers are in the market for are unfortunately the most difficult to find and ultimately buy,” said Yun. “The country’s healthy labor market is translating to greater job security, but affordability is not improving because home prices in some areas are still outpacing incomes by three times or more because of tight supply. How much new and existing inventory there is on the market this spring will determine if sales can reach their full potential and finally start reversing the nation’s low homeownership rate.”
Looking further into the year, existing home sales are expected to be around 5.57 million which is an increase of 2.3% from 2016. Despite prices, the median existing home sale price is expected to rise by 4%.
More details from the Pending Home Sales Index by region of the United States in February were as follows. The Northeast had an increase of 3.4% to 102.1 while the Midwest rose by 11.4% to 110.8. The South increased by 4.3% to 127.8 and the West went up by 3.1% to 97.5. In total, all major markets are showing great signs of activity.
It is not uncommon that many homeowners think that improving the environmental friendliness of their home is out of reach financially. However, the reality is that there are still several things that you can do that actually save you money over time. The Mendosa – Balboni Team is pleased to share some ideas of things you can do at various budgets.
Light bulbs – LED light bulbs have gone down in cost over the past few years. Although they are still more expensive, the energy cost savings over time can make these a smart buy. Also, the greenhouse emissions that are diminished make them an environmentally responsible option. Consider switching your home’s bulbs over even if by one bulb at a time.
HVAC Ducts – Heating and cooling energy can be lost due to loose seals in your home’s duct work. Sealing the ducts can be pretty inexpensive and an easy thing to do yourself that can save you up to $100 per year in energy bills.
Replacing fixtures – Water heating is usually the 2nd biggest energy expense so updating your fixtures can help you save. A low flow or energy savings option for a showerhead will save you on both heating the water and on your water bill. Consider low flow faucets and toilets to increase efficiency and your savings.
Landscaping – With spring approaching, so is the time to clean up your landscaping. Consider implementing drip systems for your flower beds and gardens. Seek alternate materials other than large grass areas that require less watering and are drought resistant or hold in moisture. In the end this will help reduce your water consumption and costs.
Window replacement – It can be a costly improvement up front, but a very beneficial upgrade is to replace your windows with energy efficient models. Some estimates have indicated that double-paned windows can reduce heating costs by 15%. More efficient Low E coated windows can even pay for themselves in savings in just a few years.
Solar panels – There are government sponsored tax rebates that make solar panels more affordable as they can be costly to purchase. Many will see a great return on adding solar panels to their home, but check with a local professional in the area to assess your home and if it may make sense for the investment.
There are many options for all different budgets. Begin today with green improvements and feel good about the environment while you work towards energy savings.
The Mendosa-Balboni team knows that although this year the winter-like weather has been lingering later, spring has actually arrived and the warmer days are just around the corner. For many of you that have gardens or outdoor space, now is the time to start planning for how you will take advantage of this extension of your living space. Even if you are not fortunate enough to have a green thumb, here are some great tips on how you can make your outdoor space more enjoyable.
Plant Variety – Try implementing a diverse and wide range of plants and flowers for your yard. Avoid having too much of the same plant and color to keep from getting boring. Plants of all shapes, size and color will add excitement and interest. Be sure to carefully plant them so they complement one another rather than compete as they become full grown.
Adding Height – One strategy for adding more sky and sun into your outdoors is to bring your eye up with items that add height. This can include anything from adding taller bushes that give you privacy, bamboo that is often times taller and low maintenance or even vine covered trellises that can add an architectural design all year round.
Plant Containers – Does your porch or patio need some life added to it? Consider purchasing some plant containers for adding more color and interest. Plant containers are available in all types of shapes and sizes and can be great for adding options for more shrubbery or flowers. These containers will add punches of color while the plantings can help provide life and privacy.
Low Maintenance – There are some strategies that you can practice so that you spend less time working in your yard and more time enjoying it. When buying your plantings, choose some that are more sustainable that require less pruning or watering. Also, working in some perennials will help cut down on your revisiting what to plant each year.
Reduce Weeding – Weeds can be both unsightly and a regular cause for maintenance in your yard. Whether you minimize weeds with adding in plants and mulch, or if you hire a professional, cutting down on them will make your yard look nicer while decreasing the required maintenance.
Pending home sales have shown an uptick in December according to the National Association of Realtors. The Pending Home Sales Index, the forward looking indicator based off of signed sales contracts increased 1.6% to 109 in December from 107.3 in November. Considering this increase, the index is now 0.3% higher than December of the previous year.
