Could Your Garage Get Your Home Sold? You’ve made updates to your kitchen. Made sure your bathrooms look fresh and clean. Decluttered EVERYTHING. Even dropped your price. But your house still isn’t selling. Could your garage make the difference? It just might.  “When prospective buyers visit your for-sale home, they’re going to inspect every room in the house—even the garage,” said Sara Reese of Berkshire Hathaway HomeServices Beach Properties of Florida on RISMedia. “It’s not exactly a glamorous space, but if your garage is a mess, it’s going to send a bad signal and turn off visitors. Therefore, it’s helpful to spend a little time in your garage and make it look its best.” Here are a few tips to get your garage in great shape. Replacing your garage door If your garage door works perfectly fine, replacing it may not be a high priority. But consider it curb appeal. Garage doors are large items, and they take up a lot of eye space. Especially if your garage faces the street, a dented, chipped, or dingy door could be stealing focus from the rest of your otherwise-put-together house.  “Remodeling Magazine found in its 2019 Cost vs. Value study that an upscale garage door replacement can actually net you a return of 97.5%,” said HomeLight. “A new garage door will run you between $300 to $1,500, depending upon the size and style, while installation typically costs between $500 and $800.” If the garage makes a loud or creaky sound when it opens, spending a few hundred dollars to replace the garage door opener is a no-brainer. Finishing out the garage Finishing out your garage isn’t recommended if you’re looking for the best return on investment (ROI). While this type of upgrade may appeal to a niche buyer, most aren’t going to pay extra for it, and you likely won’t recoup your costs.  Just adding epoxy to the floor can cost between $1,400 and $3,000. You could do it yourself for about $100, but the process can be tricky and the results may reflect your novice status.  If you don’t want to go to the trouble and expense of epoxying the floors, make sure you get them nice and clean. “If your garage floors are cracked and covered in oil stains from cars gone by, it’s a good idea to give the floor a good pressure washing and repair those cracks (depending on how big or noticeable they are),” said Nexx. According to homewyse, power washing the garage floor will cost around $200.  Adding storage After giving the garage a good cleaning, this is the No. 1 must-do to get the space in good shape. According to Kiplinger, 85% of buyers said they want garage storage.  You can easily spend thousands on dedicated garage storage systems that make the space look pristine, but creating spaces to neatly stash your stuff doesn’t have to be costly. A few large metal shelving units placed side by side will only cost you a few hundred dollars. These freestanding units are popular with buyers because the doors hide messes. And, when you put a few of them together, you can turn the top into a work surface. Adding a garage If you don’t have a garage and you’re in an area where most homes do, adding one might be on your mind. Your real estate agent should be able to advise you on whether or not this is a smart move, especially given the expense and expected ROI. “At a national level, home sellers can expect to recover close to 64.8% of their initial garage addition costs,” said Clever. “Let’s say that you invest $27,000 in adding a garage to your home, you may recover about $17,496 when you sell your home.” Doing a garage conversion Perhaps you’re thinking of converting your garage to living space. It is less expensive than adding on; According to Realtor.com, a garage renovation “comes in at $11,000 on average.” While a conversion isn’t necessarily a recommended strategy if you’re looking to get your home sold right away because of the expense and the time involved, there are some instances where this might be a good move.  “Nearly 30% of shoppers rate a garage as one of the most important home features, just ahead of an updated kitchen and open floor plan. But “a ‘well-done’ garage conversion to living space can give you up to an 80% ROI.”  The decision of whether to go this route largely hinges on that expense, but also on the specific area in which your home is located. It’s best to talk with your real estate agent before dropping the hammer on your garage conversion. It could be that homes without garage in your area just don’t sell. Or, perhaps there is a growing trend toward multi-generational living locally that could inform your renovation and make your home especially desirable.  FULL STORY->

