The Chicagoland mortgage refinancing market has enjoyed months of near-record low interest rates. The rates have stayed so low for so long that many borrowers assumed home mortgage interest rates will be low “forever.” And for good reason. At the first sign of rising interest rates – regardless of how slight the expected increase – the global money markets seemed to force them downward again. Even the rumblings of a Federal Reserve increase in fed funds rates did little to change the feelings of some borrowers who watched mortgage rates remain low throughout the peak home buying months.
The majority of borrowers refinanced in the past year or so while interest rates were low. Surprisingly, however, more than 10% of borrowers throughout the nation have yet to refinance. Of the ones who haven’t refinanced their mortgages, most have home loans with rates at 5% or higher. The average rate of those borrowers in the Chicagoland mortgage refinancing arena who have actually refinanced is roughly 3.5%.
For technicality’s sake, experts say almost 25% of borrowers have mortgages with rates higher than 5%, but many of those homeowners cannot refinance their loans. According to CoreLogic here are the reasons why they haven’t – or are unable to – refinance to save money. For one thing, roughly half of the existing mortgages with higher rates that haven’t been refinanced are delinquent or have experienced a delinquency during the loan period. Because of that, most lenders consider the risk of granting them a new mortgage – even at a lower interest rate – too high.
In addition, existing mortgages held as part of private-label securities portfolios are generally more difficult to refinance than government-backed loans. As a result of the changes made in the aftermath of the housing crash of nearly a decade ago, the U.S. government offered refinance programs designed to be more streamlined. Those programs included a large number of borrowers who were underwater at the time – borrowers who owed more on their homes than they were worth. Again, to be technical the resulting share of borrowers not taking advantage of the interest savings is roughly 13%. Why haven’t that 13% refinanced when they could have? Let’s take a quick look.
The reluctance of the rest of the 13% of borrowers that haven’t refinanced is likely due to the remaining balance on their higher-rate mortgages. A CoreLogic spokesperson speculated that “small balances may not be worth refinancing… the savings would be too low.” And the speculation is probably spot on. Consider this: CoreLogic found that borrowers eligible to refinance with old rates above 7% have an average remaining mortgage balance of only $53,000. Borrowers with rates between 5%-7% had roughly $100,000 remaining on their principal balance. With the closing costs involved in a refinance – even with an existing lender – the question those borrowers need to ask themselves is, “Would refinancing a relatively low balance save me any money?” Closing costs for a refinance can often run 2%-3% of the loan amount, depending on whether points are involved. Let’s take a look and see if the savings are worth the effort.
The quick answer is, it depends on the original mortgage amount. For example, a borrower with an original loan balance of $400,000 can reduce his monthly mortgage payment substantially since the original payment was much higher. If that borrower is refinancing a $100,000 remaining balance, the closing costs are going to be comparatively lower. Conversely, a borrower with an original loan amount of $150,000 who currently owes $75,000 won't enjoy a significant savings on the remaining amount of interest – especially after factoring in the closing costs. In addition, many borrowers simply don't like the idea of extending the term of their loan. A borrower who’s 12 years into an original 15-year mortgage may just want to pay it off as planned instead of recasting the loan term to another 15-year term by refinancing.
As usual, each case is different, so it’s a good idea to talk to a Chicagoland mortgage refinancing professional. Here’s why:
Your mortgage lender can provide you with the remaining balance on your existing mortgage at the original interest rate. In turn, using the original amortization schedule – updated to reflect any principal only payments – the lender can estimate the amount of interest you’ll pay over the remaining life of the loan. Naturally, the calculation is based on the assumption that you won’t pay off or otherwise alter the loan's principle balance. Then, using current interest rates, the lender will determine what a typical refinance will cost in terms of monthly payment versus your existing mortgage payment. The interest portion of the payment when amortized over the new term will give the lender the total amount of interest you’d pay if you refinanced – again, barring any future changes to the principal amount. By simply comparing those two amounts, the lender can determine the interest cost savings. However, that’s not the end of the analysis. As mentioned, the costs of closing the loan have to be figured into the equation to determine the net savings, if any.
Closing costs, though not as high as on a new loan origination to purchase a home, can still be substantial. Though it may seem unnecessary, the lender is required to ensure the home's value is sufficient for the loan amount to be granted. Therefore, either a new appraisal (or, in some cases, an update to the existing appraisal) is required. In addition, you can expect to pay a loan origination fee and an updated title search fee. A new credit report and normal court recording costs will also be required. You may have to pay for an updated termite inspection and a home inspection. After all those costs are taken into consideration, then and only then can your Chicagoland mortgage refinancing lender give you an estimate on the cost savings to refinance and an opinion as to whether it makes financial sense. From there, only you can make the decision.
