I’m happy to have Brian Jessen, Senior Vice President of Mortgage Lending at Guaranteed Rate, Inc., join me for this Q&A.
Question from Fran L: Is it too late to take advantage of the low interest rates to refinance my current mortgage loan? What options are out there in the mortgage marketplace?
Brian’s Answer: Great question, Fran! Interest rates are predicted to be low for at least the next 12-24 months, so it is still a fantastic time to refinance your present mortgage loan. You could save money on a monthly basis, with a much lower interest rate. Or, you could accelerate or pay down the balance of your mortgage loan debt faster by selecting a 15- year or a 20-year fixed rate mortgage loan, saving you many tens of thousands of dollars of mortgage interest!
Additionally, with the strong housing market and rising house values, you could also refinance to pay off other outstanding debt (credit cards, student loans, or your auto loan), to increase your own personal cash flow and consolidate your debt into one lower overall monthly payment.
Lastly, you could refinance and take cash out to improve your home: complete a new home office, consider an addition for more space, re-do your bathrooms or upgrade your kitchen and/or family room area. A RealtorⓇ can help you evaluate your potential home projects, to see which ones may bring you the most return for the money spent on improving and upgrading your home.
Question from Barry G: My wife thinks we have to update our kitchen and baths and paint the whole house before we can sell it – I am concerned that the next owner will want to re-do all of it to their own taste anyhow, so isn’t that a waste of our time and money to do all the work before we sell it?
Nancy’s answer: Barry, it sounds like you’ve been in your house for several years. In the past there were many buyers that would prefer to redo everything themselves when purchasing a home that isn’t brand new. While there are buyers out there that are willing to take on some remodeling projects, the majority of buyers today would prefer it if there were few, if any, projects to tackle. In fact, these buyers will pay a premium for a home that doesn’t require much (or any) work after they move in.
So, you have a choice to make. You can sell your home in its current condition. Keep in mind that it will take a little longer to get it sold, and you will get significantly less money for it than if you fix it up.
If, on the other hand, you update the kitchen and baths, refinish hardwood floors, replace worn carpeting, and paint, then your home will sell faster and for more money. If you go this route, you need to make sure that you use a simple color palette and make selections that match the current style that buyers want. Will you recoup every dime that you spend fixing the home up? Maybe, maybe not. It depends on what condition things are in right now (the worse things are now, the less money you’ll get by doing nothing). And it depends on what projects you do – if you work with your RealtorⓇ to help you determine which projects will give you the biggest bang for your buck, you have a better chance of coming out ahead of the game. Your RealtorⓇshould be able to give you an idea of what the house would sell for if you do nothing, and what it would sell for if you do certain updates (in the current market). Then you can use numbers as a general guide when you set your budget for any projects.
If you aren’t planning to move in the next 12 months, I suggest you get to work on some of these projects now so that you can enjoy them for a few years before you are ready to move.
Do you have a real estate or mortgage question you’d like answered? Email us and we’ll address your question in an upcoming blog post: nancy@nancykarp.com brian@rate.com
This article originally appeared in Highland Park Neighbors magazine.