When Do Mortgage Points Make Sense? Mortgage rates are increasing, which leaves potential homebuyers wondering how they can beat the rates, and one option is buying mortgage points. With mortgage points, you can save money, but they don’t always make sense in every situation. Mortgage points are a fee you, as a borrower, would pay a lender to reduce your interest rate on a home loan. You’ll hear it referred to as buying down the rate. Each point you’re buying will cost 1% of your mortgage amount. If you’re getting a $400,000 mortgage, a point would cost $4,000. Each point will usually lower your rate by 0.25%. One point would reduce your mortgage rate from, let’s say, 6% to 5.75% for the life of your loan. However, there’s variation in how much every point will lower the rate. How much mortgage points can reduce your interest rate depends on the loan type and the general environment for interest rates. You can buy more than a point, or you can buy a fraction of a point. Your points are paid when you close, and you’ll see them listed on your loan estimate document. You receive the loan estimate document after applying for a mortgage, and you’ll also see them on your closing disclosure, which you get right before you close on your loan. There are also mortgage origination points and fees you pay to a lender for originating, reviewing, and processing your loan. These usually cost 1% of the total mortgage. These don’t directly reduce your interest rate. Lenders might let a borrower get a loan with no origination points, but usually, that’s in exchange for other fees or a higher interest rate. To determine when mortgage points make sense, you have to calculate what’s known as your breakeven point. This is when borrowers can recover what they spent on prepaid interest. To calculate this, you start with what you paid for the points and divide that amount by how much money you’re saving each month with the reduced rate. Let’s say the figure you get when calculating your breakeven point is 60 months. That means you would need to stay in your home for 60 months to recover what you spent on discount points. If you’re buying a home you plan to stay in for a long time, then the additional costs of mortgage points to lower your interest rate can make financial sense. If you doubt you’ll stay in your home for the long term, it’s probably not right for you. If you don’t stay in the home for long enough, you will ultimately lose money. At the same time, as you consider whether or not mortgage points are right for you, you should consider your down payment. You could be better off putting money towards a more significant down payment than points. If you make a larger down payment, you might be able to secure a lower interest rate. Plus, if you make a down payment of at least 20%, you can avoid the added cost of PMI. Bigger down payments mean you’re lowering your loan-to-value ratio or the size of your mortgage in comparison to the value of your home. The takeaway is not to assume that buying mortgage points is always the right option. You need to consider how long you will stay in the home and your breakeven point. FULL STORY->

The Pros and Cons of An Adjustable-Rate Mortgage With mortgage rates rising, many potential homebuyers are looking for ways to beat the situation. One available option is an adjustable-rate mortgage. An adjustable-rate mortgage has pros and cons, and both have to be carefully weighed before making a decision. An adjustable-rate mortgage is also known as an ARM. These home loans have an interest rate that adjusts over time based on what’s happening with the market. These loans will often begin with a lower interest rate than a comparable fixed-rate mortgage, and the interest rate doesn’t stay the same forever. Your monthly payment can fluctuate after your initial period. A fixed-rate mortgage offers predictability and certainty because, for the life of the loan, the interest rate stays the same, regardless of what’s happening with the market. An ARM, by contrast, can become more expensive or less expensive. There are two periods with an ARM. There’s a fixed period, usually the first 5, 7, or perhaps ten years of the loan. During this set period, your interest rate doesn’t change. Then, there’s an adjustment period. Your interest rate during the adjustment period can go up or down based on changes in the benchmark. Mortgage rates are influenced by a range of factors, including personal factors like your credit score and broad factors such as economic conditions. You might get a teaser rate upfront that’s much lower than the rate you could pay later on in the life of the home loan. The benchmark in your ARM loan would be the basis of your rate. The contract may name the rate benchmark the U.S. Treasury or the secured overnight finance rate (SOFR). The named benchmark will, at some point in the life of your loan, be the starting point to calculate resets. The benchmark is used, and the loan is priced at a markup or margin. The margin applied to your ARM will depend on your credit history. A rate cap may be in place with an ARM, which would be the maximum interest rate adjustment your loan would allow at any particular time. The Pros of Adjustable-Rate Mortgages Adjustable-rate mortgages can be a good option if your initial goal when buying a home and getting a loan is the lowest interest rate. Your teaser rate isn’t forever, but you’ll get lower initial payments, so you’ll improve your cash flow. You might also be able to put more toward your principal balance every month. If you’re planning to move fairly soon after buying a home, you might not have to worry about the adjusting interest rate. An ARM can be a good option for someone buying a starter home. You may have plans to upgrade, so you can sell your home before the fluctuation