Is It Time to Refinance?
Mortgage rates were unchanged this week as investors hedged their election bets.
The benchmark 30-year fixed-rate mortgage was unchanged at 3.57%, according to the Bankrate.com national survey of large lenders. The mortgages in this week's survey had an average total of 0.4 discount and origination points. One year ago, the mortgage index stood at 4.25%; four weeks ago, it was 3.59%.
The benchmark 15-year fixed-rate mortgage fell to 2.88% from 2.89%. The benchmark 5/1 adjustable-rate mortgage was unchanged at 2.72%.
Taking on some do-it-yourself projects around the home? You deserve praise for your efforts, not frustration. So why make things hard on yourself — especially when there are tools available that can make the job easier? Reas on here.
The environment for home sales becomes more difficult with each passing month. Some estimates put 11 million mortgages, about 20% of the U.S. total, underwater, meaning that homeowners owe their banks more than the underlying properties are worth. Home repossessions reached more than 100,000 for the first time in September. Rising foreclosure rates continue to further depress housing prices. Read on here.
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By Tara-Nicholle Nelson
In Staying Put: Remodel Your House to Get the Home You Want, architect Duo Dickinson gives new meaning to the term ‘housebound.’ He uses the term to refer to homeowners who have decided to stay put instead of moving up to a larger home, including those who made that decision because they are upside down on their mortgages: they owe more than the place is worth.
The premise of Dickinson’s book is something I’ve long believed myself: that staying in even an underwater home can be a smart move – and it doesn’t have to involve making do with a home that no longer works for your needs. Blinging out an upside down home with every gadget and doodad known to man can constitute throwing good money after bad, but there are a handful of upgrades that might make sense for homeowners facing negative equity.
For the most part, sensible upgrades to upside-down homes can all be described as things that either:
- make life in the place much more comfortable for the long term – alleviating the want or need to move
- boost the home’s sagging value or saleability for a relatively small investment, and/or
- begin saving the homeowners money – or even earn tax credits – immediately.
Here are five upgrades that might have upside for your lifestyle or bottom line, if you own an underwater home:
1. Cosmetics that boost curb appeal. When your home is mired in negative equity, chances are good that you might have been investing your dollars and cents into keeping your head above water and the property in sound functioning condition – not necessarily keeping the exterior at its most pristine. But if you are looking to boost your home’s value to hit an appraisal mark for refinancing, or even just trying to lure in a buyer to purchase the place as a short sale, primping your home’s exterior cosmetics can be a smart investment. Keep costs down by doing it yourself, or even hiring a reputable handyman to tackle small, but impactful tasks like:
- painting the shutters, eaves, doors and other trims – if you can paint the whole house, great – but if you can’t afford all that, painting the trims and accents can make a massive visual difference in the look and feel of your home, very inexpensively;
- adding fresh, new hardware like a mailbox, house numbers, and a front door or door knockers and kick plates; and
- landscaping – planting lush or fragrant flowers or trees, trimming up overgrown shrubs and even installing low maintenance ground cover can also transform the entire look of your home from the curb.
And while curb appeal is priority number one if you are trying to get your home sold, interior design projects of a similarly small scale can also create massive benefits for your emotions and comfort level for the buck if you’re planning to stay put for the long haul. It’s amazing what a basic paint job in your bedroom, opening (or ditching) your window coverings or installing lighting or shelves can do to make your family happier at home!
2. Economical expansion. If you crave more space and your home can be expanded within its existing footprint, consider an economical expansion – having a professional convert your garage or basement into a rental or mother-in-law type unit can be an especially good investment if you can house more family members or bring in some income within the new living space.
In a similar vein, consider adding a prefab unit in your large backyard or even building on additional square footage, if you can afford it and truly need the space. Before you do, though, make sure you get permits and check in with your local real estate pro to be sure that you’re not just overimproving the place vis-a-vis the neighborhood, digging your negative equity hole beyond your financial or emotional tolerance level or even an extended timeline you might have in mind for selling the place.
3. Greening it up. Upgrades that improve your home’s energy efficiency have inherent value in terms of scoring you points as a good citizen of the planet. But they can also improve your day-to-day living comfort – and decrease your utility bills. Buying solar panels can eliminate your electric bill entirely with an upfront investment; leasing the panels can cost you nothing upfront and keep your energy bills fixed for as long as 20 years!
And on my own personal home improvement wish list is a tankless water heater – they eliminate the need to pay to keep that big old tank of water hot, and they produce endless hot water – no matter how many showers you take. Endless hot water! (As a side benefit, if you happen to live in earthquake country like I do, you don’t have to worry about strapping the tank or checking to make sure it’s still secure after every tremor or aftershock.)
In many states, green home improvements like these and dual-paned windows, adding insulation or installing efficient heating and cooling appliances might qualify you for tax credits; check with a local tax pro to see what tax advantages you might earn by going green at home.
4. Combining quarters. A home improvement show would be nothing without someone pointing out how gloriously spacious the kitchen/dining room, master bedroom or even two smallest bedrooms could be if they could just (say it with me, folks): “knock out this wall.” If you’ve uttered those very words about your own home, consult with a contractor – many interior walls are relatively easy and inexpensive to remove, even if you might need to leave in and finish off a support beam if the wall does turn out to be load bearing.
I know it’s anathema to some agents to even think about combining two bedrooms into one; for resale purposes the rule of thumb is the more bedrooms, the better. But, here’s the deal:
(a) two teeny-tiny, unusable bedrooms are not better than one, in the eyes of most homebuyers, and
(b) most walls that are easily taken down can be equally easily put back up when it’s time to sell.
If you’ve decided to stay put in your underwater home for the next 10, 20 or even 30 years, there’s no reason resale considerations should stop you from taking down a wall that is preventing you from fully enjoying your home.
5. Built-ins that make things work. Built-in work and storage spaces in your office, garage, craft rooms, kitchen and even otherwise unusable nooks and crannies are uber-useful and can give you the feel of a highly customized luxury home without moving – and without spending much cash. (And window seats? Don’t get me started – who doesn’t love a window seat?!)Similarly, functional furniture like loft beds, Murphy beds, pot racks, pantries and armoires can create a highly customized feel and convenient lifestyle, but you can move them around the house – or even take them with you whenever you do decide to move!
Investing to improve a home that is upside down should be done very carefully, and only once you have your personal endgame firmly in mind. The budget you set to spruce up a home you need to divest of via a short sell might be vastly different from the investment you’re willing to make to enlarge a home you plan to house your family in for the next 20 years. So be intentional: get clear on your finances and your future plans for your family and career before you start spending on home improvements in this market climate.
Then, you’ll be in a position to create a regret-free home improvement plan.