When is it Worth it to Refinance Your Mortgage?

Finance and Taxes

Refinancing your mortgage is worth it if you get a lower interest rate, a shorter term, or a smaller monthly payment. It’s usually beneficial if you can lower your mortgage interest rate by one percentage point. For a $400,000 loan, reducing the rate from 6.5% to 5.5% saves $257 per month, nearly 20% of the payment. With $8,000 in closing costs, you’ll need to keep the loan for 2.6 years to break even.

Avoiding Closing Costs. You can ask your lender about a no-closing-cost refinance, where you pay a slightly higher interest rate, but avoid upfront costs. This strategy allows you to sell your home anytime without penalty. Alternatively, you can roll closing costs into your new loan, ideal if you plan to stay for several years. You’ll pay more interest, but it can be cheaper than a higher-rate, no-closing-cost loan.

You can also replace an adjustable-rate mortgage with a fixed 30-year term, or switch a 30-year loan to a 20- or 15-year term. Principal payments will be higher, but the interest rate will be lower.

 Prepare Your Outdoor Spaces for Fall and Winter

About the house...

Late October to mid-November is the perfect time to plant, weed, prune, and mulch, so your yard looks nicer and your plants will be protected during the winter.

  1. Trim trees of dead branches for your own and neighbors’ safety. November-March is an ideal time to prune trees to prevent branches from blowing against the house.
  2. Get rid of leggy shrubs and plant new ones. Plant new shade trees with leaves that change color.
  3. Clean out flower beds and re-mulch with a layer of “wood chips, tree bark, leaves or other organic material.”
  4. October-November is the ideal time to plant bulbs before the ground freezes. You can also plant pansies, ornamental kale, ornamental cabbage, and other cool-season annuals.
  5. Pull weeds from the lawn after a rain so they’ll be easier to pull out by the roots. They’ll be less likely to reappear in the spring.

20 things that don’t add to your property value

About the house..., Seller Information

Make your home as unique as you want it, but if you are considering selling in the not to far future or are already on your way to listing, staying away from these items might pay off when your offers start rolling in.

  1. DIY Home Improvements – while they may save you money, if not done professionally, it will be obvious to a prospective buyer, which might cost you in property value more than you invested in improvements.
  2. Garage Conversion – When it comes to home buying, buyers care about their garage space and size, you cutting into that with a garage conversion that might not match the rest of the house might be something to consider before taking the plunge.
  3. Solar Panels – If you decide to lease solar panels instead of buying, keep in mind, that future home buyers might not want to take on that responsibility.
  4. Quirky Wallpaper – it may look cute, and you might think it adds character but with quirky wallpaper, the odds of others not holding them as fondly as you do are very high. Consider investing in temporary wallpaper instead and removing it before selling if you have your heart set on it.
  5. Custom Luxury Upgrades– They may be just perfect for you, but that’s just the thing, they probably won’t be for others, and the more custom you go, the likelihood the cost will go up for replacing the upgrades. Make sure you think through these decisions.
  6. Wine Cellars– With so maybe individuals who don’t drink, or hate wine, or are simply committed beer drinkers, wine cellars take up a lot of square footage. They are expensive and difficult to renovate into a different space.
  7. Remodeled basements and attics –If you are looking to add on a bedroom, using this space, there is a lot to factor in. There are ceiling height, closet, and emergency exit requirements that can end up racking up quite a cost so if you are thinking of doing this make sure you do your research and the math beforehand.
  8. An oversized home addition –If you expand the home too far, it will start to look unplanned and not give the added appeal you may be thinking it will have.
  9. New windows – If these are old windows we’re talking about, then they may add to your property value, but you need to check your local market to see if houses with new windows are going off the market faster than ones that haven’t made the upgrade, especially with windows being such a large investment.
  10. Swimming pools – Swimming pools often scare aware new family buyers who have little ones around to worry about, while they may seem fun, keep in mind your target buyer before installing.
  11. Lavish lighting fixtures– These can go wrong in so many ways, they can go out of style fast, dates themselves and your home, and aggressively tell other people your style and how much it’s not theirs.
  12. Too much wallpaper – Once again, it’s hard to envision a space of your own, in a room with a distinct look because of the wallpaper. Solid color walls give homebuyers more room for imagination.
  13. Textures on the wall and ceiling– Textured walls can go in and out of style, people who want this in their home will make the investment to do it themselves but for others who don’t want them, they may be discouraged by the mess of having them removed.
  14. Overbuilding for the neighborhood – A house that doesn’t match the neighborhood, can stand out and make people feel it’s out of place.
  15. Inconsistent high-end upgrades – This creates more work for the buyers to make the home more cohesive and it can sometimes give the impression that your home upgrades weren’t thought out.
  16. Invisible improvements– If it’s not something you need to be done and not something homebuyers would see or ask about, it likely will be a good deed unrecognized, save your wallet the stress.
  17. Quirky tiling – It is pretty hard to work with tiling if it is already setting the tone of the room all on its own. Try picking tiling that can mess well with many different design tastes, homebuyers often are interested in ripping up and replacing tile right after purchase.
  18. Too much carpeting– Carpet can age fast, wear down and get messy. It may make sense in some rooms like the bedroom but with the market changing, committing to most of the rooms with carpet is a big no-no, especially in the bathroom! Not that we should have to say this.
  19. Bright or bold paint colors – If new buyers cannot imagine themselves in your home because you have left so many traces of your design style that they might not agree with, they are going to be less likely to see it as their dream home.
  20. Large Gardens – Gardens are amazing, but depending on the property price range, large gardens can be expensive and time-consuming to maintain, and not easy to get rid of if the new owners don’t share your green thumb.

