MONEY selling a home

Selling An Upscale Home? You’re in Luck. Sales Remain Strong.

Sales of higher-priced homes continue to outpace the lower tier, according to April figures. Check out our tips for buyers, sellers and owners.

If you’re trying to sell a home priced above $500,000, you’re in luck. Demand for those upscale homes keeps humming along, at least for now, according to National Association of Realtor figures for April.

Sales in the lowest price tier fell by 12% while sales in higher-priced categories were up by 0 to 5% from a year ago, wrote Danielle Hale, NAR’s director of housing statistics, on the association’s economists blog. The share of home sales above $500,000 or more rose from 10.8% to 11.6%.

Here is how sales changed year-over-year in April by price tier:

Price %Change
<$100,000 -12%
$100k-$250k -5.1%
$250k-$500k 0.2%
$500-$750k 0.3%
$750k-$1M 2.4%
>$1M 5.2%

 

Part of the reason for the disparity is that there are fewer lower-priced homes on the market. Investors and first-time buyers already have snapped up most of those properties; price gains have pushed homes into upper tiers as well.

Hale noted that the trend is slowing. In April of last year, for example, sales then of homes in the $500,000-$750,000 tier were up 33.6% from April 2012. This year, the gain was just 0.3%.

For now, generally the higher-priced homes within a town are selling better. How you’ll know if your home is in the top tier: Check Zillow’s Local Info page for your town. There you’ll find the median home values for the low, middle, and top price tiers in your market. Then, gauge the strength of your specific tier by asking your agent for the inventory and days-on-market stats for homes in your range.

Trying to sell an upscale home? Or buy one? Check out these tips:

BUYERS

Time it right. Want a more expensive home? Buy now before prices climb. However, if you live in a pricey house but are looking to downsize to something less expensive, it may be worth waiting for your current home to appreciate.

Look at jumbos. Will you need a large mortgage (typically more than $417,000)? The premium over what you’d pay for a smaller loan, which grew as wide as two full percentage points during the bust, has shrunk to next to nothing. Big banks often offer the best rates and options on these types of loans, says Keith Gumbinger of mortgage publisher HSH.com.

Don’t dismiss ARMs. While rising rates are a very real risk, ARMs at least deserve a look if you’re taking a big loan, says Gumbinger.

Buy for the future. Nearly 25% of owners regret the size of the home they picked, according to a Trulia study. With prices expected to climb, high-end homes are likely to be more affordable than they will be in the future, so think about how much space you’ll need in the coming years and buy appropriately.

Don’t go it alone. A recent study found that buyers of homes priced at more than $300,000 are more likely to try to negotiate the deal themselves than buyers of more moderately priced properties, says co-author Bennie Waller, professor of finance and real estate at Longwood University. It doesn’t end well: The DIYers end up paying an average of 9% more than those who use their own agent.

SELLERS

Price carefully. With sales of higher-end properties picking up, homes are increasingly “stigmatized if they stay on the market too long,” says Judson Henderson, a broker in Princeton, N.J.

Overprice, and your place could be the one with the black mark. If you’re unsure, pay the $500 or so for an appraisal. Also, if your home is older than 20 years, get an inspection to make sure your structure is sound, and your HVAC, plumbing, and electrical systems function smoothly. Fix whatever’s on the fritz. “You don’t want people feeling like the house is a project,” says Henderson.

Make your listing tech-friendly. Most shoppers, and particularly those in the market for upscale houses, will be looking at your home on phones and tablets, says Amy Bohutinsky, chief marketing officer at Zillow. Photos on these gadgets need a higher resolution than what’s required by a desktop. Check your listing on a mobile device to make sure it looks great. Some buyers may look at photos of your home on Google, so you should do the same (type your address into the map search, then click on the Street View tab). If the photo is outdated or taken in winter, note that in your listing.

Highlight the right features. According to a study by the National Association of Home Builders, buyers who expect to pay at least $500,000 today put warming drawers, wine fridges, and outdoor kitchens high on their wish lists. If your home has these or other unique selling points, mention them in your listing.

OWNERS

Renovate sooner, not later. Don’t let dated features drag down the value of your home. Owners thinking about remodeling have good reason to act now. Quality contractors, already busier than they have been in recent years, are likely to get even tougher to snag. Then there’s the issue of rising rates, which would push up the cost of new home-equity loans and most lines of credit.