of the interest rates, which keeps your risks pretty low with this type of loan. When you’re paying less monthly, you have more flexibility in your budget to meet other financial goals. If you think you’re moving somewhere that you won’t stay for more than five years, an ARM is often the best option. The Cons of an Adjustable-Rate Mortgage The biggest downside of this type of mortgage is that you’re taking a risk that your interest rate will go up. That’s highly likely, meaning eventually, your monthly payments will increase. It’s hard to predict what your financial situation will be in the future, and you might at some point find it’s a struggle to make your monthly payments if they’re higher. There’s also an inherent sense of uncertainty that can cause anxiety for some buyers. Finally, you also have to consider the risk that if you are planning to stay in your home for five years or fewer, you may not be able to sell it before your rate adjustment. If you’re in an ARM situation and can’t sell it, an alternative would be to refinance to a fixed-rate loan or maybe a  new adjustable-rate mortgage. FULL STORY->

What Does It Mean to Make a Principal-Only Payment? You’ll hear the terms principal and interest when you get a home loan. Your principal is the amount you borrow for your home loan, and your interest is what you pay monthly to use the loan. To calculate the principal of a mortgage, you would subtract your down payment from the final sales price of the home you’re buying. The principal you borrow starts accumulating interest right when you take it out. Your interest payment is the second part of a monthly mortgage payment. You’re paying your mortgage lender to give you a loan, which is reflected in your interest. Most lenders will calculate your mortgage rate in terms of an annual percentage rate or APR. APR is what you pay on your loan per year in interest. If you borrow $200,000 and your APR is 5%, you’re paying $10,000 a year in interest. Your principal is high at the start of your loan, so during this time, your monthly payment is primarily going towards paying your interest. A few percentage points of interest significantly affect how much you ultimately pay for your loan. If, for example, you borrowed $150,000 and your interest rate on a 30-year loan was 4%, your monthly payment would be around $716. If you had the same loan but a 6% interest rate, your monthly payment jumps to more than $899. A difference of just 2% in interest rates, for example, can make a difference of tens of thousands of dollars in how much you pay in interest over the life of your loan. When you make a payment on your loan, your lender will apply part of your payment to interest and fees before reducing the principal. The lender will use the same formula to pay the interest if you make additional monthly payments. The lender adds up interest accrued during the month, using a part of your payment to pay accrued interest before it’s then applied to your principal. So, What is a Principal-Only Payment? A principal-only payment is going entirely toward reducing your principal. Since the amount of interest you pay is based on the principal, your interest charges are smaller when you reduce your principal. You can pay off debt faster with principal-only payments and save on interest. Not all lenders will allow a principal-only payment, and some lenders will let you make additional payments during the month, but you need to specify it should go toward only the principal. Regarding a home loan, you’re making an additional principal payment that’s supplementary and applied directly to your principal mortgage amount, which goes beyond your scheduled monthly payment. Your monthly payments stay the same, no matter how many principal-only payments you make. You will save more money in interest throughout your loan life. You might want to recast your mortgage if you want lower monthly payments. Mortgage Recasting Finally, if you want to save on your home loan, mortgage recasting can help you pay less interest costs and maybe cut down on the total number of payments you must make before you pay your mortgage in full. You make a lump-sum payment towards your loan’s principal balance with a mortgage recast. Your lender amortizes your mortgage, reflecting your lower balance. You can lower your monthly payments because your principal went down, but your term and interest rates stay the same. One example of when someone might recast a mortgage is if they bought a new home before selling their old one. Then, once they sell their previous home, they can use that money to recast their new mortgage. If you get a bonus or windfall of money for some reason, you might also want to do a mortgage recast. Many lenders will charge a servicing fee for this, but not usually more than a few hundred dollars. Not every lender will offer this option, and some types of loans aren’t eligible. You can’t have a government-backed loan and it must meet minimum standards for principal reduction. For example, you usually have to make a minimum payment of $5,000. You’ll also probably need to meet equity requirements, and you have to meet requirements set by your lender for your payment history. FULL STORY->