Chief economist, Lawrence Yun shared that the contract activity has really varied across the United States in December but finished out on a high note as the year came to an end. “Pending sales rebounded (in December) as enough buyers fended off rising mortgage rates and alarmingly low inventory levels1 to sign a contract,” he said. “The main storyline in the early months of 2017 will be if supply can meaningfully increase to keep price growth at a moderate enough level for households to absorb higher borrowing costs. Sales will struggle to build on last year’s strong pace if inventory conditions don’t improve.”
Existing home sales are expected to be at approximately 5.54 million for 2017 which is an increase of 1.7% over last year. Last year was the best year of sales in a decade since 2006. The median home price for this year is anticipated to rise by 4%. By comparison, 2016 had existing home sales increase by 3.8% and prices increase by 5.2%. Additionally, Yun predicts housing starts to surge by 7.9% to 1.26 million units.
“Especially if construction-related regulations are relaxed, all eyes will be on the homebuilding industry this year to see if they can finally start making up lost ground on the severe housing shortages impacting much of the country,” added Yun.
In a lot of markets it is typical for sales to slow during the holidays and winter months. Inventory can also be a challenge with sellers removing their homes from the market and relist as spring approaches. Overall, the predictions for 2017 are optimistic as we move further into the year.
After the recent presidential election, mortgage rates have been seeing a slow increase which may have a small effect on home prices and affordability for buyers. According to Realtor.com’s Housing Forecast, a slower price appreciation and a stabilization in the homeownership rate is what is expected for 2017.
“Because of demographics and affordability challenges that are starting to emerge, more people are focused on getting into homeownership because renting is continuing to have the same challenges and, over the long term, is something that can really impact a household’s financial situation,” said Realtor.com Chief Economist Jonathan Smoke.
Here are some of the highlights of Realtor.com’s report.
Millennials and their Baby Boomer parents
Millennials are the biggest demographic where baby boomers come in as runner up. Both of these segments of the population are expected to dominate the real estate market in 2017 as their living situations and needs will be changing. Millennials are predicted to make up 33% of homebuyers with 30% belonging to baby boomers.
Millennials are a large portion of today’s first time homebuyers. As mortgage rates are on the rise it will progressively make affordability more challenging for this group. Also, the slim inventory adds more challenges when looking for a home to buy. Meanwhile, their baby boomer parents will likely take advantage of the higher home values and sell their homes which will help open up more inventory for the market.
Home Price Appreciation
Home prices are expected to lose some steam in their increases to 3.9% down from 4.9% in 2016. Smoke states that the percentage is still above average and demand is still going to stay stronger than supply in many areas across the country.
Home Ownership will stabilize
Smoke states that homeownership in the nation is forecast to come in at around 63.5% for 2017. This rate could increase more, but with prices where they are and inventory down across the country it is not expected to significantly increase. Realtor.com anticipates new home sales to increase 10% and new home starts 3% in the new year.
The Midwest Alternative
With the market posing its challenges with prices and inventory, Millennials are either remaining in or relocating to the Midwest. The area already has a large amount of Millennials and this group is now living closer to home after college. Millennials account for 42% of the homebuyers in the area compared to 38% nationally.
“There is a huge disparity in how many dollars are needed to get a home in Des Moines versus San Francisco,” Smoke said. “Affordability is a key part of why millennials are deciding to move or stay where they have been, as opposed to staying where they are.”
Inclement weather for any season fosters purchases of some standard items including snow blowers, air conditioners and the like. With severe weather comes the threat of power outages where retailers have difficulty keeping portable generators in stock.
In certain locations across the country, some storms cause power outages either more frequently or for longer periods of time. This has caused for homeowners to consider investing in a permanent home generator. Power outages are not only inconvenient, but they can also be dangerous or cause larger issues. An outage during the extreme cold could lead to a frozen or burst water pipe that can wreak havoc. A permanent generator can provide power to the whole house automatically making it very easy and safe for power to be restored.
Choosing the Right Size
Generators are rated by wattage. Some smaller ones produce only 1,000 watts while whole-house models can put out 6,000-22,000 watts. Most manufacturers have size calculators on their websites that can assist you with calculating your needs. Square footage and appliances that you have are part of the equation. As technology and models have progressed, nowadays there have been quieter models introduced as historically generators have been noisy.