MONEY Rentals

The Top 10 Cities for Singles Who Rent

If you're single and looking for a place to live, here are the 10 best cities for those ready to mingle.

Thinking of moving to a new city? Lots of lists will help you find places with the lowest (or most outrageous) housing prices and highest incomes, but for young people looking to meet someone, there are more things to consider than pure affordability.

Rent.com partnered with Onboard Informatics to rank cities based on factors like quality of nightlife, restaurants, lifestyle (what percentage of residents do things like attend concerts and cultural events), and, primarily, the percentage of single adults.

Here’s what they found.

Methodology: All indexes were ranked on a scale of 1-1000. This list is based on cities with more than 50,000 rental dwellings, a high concentration of single adults and an overall population greater than 100,000. More details here.

  • San Francisco, CA

    It may be expensive, but the City by the Bay is safe, ranks high on lifestyle, and the average income is off the charts. Best of all? 39% of town is single.

    The Good

    Single Adults: 39%

    Non-Family Households: 58%

    Average Household Income: $104,540

    Safety Index: 822

    Lifestyle Index: 736

    The Bad

    Median Rental Rate (1BR): $2,920

    Nightlife Options Index: 374

    Restaurant Option Index: 236

     

     

     

  • Manhattan, NY

    When it comes to nightlife, lifestyle, and great food, nobody tops the Big Apple. Like SF, cost is a (huge) factor, but if you can afford it, there’s nowhere better.

    The Good

    Single Adults: 38%

    Non-Family Households: 60%

    Average Household Income: $125,205

    Safety Index: 896

    Lifestyle Index: 781

    Nightlife Options Index: 1000

    Restaurant Option Index: 1000

    Frequent Coffee Shop Goers Index: 1000

    The Bad

    Median Rental Rate (1BR): $3,800

     

     

  • Washington, D.C.

    It’s a company town, but that town is very single and very safe. Average salaries are also high, but there isn’t much nightlife or fine dining to spend that disposable income on.

    The Good

    Single Adults: 38%

    Non-Family Households: 58%

    Average Household Income: $93,637

    Safety Index: 776

    Lifestyle Index: 652

    The Bad

    Median Rental Rate (1BR): $2,300

    Nightlife Options Index: 173

    Restaurant Option Index: 228

     

     

     

  • Boston, MA

    The Hub’s restaurant and nightlife options don’t exactly compare to New York, but it’s a safe, fun city where one-third of the adult population is single.

    The Good

    Single Adults: 33%

    Non-Family Households: 55%

    Average Household Income: $76,661

    Safety Index: 719

    Lifestyle Index: 671

    The Bad

    Median Rental Rate (1BR): $3,150

    Nightlife Options Index: 192

    Restaurant Option Index: 224

     

     

  • Seattle, WA

    The second West Coast city on the list boasts lots of restaurant goers, good cultural events, and rentals in the neighborhood of affordable—at least for a big city.

    The Good

    Single Adults: 30%

    Non-Family Households: 57%

    Average Household Income: $88,211

    Lifestyle Index: 732

    Frequent Restaurant Goers Index: 616

    The Bad

    Median Rental Rate (1BR): $1,584

    Nightlife Options Index: 302

    Restaurant Option Index: 199

  • Philadelphia, PA

    Philly can’t stand up to higher-ranked towns in most categories, but the rent isn’t too bad, more than a fourth of the population is single, and the nightlife is better than all but a few cities on this list.

    The Good

    Single Adults: 26%

    Median Rental Rate (1BR): $1,295

    Safety Index: 686

    Nightlife Options Index: 502

    The Bad

    Restaurant Option Index: 340

    Frequent Restaurant Goers Index: 439

  • Minneapolis, MN

    The most notable of the Twin Cities has lots of singles and lots of rental housing. Nothing too special as we approach the back of the list, but Minneapolis stands her ground in most categories.

    The Good

    Single Adults: 25%

    Non-Family Households: 57%

    Median Rental Rate (1BR): $1,395

    Lifestyle Index: 643

    Frequent Restaurant Goers Index: 555

    The Bad

    Nightlife Options Index: 149

    Restaurant Option Index: 108

     

     

  • Portland, OR

    Portlandia‘s home is safe, fun, and great for people who like to eat out. The rent is also relatively low compared to other listed cities.