You can find more articles pertaining to Chicagoland mortgage refinancing and the overall mortgage market in the Chicagoland Mortgage Info section of our site below Chicagoland Real Estate Categories in the column to your right.
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Homeowners in the Chicagoland real estate market are often motivated by the merging of two age-old cliches: “Jumping on the bandwagon” and “Strike while the iron is hot.” Homeowners thinking about selling a Chicagoland home have seen prices continuously climb during the last year as a result of a number of factors – most notably a higher demand created by a lower than usual supply of home inventory. However, one question homeowners should ask themselves if they're contemplating selling is, “Am I making the right decision.” Yes, No, Maybe?
When thinking about selling a Chicagoland home, the market is comprised of many “ups and downs.” The “ups” are the higher prices many sellers can command for their homes. The “downs” are, again, the higher prices many sellers can command for their homes. Simply put, if you sell your home for top dollar you’ll probably have to pay top dollar for a new place to live, too. We suggest consulting with real estate professionals before you test the waters.
One of the biggest challenges in your individual housing market is the difficulty for the average homeowner to know whether or not it’s at its peak. If you base your decision to sell on the perception that other homes in your market are selling, it could give you a sense of urgency. That impulsive need to act quickly or “Strike while the iron is hot” may often be popular, but not always prudent. Let’s take a look at a few tips that may give you more insight if you're considering selling a Chicagoland home.
Long Term Considerations
Because real estate transactions are in large measure emotional investments, you should carefully assess the reasons you're contemplating selling. Is it purely for financial gain? If so, as mentioned above, will you end up paying more for your next home? Do you really want or need to sell? If not, consider making your home a rental property – especially if you’re thinking of downsizing. As an alternative, if you can afford it, you can give your home to your children – what a wonderful gift for a growing family! Just don't get caught up in a market feeding frenzy and allow it to push you into making a bad decision. Just because there may be an opportunity to sell your home, that doesn't mean it’s the best decision to make right now.
The Past is Just That – the Past
One thing to remember, perhaps above all else, is what worked before when it comes to selling a Chicagoland home, doesn’t necessarily work today. The homeownership playing field and the environment in which housing operates is vastly different to what it was just 20 years ago. With employment markets having been negatively impacted and wage growth relatively stalled, it’s often a challenge for prospective purchasers to afford their mortgage. The concept of being able to “grow into a mortgage” is foreign in today’s economic climate. That – combined with the additional challenge of saving for a down payment – is one reason “Millennials” aren’t buying homes in the numbers their predecessors once did. As a result, the homeownership rate in the U.S. is at the lowest level in over 50 years. So, if you do decide to sell, remember you may be in a neighborhood that would be ideal for first-time homebuyers – but fewer, at least for now, are buying.
Don’t Rush Things
Take your time. Nothing or nobody should be able to unduly influence your decision to sell or not to sell. You likely didn’t rush into the transaction when you purchased your home, so there’s little need to rush to sell, either. Get the opinion and advice from different sources. Consult a real estate professional. Call your accountant, tax advisor or financial planner. They could be invaluable in providing information you may not have considered. Remember, because of their nature and the resulting “domino effect” they usually create, home sales aren't easily undone. So before you decide to sign the sales contract, take your time, be confident in your decision and don’t look back. If you have any hesitancy, take it as a sign you should step back and regroup. As with most things – especially emotional decisions like selling your home – let your conscience be your guide. Chances are, your instincts will tell you what’s best for you and your family.
Don’t Look Back
After you’ve given due consideration to these and other tips pertaining to selling a Chicagoland home and still decide you’re ready to sell, go for it. Shift into high gear, hire a sales professional, list your home at the most attractive price possible for a comfortable, manageable closing date – and don’t look back! As humans, we’re all guilty of second-guessing ourselves. However, if you’ve gone through the thought-provoking exercise, consulted with the right people, and feel selling is the best thing to do, you’ve done your due diligence. No second-guessing required. Own your decision and press forward.
The proverbial bottom line is this. A decision of this magnitude should be made by you and you alone. Others can provide their opinions, their expertise and their advice, but when the dust settles, you’re still the one who has to make the final decision. Once you feel confident in your research, information gathering, processing and mulling things over you may just find that the agonizing decision you wrestled with at one time now seems obvious – one way or the other.
See more articles pertaining to selling a Chicagoland home in the Chicagoland Home Selling Tips section of our site below Chicagoland Real Estate Categories in the column to your right.
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Some of the most important Chicagoland outside home improvements can also be the least expensive – and can put your home’s “best foot forward.” When it comes to giving your home a boost in curb appeal, here are nine ideas to improve its exterior.
Cut the grass and tend to the lawn area.
