Tag Archive Home Improvement

ByCurtis Watts

Should I Refinance My Mortgage? When to Refinance

The Federal Reserve recently lowered interest rates in an effort to stimulate the economy during the coronavirus pandemic. As a result, more and more people are becoming interested in refinancing their mortgage. Depending on the situation, refinancing your mortgage can prove to be a savvy financial decision that can save you massive amounts of money in the long-term. But is it right for you? 

If you’re curious about refinancing your mortgage, this article should answer many of your questions, including: 

  1. How Does Refinancing Work?
  2. When Should I Refinance My Mortgage? 
  3. What is the Downside of Refinancing My Home? 
  4. How Do I Calculate if I Should Refinance My Mortgage? 
  5. What are My Refinancing Options? 

How Does Refinancing Work? 

“Refinancing your mortgage allows you to pay off your existing mortgage and take out a new mortgage on new terms,” according to usa.gov. So when you refinance your mortgage, you’re essentially trading in your old mortgage for a new one. The new loan that you take out pays off the remainder of the original mortgage and takes its place. That means the terms of the old mortgage no longer apply, and you’re instead bound by the terms of the new one. 

There are many reasons why homeowners choose to refinance their mortgage. They may want to secure a loan with a lower interest rate, switch from an adjustable rate mortgage (ARM) to a fixed-rate, shorten or lengthen their repayment term, change mortgage companies, or come up with some cash in order to pay off debts or deal with miscellaneous expenses. As you can see, there are a vast number of reasons why someone might be interested in refinancing. 

There are also a couple of different ways to go about refinancing. A standard rate-and-term refinance is the most common way to do it. With this method, you simply adjust the interest rate you’re paying and the terms of your mortgage so that they become more beneficial to you. 

However, you could also do a cash out refinance, where you pull equity out of your home and receive it in the form of a cash payment, or take out a new loan that’s greater than the remaining debt on the original mortgage. Even though you’ll get an influx of cash in the short-term, a cash out refinance can be a risky option because it increases your debt and it’ll likely cost you in interest payments in the long-term.


When Should I Refinance My Mortgage?

Maybe you’ve been wondering, “Should I refinance my mortgage?” If you can save money, pay off your mortgage faster, and build equity in your home by doing so, then the answer is yes. Whether you can achieve this is dependent on a variety of things. Take a look at these refinance tips in order to get a better idea of when you should refinance your mortgage. 

Capitalize on Low Interest Rates 

When mortgage rates go down, a lot of people consider refinancing their mortgage in order to take advantage of that new lower rate. And this makes perfect sense—by paying a lower interest rate on your mortgage, you could end up saving thousands of dollars over time. But when it comes to refinancing your mortgage, there are a number of other factors you should consider as well. 

Regarding interest rates, you should take a look at how steeply they drop before making any refinancing decisions. It might be a good idea to refinance your mortgage if you can lower your interest rate by at least 2 percent. It ultimately depends on the amount of your mortgage, but anything less than that amount likely won’t be worth it in the long run. 

Switch to Fixed-Rate Mortgage

It’s also very common for people to refinance in order to get out of an adjustable rate mortgage and instead convert to a fixed-rate. An adjustable rate mortgage usually starts off with a lower interest rate than a fixed-rate, but that rate eventually changes and it can end up costing you. That’s because the interest rate on an adjustable rate mortgage changes over time based on an index of interest rates. It can alter based on the mortgage market, the LIBOR market index, and the federal funds rate. 

By converting to a fixed-rate mortgage—where the interest rate is set when you initially take out the loan—before the low rates on your adjustable rate mortgage increase, you can minimize the amount you have to pay in interest. If you’re able to lock in a low fixed interest rate, you’ll be less susceptible to market volatility and more capable of devising a long-term payment strategy.   

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When debating the question of “Should I refinance my mortgage or not?”, you should also keep in mind what lenders will look at when determining the terms of your loan. In order to come up with an interest rate and approve you for a refinancing loan, lenders will take the following factors into consideration: 

  • Payment history on your original mortgage: Before issuing a refinancing loan, lenders will review the payment history on your initial mortgage to make sure that you made payments on time. 
  • Credit score: With good credit, you’ll have more flexibility and options when refinancing. A high credit score will allow you to take out loans with more favorable terms at a lower interest rate. 
  • Income: Lenders will want to see that you generate a steady, reliable income that can comfortably cover the monthly mortgage payments.  
  • Equity: Home equity is the loan-to-value ratio of a borrower. You can calculate it by dividing the amount owed on the current mortgage loan by the home’s current value. Before you consider refinancing, you should ideally have at least 20% equity in your home. If your equity is under 20% but your credit is good, you still may be able to secure a loan, but you’ll likely be charged a higher interest rate or have to pay for mortgage insurance, which is not ideal.

What is the Downside of Refinancing My Home? 

Refinancing a mortgage isn’t for everyone. If you don’t take the time to do your research, calculate savings, and weigh the benefits versus the potential risks, you could end up spending more money on refinancing than you would have had you stuck with the original loan. 