    The Good

    Single Adults: 24%

    Median Rental Rate (1BR): $1,335

    Safety Index: 632

    Lifestyle Index: 668

    Frequent Restaurant Goers Index: 585

    The Bad

    Nightlife Options Index: 383

    Restaurant Option Index: 168

  • Jersey City, NJ

    Jersey is safe and good for restaurants and culture, but the price of rent might make you think twice.

    The Good

    Single Adults: 23%

    Average Household Income: $77,804

    Safety Index: 766

    Lifestyle Index: 623

    Restaurant Option Index: 512

    The Bad

    Median Rental Rate (1BR): $2,480

    Nightlife Options Index: 421

  • Chicago, IL

    Chi-Town has the cheapest median rent on the list, with high nightlife and lifestyle ratings to boot. It’s also safer (on the whole) than you probably think.

    The Good

    Single Adults: 23%

    Median Rental Rate (1BR): $1,150

    Safety Index: 665

    Lifestyle Index: 604

    Nightlife Options Index: 869

    Restaurant Option Index: 507

    The Bad

    Frequent Restaurant Goers Index: 475

MONEY home improvement

How to Set a Landscaping Budget—and Stick to It

The right landscaping adds value to your property, so before you undertake a landscaping redo, understand your needs and make a proper budget.

Designing a landscape that suits your home, as well as your budget, is an important part of home ownership. It’s important to ensure you have the type of yard that fits your current needs, as well as establishing critical curb appeal for future sale. Regardless of the size of your property, beautiful landscaping adds value to your property. Before undertaking a landscaping renovation or upgrade, spend some time assessing your wants and needs and understanding the cost drivers for a project of this size.

Landscaping budget basics

A budget is an itemized description of anticipated expenses for your landscaping project. Your budget should be realistic, organized, detailed and easily to track. Establishing a budget helps you determine what is required to complete the landscaping project and should include how much each item should cost.

Effective budgeting is more than just planning. A responsible homeowner will monitor the budget closely and be conscious of the investment, regardless of who is actually performing the work. Build in some flexibility wherever possible to ensure your project can handle the unexpected. Depending on the size of the lot and the complexity of the landscaping project, a landscaping budget spreadsheet need not be lengthy, but it should be detailed enough to be reasonably accurate.

How to start your landscaping budget

Planning your landscape can be an enjoyable part of the pre-planning phase. Bringing these visions to reality starts with research to find the actual costs of what you want included based on the size of your property. Start with a general list of what projects you’d like to complete such as:

  • irrigation installation
  • lawn servicing
  • tree removal or limb pruning
  • general maintenance
  • new plants and shrubbery
  • excavation
  • water features
  • new dirt or mulch
  • hardscaping projects like patios, pathways, rockery or arbors
  • organic garden set-up
  • edible plants
  • fences or retaining walls
  • address drainage issues
  • flower bed preparation and planting
  • exterior lighting
  • outdoor entertainment features like firepit, built-in seating, or outdoor kitchens

In addition to specific actions, make a priority list of which areas of the property you’d like to focus on. Depending upon your land, you may want to improve the entire front, back and side yards or you may just want to focus on one area outside. Breaking up the landscaping renovation into different stages is an especially good idea if you have a limited budget or a large amount of land.

Keeping your landscape project on budget

Once you’ve put together your initial list of needs, make a note of who will be doing the work. If you plan on doing most of the work yourself, be realistic about your time and skills. If you have time to shop around and work on the weekends, your budget can be spread out over a longer period of time. You can also save money by waiting for sales or purchasing items in the off season.

If you plan on hiring a professional to do most or part of the work, have a clear idea of what you need them to do. Your pre-planning meetings should be detailed and thorough and allow time for any drawings to be made. Your professional will advise you to how long this project will take to complete and provide you with a quote or bid for the project. Once you’ve signed off on the bid, and signed a contract for the work, the project can begin.

Regardless of who is performing the work, keep track of expenses. For you DIY landscaping, this could mean keeping a simple spreadsheet of costs or tool rentals. For your professional, your quote should detail all expenses and fees. If any changes are made during the course of the project, a change work order form should be completed and signed by both parties. This ensures a paper trail is in place tracking all changes and costs. Check in regularly with your landscaper to ensure that the project is going according to plan and ask to be alerted to any potential changes in the budget. Be aware of professionals who may also charge for their consultation time. They should alert you if any of your phone calls or consulting appointments are costing you money.