How to Prevent Carbon MonoxidePoisoning in Your Home

About the house...

With fall and winter approaching, it’s essential to have your home’s heating systems inspected and serviced, according to the Consumer Product Safety Commission. A trained technician can check chimneys, central heat, gas heaters, heat pumps, electric heaters, and more to ensure they function properly and don’t produce dangerous carbon monoxide (CO). They can also install CO detectors throughout the house to ensure occupant safety.

Carbon monoxide is odorless and colorless, making it undetectable without alarms. CO poisoning symptoms can be mild or severe and are often mistaken for the flu. Low-level exposure can cause headaches, fatigue, shortness of breath, nausea, and dizziness. High-level exposure can lead to confusion, vomiting, loss of coordination, unconsciousness, and even death.

To prevent CO poisoning, the CPSC and Environmental Protection Agency recommend:

  • Installing interconnected CO alarms that all sound together.
  • Never using portable generators indoors; keep them at least 20 feet away from the home.
  • Not using cooking appliances for heat.
  • Opening the fireplace damper before and after use.
  • Avoiding barbeque grills in semi-enclosed spaces like garages.

Are Mortgage Interest Rates Going Down?

Finance and Taxes, Market Update

Homebuyers saw a turning point in interest rates beginning in June 2024. The Federal Reserve decided not to raise overnight borrowing rates, keeping them at 5.25%-5.50%. This is a sign that inflation is moving closer to the Fed’s 2% target. However, the Fed anticipates only one rate cut by year-end, which could impact the housing market.

Mortgage rates have decreased to their lowest levels since March 2023 but remain around 7% for the 30-year fixed mortgage. This rate is typically available only to those with excellent credit and a 20% down payment, which might explain why housing sales are 10% below mid-2023 levels.

Most economists expect rates to drop slightly by the end of 2024. Fannie Mae predicts an average rate of 7%, while the Mortgage Bankers Association, Realtor.com, and Wells Fargo forecast a drop to 6.5%. The difference between 7% and 6.5% is $122 per month on a $400,000 mortgage.

Even with fewer sales… home values increase

Current Lansing Area Sales Statistics, Market Update

Second quarter 2024 sales statistics, ending June 30th, showed that the average sales price of Lansing area homes increased 10.9% from $235,475 at the end of the second quarter of 2023 to $261,087. This represents an average home value improvement of $25,612.

The fact that there were 131 fewer sales so far in 2024 (-4.8%) represents a lower number of homes being offered for sale with established homeowners reluctance to give up a 3.5% mortgage in order to enter into a now 6.78% mortgage on a different home.

The increase in home value indicates strong buyer enthusiasm by those moving into the Lansing area and those able to adjust to higher mortgage rates. First time home buyers have been hit hard with the increased interest rates and home insurance that require budgeting changes and higher down payments. Local lenders and the State of Michigan’s MSHDA program have offered relief with mortgage incentives that accommodate lower income buyers.

First Quarter 2024 Sales Statistics

Snapshot of current Lansing area sales entering into the Spring selling season:
Lansing Area Market View –August 1, 2024
634 – currently listed homes for sale in the five county greater Lansing area.
 285 – homes with accepted offers. (Awaiting inspections and/or appraisal.)
 345 – homes listed as Pending. (Have completed inspections and will soon close.)
 3012 – homes that have closed since January 1, 2024. 

Current Mortgage interest rates 
  30-year fixed – 6.77% ($6.49 per $1000)
  15-year fixed – 6.44% ($8.47 per $1000)

Square Footage: Why Size Isn’t Everything in Real Estate

Buyer Information

First, there’s no single universal means of measuring square footage. Differing state rules and customs make calculating square footage somewhat subjective. Insurers, tax authorities, lenders, and real estate professionals typically use square footage numbers as determined by licensed property appraisers, but this data can conflict with tax roll figures if improvements to the home were made without permits.