For most homes, the lawn comprises a major portion of the front yard – as well as what’s seen from the road or driveway. As such, the condition and appearance of your lawn can have a huge impact on curb appeal – good or bad. Give your grass a little TLC. Mow it, rake it, edge it and get rid of the weeds. Make sure it gets plenty of water and the right amount and type of fertilizer.
Throw away the junk.
Eyesores like old lawn furniture, swing sets no longer in use, or dead bushes should be removed. Find an out of sight hiding place for other unsightly items such as garbage cans or recycling bins. In short, remove the clutter, throw away the junk and improve the visual appeal of your home’s exterior. It’s one of the Chicagoland outside home improvements that costs the least.
Make your home visitor-friendly.
When friends, family or potential buyers see your home and start to enter, give them a good first impression. Keep the driveway, walkway, front steps, porch and front door as clean and unobstructed as possible. Pay attention to details like weeds growing in the walkway or driveway and cracks that need to be filled or repaired. Not only can they be eyesore, they can be potential hazards. If you have a plain concrete walkway, consider edging it with a classic brick or stone trim. In addition, lighting is not only a nice touch but it can add safety and security after dark. Outdoor lighting can greatly improve your home’s curb appeal, especially low-voltage landscape accent lighting for trees and shrubbery.
The front door focal point.
Your home’s front door is arguably its main focal point for all visitors that come to your house. Treat it that way. Keep it clean by washing it periodically and wiping it down every few days to remove cobwebs, dust and pollen. Consider refinishing or repainting it as needed. Your front door’s hardware is important, too. Remove tarnished hardware and give it a good polishing. If that doesn’t do the trick, replace worn or old hardware such as handles, hinges or door knockers. For inexpensive Chicagoland outside home improvements, consider adding a shiny new brass kick plate at the bottom of the front door. Not only will it add a touch of class, it can also hide scuff marks or scratches. Complete the front door makeover with a welcoming doormat that matches your home’s general style.
Care for bushes, trees and greenery.
Well-maintained bushes, trees, flowers and other plantings can contribute greatly to your home’s overall curb appeal. Conversely, unsightly or overgrown shrubbery can detract from your home’s appearance, making it look like something out of a low-budget horror movie. Prune anything that grows or have a landscaping specialist look at what may need to be done such as tree or limb removal, heavy undergrowth removal or replacement of dead or dying shrubbery or plants.
Replace flowers or shrubs.
For both the enhanced appearance of your home and it surroundings, plant shrubs for garden beauty year-round. In addition, you can include various seasonal flowers or foliage to give your landscaping splashes of color. If you need to hide certain parts of your home such as a visible foundation, an unsightly HVAC unit, or electric meter, you can use flowering plants as camouflage. Popular selections can grow up to four feet in height. Be sure to plant them at least two to three feet from your home to allow for growth and enable access to repairmen.
Don’t forget the details.
Chicagoland outside home improvements for your home can also include additions to your front yard. You’d be surprised at how much you can improve curb appeal by installing brand new house numbers, an attractive front porch light fixture or a stately door knocker. Consider replacing your old mailbox with a newer version and installing a post lamp at the beginning of your driveway or walkway. Other ideas include garden additions like a birdbath, unique planter or a small garden statue.
Give your house a bath.
It sounds like a daunting task, but washing your home’s exterior can be one of the simplest and most-rewarding Chicagoland outside home improvements. Start by sweeping dirt, dust, cobwebs and pollen, working from top to bottom. After that, use a garden hose with a strong spray attachment or rent a pressure washer. If you don’t have a pressure washer and want to forego the expense of renting one, use a long-handled brush with soft bristles and a mixture of warm soapy water. Again, working from top to bottom, rinse the exterior walls with water. Should you decide to use a pressure washer, read the directions carefully. A high-powered spray can cause paint to peel and even damage your home’s siding. In addition, refrain from spraying electrical wires or wiring, light fixtures, outlets, switch plates or windows. After you’ve finished, inspect the entire exterior of your home. If it doesn’t look a great deal better after the washing, it may be time for a fresh coat of paint.
Remember the garage door.
Most homes these days have at least a two-car garage. Because of that, the garage door is probably one of the widest surfaces at or near the front of your home. If it needs attention, consider refinishing or repainting the garage door. In worst case situations, replace the garage door. As more and more homes are built with attached garages, there are a number of attractive garage door designs available. While garage doors aren’t extremely expensive, compared to the other suggestions, they are one of the more costly Chicagoland outside home improvements – especially if you include an automatic door opener, which is more than just a convenience, it’s a necessity. Either way – whether you repaint or replace – your garage door can be a stylish and important accessory to your home’s exterior.
You can find more articles pertaining to home improvements in the Chicagoland Home Improvements section of our site below Chicagoland Real Estate Categories in the column to your right.We also post tips daily on Twitter and Facebook and would love for you to follow us there as well.