When refinancing, you run the risk of placing yourself in a precarious financial position. This is especially true when it comes to a cash out refinance, as this can put you on the hook for even more money and bury you in interest payments. 

Don’t refinance your home and pull out equity just to get quick cash, make luxury purchases, and buy things you don’t need—doing this is an easy way to dig yourself into a deep financial hole. In reality, you should only refinance your mortgage if you know that you can save money doing it. 

How Do I Calculate if I Should Refinance My Mortgage? 

Before you refinance your mortgage, it’s crucial to crunch the numbers and determine whether it’s worth it in the long-run. To do this, you’ll first have to consider how much refinancing actually costs. 

Consider Closing Costs

So how much does it cost to refinance? One of the most significant expenses to take into account when refinancing is the closing costs. All refinancing loans come with closing costs, which depend on the lender and the amount of your loan, but average around three to six percent of the principal amount of the loan. So, for example, if you took out a loan of $200,000, you would end up paying another $8,000 if closing costs were set at 4%. 

These closing costs are most often paid upfront, but in some cases lenders will permit you to make the closing costs part of the principal amount, thus incorporating them into the new loan. While closing costs generally don’t cover property taxes, homeowner’s insurance, and mortgage insurance, they do tend to include the following: 

  • Refinance application fee
  • Credit fees 
  • Home appraisal and inspection fees 
  • Points fee
  • Escrow and title fees 
  • Lender fee

Determine Your Break-Even Point

To make an informed decision as to whether refinancing your mortgage is a sound financial decision, you should calculate how long it will take for the refinancing to pay for itself. In other words, you’ll want to determine your break-even point. To calculate your break-even point, divide the total closing costs by the amount you’ll save on a monthly basis as a result of your refinance loan. 

The basic equation for figuring out your break-even point is as follows: [Closing Costs] / [Monthly Savings] = [# of Months to Break Even] 

Taking this into consideration, you can see how the length of time you plan on staying in a home can make a big difference as to whether or not refinancing your mortgage is the right option for you. If you’re thinking of moving away and selling your house in a few years, then refinancing your mortgage is probably not the right move. You likely won’t save enough in those few years to cover the additional costs of refinancing. 

However, if you plan on remaining at the house you’re in for a long stretch of time, then refinancing could potentially save you a lot of money. To make an informed decision, you have to do the math yourself—or, to make the calculations even simpler, use Mint’s online loan repayment calculator. 

What are My Refinancing Options? 

As stated above, you have options when it comes to refinancing loans. You could refinance your mortgage in order to secure a lower interest fee and a change in the terms of your loan; or you might opt for a cash out refinance that lets you turn your home’s equity into extra income that you can use to pay for home improvement, tuition costs, high-interest debt payments, and more. 

In order to actually start refinancing your home, you’ll have to find a lender and fill out a loan application. Shop around at large and small banks alike to see who will offer you the lowest interest rates and the best terms. How long does a refinance take? The timeline depends on a few things, including the lender you borrow from and your own financial situation. But, in general, it takes an average of 45 days to refinance a mortgage. 

You might also consider forgoing the traditional banks and dealing with an online non-banking company instead. Alternative lenders often offer greater flexibility in terms of who qualifies for a loan and they can, in some cases, expedite the refinancing process. For example, Freddie Mac is a government-sponsored mortgage loan company that, in addition to offering no cash out and cash out refinancing, has a third option available for borrowers whose loan-to-value ratio is too high to qualify for the traditional refinancing routes. Learn more by visiting freddiemac.com. 

When tackling any big financial decision, it’s important that you’re informed and organized. Learn the facts, do the calculations, and research your options before beginning the refinancing process to make sure it’s the right choice for you. 

The post Should I Refinance My Mortgage? When to Refinance appeared first on MintLife Blog.

Source: mint.intuit.com

ByCurtis Watts

8 Dangerous Mistakes To Avoid When Firing Up Your Generator This Winter

generator mistakesLifestyleVisuals/Getty Images

With so many people spending more time at home due to COVID-19, having reliable and consistent power is more critical than ever. But with winter about to be in full swing—and serious storms already wreaking havoc on parts of the country—many of us are thrust into crisis mode to get the juice back on.

If you haven’t done so already, now’s the time to invest in a generator to restore power to your home quickly. But here’s the deal: This is not a device to learn as you go. You need to know how to run it safely—before you push “start,” and long before the lights go out. Because when you’re in crisis mode, it’s much easier to make dangerous mistakes that damage the generator or, worse, potentially put your family at risk.

Whether you’ve run a generator before or just bought one, here are eight things you should avoid.

1. You neglect regular maintenance

Hopefully, you won’t need to fire up your generator that often. But between the times that you do, you shouldn’t just put it in the corner and forget about it.

“Lack of proper maintenance on generators is the largest problem we see,” says Rusty Wise, owner of Mister Sparky in Cherryville, NC.

To ensure your generator is ready to go, Wise says to check the batteries regularly, and examine and clean the oil and air filter. You should also start it up on a regular basis during the colder months.

“Cranking the generator and putting it under a load is recommended at least once a month to help prevent moisture from accumulating in the windings and other electrical components,” says Wise.