To make it easy to compare homes, the real estate industry supplies lots of data for each listing, including number of stories, type of home (condo, single-family, etc.), building materials (brick or siding), size of lot, number of bedrooms and baths, and so on. Nearly all homes listed for sale provide square footage to indicate overall size, but there are several reasons why square footage can be misleading, causing you to either overpay for a larger home or pass up a smaller home that’s actually more comfortable and livable.

Some states exclude attics, basements, garages and detached structures, while others allow them to be included if they’ve been finished out as living space. In high-rise buildings, square footage often includes balconies, even though they’re open air and not enclosed.

As a homebuyer, use square footage as a guide, but pay more attention to the home’s living spaces. Does foot traffic flow easily from room to room? Does the floorplan make sense? Are the rooms the right proportions for their purposes? Do you have the right spaces for your family’s needs? These questions will help you prioritize factors like flow, layout, and functionality over square footage alone.

How to Get Your PMI Canceled

Buyer Information, Finance and Taxes

When you take out a conventional mortgage loan (not insured by the U.S. government), with a down payment of less than 20%, your lender will require that you pay monthly private mortgage insurance (PMI) which protects the lender in case you default.

PMI costs can vary between 0.58% and 1.86% of the mortgage amount. Suppose you buy a home for $350,000, put down $35,000 or 10% with a 6% interest rate on a 30-year note, and with a credit score of 620 to 639, you’ll pay 1.50% PMI, or $394 per month. It’ll take 7.40 years for your loan balance to get to 80% loan to value (LTV). The earliest you can get a PMI cancellation is two years of ownership and an LTV of 75%. 

You can ask your lender to remove PMI when your loan balance reaches 80% LTV. At 78%, PMI should be canceled automatically, but there are steps you can take to get it canceled more quickly.

  1. Make extra payments to reduce the principal.
  2. Make payments on time—no late payments in the previous 12 months, no 60-day late payments in the previous 24 months.
  3. Don’t have any other liens on the property, including a second mortgage.
  4. Show proof of value with a professional appraisal or broker price opinion.
  5. Make improvements to the home that add value.
  6. Refinance the mortgage and get a home equity line of credit to pay off the PMI.

What Does Recasting a Mortgage Loan Involve?

Finance and Taxes

Refinancing your mortgage is expensive, especially if you just want to lower your monthly payments. Closing costs can be in the thousands of dollars because you’re essentially applying for a new loan. Is there another way to lower your monthly payment? Yes: You can recast your mortgage.

In simple terms, a mortgage recast involves making a lump-sum payment toward the principal balance of your loan which the lender uses to create a new amortization schedule which will lower your monthly payments.

Every mortgage has an amortization schedule that directs part of your payment to reducing principal or toward paying interest. These amounts change slightly every month, until your payments go from paying mostly interest to paying down your principal. With a recast, your interest rate and term remain the same, but your monthly payments are lower because you paid a lump sum toward the principal.

To qualify for a recast, you’ll need a minimum of $10,000 and you’ll pay a service fee of approximately $250. Though the recast isn’t a new loan, you must qualify to get one: 

  1. Lenders may have differing requirements and fees, from the amount of the lump-sum payment, to how many on-time payments you’ve made, to how much equity you have in your home.
  2. Recasts are not available on government-guaranteed loans such as FHA, VA, or USDA.

When you receive a bonus at work or decide to close out your savings, it’s a great idea to build equity in your home.

What’s the Difference Between a Condo and a Co-op?

Buyer Information

Condominiums and co-ops are great choices for first-time homebuyers, singles, couples and roommates, and down-sizing families, but they are very different types of property ownership.

As an investment, a condo owner is free to rent out their unit, but some HOAs impose limits on the number of units within the community that can be rented out or restrictions that prevent short-term rentals or the use of some amenities, because a high number of renters raises the HOA’s exposure to risk.

Condominiums are usually located in the most in-demand areas, near plentiful jobs and entertainment districts. You’ll own your unit and share amenities with other owners such as garage parking, fitness rooms, and swimming pools. You’ll pay a monthly, quarterly, or annual homeowners association (HOA) fee which is levied to take care of common areas. HOA fees vary widely, depending on amenities and the market.

Co-op owners have a percentage ownership of their building and property, based on the size of their units, but they don’t own their individual units. In the Lansing area The Ponds, located in Okemos, is a co-op operated like a corporation in which homeowners are shareholders. They have the right to approve new owner-occupants and can reject them based on financial requirements. They can’t discriminate against protected classes, such as race, creed, age or gender. Most co-ops don’t allow renters; if they do, they impose restrictions such as rental terms and credit worthiness.