Hire a Professional
Installing a permanent generator is not a DIY project. In addition, prepare to pay in the thousands for the installation of a larger 20kW model due to the cost of the unit and necessary wiring. Additional considerations include:
- Obtaining a permit
- Follow town laws
- Install unit far away enough from the home
- Properly bury any wires
- Install on a secure pad
Fueling options can range these days from gasoline, propane or natural gas. If you can connect to a natural gas line, then you won’t have to worry about ever running out of power.
Although there are costs and efforts involved in installing a standby generator, if you are in a location that can often have an interruption in service, it can be well worth the inconvenience and potential headache from the loss of power.
The Mendosa Balboni Team sells numerous homes in the Concord and surrounding areas which sometimes includes historic properties due to the nature of the area. The work and resources required to maintain a historic property can vary especially depending on the condition. Before you decide to purchase a historic home, here are some things to consider before you own a piece of history.
Living in a historic district may restrict you on what you can do with the exterior of your home. For example, certain colors and even window type can be protected under regulations. Check with your local planning department to be sure you are within compliance.
Historic Preservation Easements
Setting up a historic preservation easement will help protect your homes integrity. Paying a qualified organization or government agency to hold said easement will place a restriction on what can happen with the property. Sometimes this payment can qualify for a federal tax deduction.
Many historic homes have lasted as long as they have due to the great quality of construction and materials. Sometimes homes that are only 30 years old can be in worse condition than one that is 100 plus years old. It all can depend on what work has been done to it over time. If there has been neglect, then repairs can certainly add up. However, some areas have preservation offices that offer tax programs to assist owners of homes that are registered properties.
Financing and Insurance
Typically just like any other home financing your home should qualify. However, if there are significant repairs needed then some lenders may be hesitant. Other options like a private HUD title 1 loan or a 203k loan, also known as rehab mortgage insurance can go towards the purchase and cost of rehabilitation. Fannie Mae HomeStyle Renovation mortgages also can be an option. Insurance companies may also be reluctant should replacement costs be higher. A little time spent shopping around for policies may be required.
Older Homes and Inspection
It is not always required to get a home inspection, but it is typically a wise idea. Hiring an inspector that has an appreciation and experience for older homes is a good thing as they will be trained to look for commonalities like lead paint and asbestos.
Consider your desires and current lifestyle. If you are looking for a modern layout with a fully equipped kitchen or luxurious master bath it may be challenging. Ask yourself what you can live with and without to see if the character and charm outweigh these needs.
Is your home in need of some updating? Did you just receive a bonus check or a tax refund from the IRS and are not sure how to use the money as best as possible? Investing money into your home with select home improvement projects can have a significant impact on your home’s value. Here is a list of enhancement projects according to research teams from both the National Association of Realtors and Realtor Magazine that include some of the highest returns on your investment.
Front Door – Replacing a boring or beat up front door with an architecturally stimulating one can enhance your home’s curb appeal and also increase energy efficiency and safety. A new steel entry door on average costs just over $1,100 but has a ROI of over 96%.
Garage Door – Continuing on the theme of exterior doors, replacing those old garage doors with modern ones costs on average about $1,500 and has an ROI of over 83%. A garage is sought after by many buyers and has a big impact on appearance making for a great investment.
Windows – Your home’s exterior appearance would not be complete without the importance of quality, functioning windows. New, energy efficient windows can cut down on your energy costs and potentially earn you tax credits with select models. Replacing windows with wood replacements has a 79.3% ROI while vinyl replacements are at 78.7%.
Deck – Decks are ideal for outdoor enjoyment and can provide a great space to entertain. A 16 foot by 20 foot deck will cost on average about $9,500 but you will gain an 87.4% return on it after resale. Already have a deck? Consider giving it a facelift with a fresh coat of paint or stain, adding a bench or screening.
Add a Bedroom – An additional bedroom can add tremendous value to your home. Building out an attic into a 15 foot by 15 foot bedroom with a 5 by 7 bathroom with shower does cost you close to $50,000, however, you can expect an 84% ROI on the project.
Update Your Kitchen – Kitchens are one of the most important rooms in any home. Fortunately, you don’t have to gut your kitchen down to the studs to make add value. Consider keeping your existing cabinets but replace the doors and drawers. Swap out those older appliances with some new energy models along with a new sink and countertops and you will have made a big improvement for significantly less than a full remodel. This type of mid-range remodel can yield an estimated 82% ROI.
Interested in another great financial move but don’t want to take on a project? Make one extra mortgage payment per year and apply this to your mortgage principal. This can reduce your overall debt and brings the lifespan of a 30 year mortgage down to 22 years.