2. You don’t use heavy-duty extension cords

It seems like power failures go hand in hand with severe weather—and pairing sleet, rain, and snow with the wrong extension cords is a recipe for disaster.

Extension cords range from smaller wire 18-gauge to larger wire 10-gauge, says Wise. Wise recommends at least a 14-gauge outdoor grounded extension cord with GFCI protection for generators.

That’s a general reference, as the extension cord length and the amperage of the load affect how much the extension cord can handle, Wise says. Always consult your manual for specific extension cord requirements.

3. You run the generator from the garage

When a storm knocks out power and you have a generator ready to go, it’s tempting to start it up ASAP to restore power.

But beware: It’s not a good idea to start it up while it’s in the garage, even with the door open.

Generators should be operated outside, in a dry area at least 25 feet away from any open windows or doors with at least 5 feet of clearance on all sides, says Austin Heller, product manager of portable generators at Generac Power Systems.

“Generator exhaust contains carbon monoxide, a deadly poisonous gas invisible to the naked eye,” says Heller. “Only use generators far away from any openings to your home, and install a carbon monoxide detector indoors to make sure you’re alerted when CO is detected.”

4. You don’t follow the correct sequence when starting and stopping

Read the owners manual, but generally speaking, Heller says to turn the generator on before plugging in extension cords, then plug any loads into the extension cord.

When powering off, unplug loads from the extension cord. Then unplug the extension cord from the generator before turning the generator off.

“Following these steps will help to protect yourself from electrical shock, but it will also help minimize unnecessary strain or damage to the generator,” says Heller.

5. You have bad gas

We’re not talking about your digestion issues here. If you only started up the generator once and stored it with the remaining gasoline in the tank, it might go bad from sitting, Wise says.

“If you are going to store your generator, make sure to drain all of the gasoline or run it periodically to keep the gas fresh,” Wise says. “There are also gasoline additives that can help to keep the fuel fresh.”

6. You add gasoline while the generator is running

Speaking of gas, the generator sucks down gasoline as the hours go by in a power outage, yet you can’t add more gas at the last minute like you do when your car reaches the empty mark.

“Refueling a generator while it’s running or while the engine is hot could be a quick recipe for disaster,” Heller says. “Spilled gasoline could ignite, and create an explosion. Make sure to turn off your engine and let it cool completely before refueling.”

7. You run your generator unprotected from the elements

In the rush to get power restored to the house, you might haul out the generator in the pouring rain without setting up an area that will protect the generator from the elements.

Generators can be fired up and run during a snowstorm or rainfall, but they should be operated in a dry area to avoid electrocution or inverter damage, Heller says. Run it on a dry surface under an open, canopylike structure. Or buy a cover made specifically for generators.

8. You connect your generator directly to the service panel

Also known as “back feeding,” this connection is extremely hazardous.

“Connecting a portable generator directly to household wiring (electrical service panel) can be deadly to the homeowner, neighbors, or utility workers,” says Heller. “This is an illegal process, and it poses a major risk of electrical fire to the homeowner and any neighbors serviced by the same transformer.”

To get more power to the home safely, hire a licensed electrician to add a manual transfer switch.

“It can be installed to the home’s electrical panel with a manual switch to power everything a homeowner needs backup for,” says Heller. “A certified dealer can assess the home and suggest the correct size generator, while a licensed electrician can safely install the manual transfer switch to code.”

The post 8 Dangerous Mistakes To Avoid When Firing Up Your Generator This Winter appeared first on Real Estate News & Insights | realtor.com®.

Source: realtor.com

ByCurtis Watts

How to Keep Common Summer Pests Away from Your Home

If you’re spending more time outdoors, then you’re probably not alone. Here are some easy tricks and natural hacks to get rid of those unwanted summer pests.

The post How to Keep Common Summer Pests Away from Your Home appeared first on Homes.com.

Source: homes.com

ByCurtis Watts

How to prepare your home for a winter open house

The winter season can be a great time to sell your house, but while your competition is reduced, success during this time can still depend on a successful open house. To help make your open house as effective as possible, follow these tips.

  • Take down your decorations. The holidays are over, but if you’re the type that likes to leave the decorations up for a time, taking them down before your open house is a good idea. Prospective buyers may not celebrate the same holidays as you and you don’t want to alienate them.
  • Clear the clutter. If you haven’t put those holiday gifts away yet, now’s the time. Prospective buyers should be able to focus on your home instead of the collection of things crowding it. Give them nice open spaces to move about and they’ll be appreciative.
  • Turn up the heat. Warm and cozy is more than a catch phrase during the winter. Bring the temperature up in your home slightly during your open house to keep your guests comfortable. If they are too cold in your home, they aren’t apt to stay long.
  • Plan for winter apparel. Be it jackets or boots, take extra steps to prepare your entryway for the added material your buyers will bring with them. A designated spot to place these items can make guests feel welcome and keep your home cleaner during the showing and beyond.

The post How to prepare your home for a winter open house first appeared on Century 21®.

Source: century21.com