Most real estate on the market is comprised of homes listed by real estate professionals. In addition, some properties may be available for sale directly by the owner. FSBO is the industry acronym for “For Sale By Owner.” One of the common misconceptions with Chicagoland FSBO properties – or FSBOs – is the myth that because the sale doesn’t involve a real estate agent it will somehow be simpler. This is rarely the case. Let’s examine a few key points to keep in mind if you’re in the market for Chicagoland real estate and come across a home that is advertised as a Chicagoland FSBO.
Most Chicagoland FSBO sellers will still work with your agent.
Typically, savvy home sellers are aware that most buyers they encounter have a close relationship with a buyer’s agent. As such, they will usually make arrangements to ensure the buyer’s agent will be paid for their efforts. Dayton area real estate buyer’s agents are important participants in the home buying process. If you’re interested in taking a closer look at a Chicagoland FSBO, consider calling us to make the initial contact with the seller on your behalf.
A home is a home, regardless of whether it’s a FSBO or not.
Just because a home is listed for sale by the owner doesn’t mean it should be treated any differently than a home listed by a professional real estate firm. The biggest difference between the two is the greater likelihood that you’ll be meeting, talking and negotiating directly with the seller. So be prepared. Because a home sale is often an emotionally challenging experience for some sellers to go through, be ready for some hurdles – and try your best to take them in stride.
If you’re truly interested in a Chicagoland FSBO home, you’ll find a way to work around the drama. Remember, lean on your agent for assistance and expertise. In addition, if you find it necessary to view the home without the owner being there, just ask. While it’s always a little uncomfortable for owners to have prospective buyers “snoop around” by themselves or with their agent, if you’re selling your home as a FSBO it goes with the territory. Try to put yourself in their shoes and understand how you might feel if the roles were reversed. Then, use that to your advantage by assuring the seller that you simply want to take some extra time alone to envision your furniture and your belongings in what may end up being your home. Once the seller understands your insistence and reasoning, they will likely be more open to letting you have all the time you need – especially if it means the difference in making the sale.
The law is the law – and it applies to all homes equally.
Regardless of whether a home is being sold as a FSBO or not, real estate sales laws still apply. Sellers have an obligation to disclose existing issues about the home to the buyers. In addition, the seller could also be bound to have the home inspected and perform certain repairs. Unfortunately, many Chicagoland FSBO sellers are rookies when it comes to selling homes, and they simply aren’t aware of the laws or common industry practices. Again, rely on your agent – and your own instincts – to determine if a seller is shirking his responsibility or making it more difficult to inspect the home than it should be. It could be a tell-tale sign that the seller knows something about his home that he doesn’t want you or your agent to find out about. If that’s even remotely the situation, keep looking. Life is too short to deal with difficult people, and money is too valuable to take a risk on a home that may be trouble in the future.
Anticipate inflated asking prices.
If there’s one factor that tends to remain consistent when owners try to sell their homes directly, it’s overpricing. Not having a knowledgeable professional real estate agent to consult often means sellers price their homes unrealistically. They tend to dismiss the market comparables and any other recent sales data and erroneously assume their home is worth more than the others in the same neighborhood. You'll often hear rationalizations or justifications expressed by owners that go something like this: "Our home is the nicest one in the neighborhood." While it's normal for any homeowner to have pride in their home and want to get top dollar when they sell, the cold hard truth is more like, "Your home is pretty much like all the others in the neighborhood – some are more attractive, some less." It’s not necessarily greed that motivates them to inflate their asking price, it’s more a case of just not knowing the market – and the Chicagoland home selling process. Again, they’re rookies, and just like in the big leagues, rookies make mistakes.
If you really like the home, once again rely on your own agent to assist. By providing comparable sales information of similar homes in the neighborhood maybe your agent can convince the seller to see his price is too high. In addition, if the home has been appraised already – or if you can perhaps negotiate having an appraisal done – you can use that as a closer representation of the home’s value. If either of those ideas fail, keep looking. A stubborn owner isn’t worth the headache, and there are likely other homes on the market that are priced where they should be.
Just keep this in mind: A Chicagoland FSBO home is just a home, it just happens to be listed for sale by the homeowner. Discuss the home with your agent and get his or her thoughts and input. While the negotiation process may be a little different since the sellers are going solo, remember there are still certain obligations incumbent upon the sellers. Don’t be intimidated by the fact that the seller is listing the home directly – as mentioned above, that doesn’t necessarily mean he knows more about Chicagoland real estate than you – and he certainly doesn’t know the process as well as your professional agent.
See more articles pertaining to real estate in the section of articles on Chicagoland Real Estate just below Chicagoland Real Estate Categories in the column to your right. And remember, we also post tips daily on Facebook and Twitter. Check us out there, too.