Other cost drivers for landscaping projects

Depending upon the scope of your project, you may need to obtain a permit. Some fence designs, retaining walls or excavation, for example, may require a permit. It is the responsibility of the homeowner to ensure that the proper paperwork is filed and you can check with your local department of development and planning to see if your particular project requires a permit. Or check with your professional, who can obtain the permit on your behalf.

Delays in materials or shipping can increase your costs. If you budget is flexible you may be able to afford overnight shipping or change your material selection. Seasonal changes may also affect your budget, especially if you are trying to hire a professional during their busiest time of year.

More from Porch:
Keeping Your Workshop Remodel on Schedule
The Golden Triangle: Designing an Efficient Kitchen
How to Keep Pest Control Costs Under Control

Anne Reagan is the editor-in-chief of home improvement website Porch.com.

MONEY home improvement

This 1920s Home Was a Mess Before These Guys Got Hold of It

This Queen Anne home in Baltimore had a lot going for it: Proximity to universities, shopping and job hubs. Historic details. But it was, well, a hot mess. Here’s how this $110,900 renovation transformed the three-story home into a showplace. Story and photos from home improvement website Porch.com.

MONEY

Are Baby Boomers Downsizing Into Condos? Not So Fast.

Baby Boomers talk about downsizing but apparently don't do it. Trulia's economist says the long-term trend among older households shows downsizing getting rarer and happening later in life.

Throughout the recession and recovery, Millennials have hogged the attention: they suffered a particularly bad recession, which delayed their launch into the housing market, slowed overall household formation, and lowered first-time homeownership. But they’re hardly the only demographic that matters for housing. Baby Boomers will help determine the demand for different types of housing and the supply of homes for sale when – and if – they downsize.

This morning, Fannie Mae released a note on boomer downsizing, showing that the share of baby boomers in single-family detached homes has been roughly stable from 2006-2012 (rising slightly on a per-capita basis and falling slightly in the most recent years on a per-household basis). The big question is what happens longer term: are we about to hit a wave of baby boomers selling their single-family homes and moving into apartments and condos? It’s unlikely, for two reasons: baby boomers are still years away from the age of downsizing, and the long-term trend shows that older households today are less likely to downsize than older adults in the past.

Let’s start by looking at the age when older households move from single-family homes to multi-unit buildings. Based on the 2013 Current Population Survey’s Annual Social and Economic Supplement (CPS ASEC) – the most recent detailed demographic data available – baby boomers (born between 1946 and 1964, which means 50-68 years old in 2014) are less likely than almost any other age group to live in multi-unit buildings as opposed to single-family homes. The only age group less likely to live in multi-unit buildings is 70-74 year-olds, which is the age group that baby boomers will start to enter in the coming years.

In later years, the share of households in multi-unit buildings rises, but by less than you might guess. Just 25% of households headed by 80-84 year-olds live in multi-unit buildings – which is a lower share than 40-44 year-olds. Even among households headed by adults aged 85 and older, only one-third live in multi-unit buildings – and that’s only counting those who head their own household are not living with adult children or in institutions.

Therefore, as today’s baby boomers age, they’ll grow into age groups first with a lower likelihood of living in multi-unit buildings (70-74 year-olds). Multi-unit living starts rising slightly at age 75-79, and rises more notably only when heads of household reach their 80s.

But will baby boomers, who are in their 50s and 60s today, look like today’s 60- and 70-somethings ten years from now – or will they make different housing decision as they age? One clue is to look at the longer-term trend in multi-unit living among older age groups using CPS ASEC data back to 1979 (no data are available for 1988). The share of households headed by 50-69 year-olds – roughly the age of baby boomers today – living in multi-unit buildings rose to 21.3% in 2012 and 21.6% in 2013, after holding steady in the 19-21% range for decades. Therefore, baby boomers today are a bit more likely than their parents to live in multi-unit buildings instead of single-family homes. It’s too soon to tell whether that increase is a temporary effect of the recession or the beginning of a longer-term trend.

The clearer long-term trend, though, is the decline in multi-unit living at the ages that baby boomers are approaching. The share of age-70-plus households living in multi-unit buildings has been dropping for decades, from over 30% in 1980 to under 25% in recent years. That means that even if the recent uptick in multi-unit living among 50-69 year-olds persists, baby boomers are entering an age group that is less likely to live in multi-unit buildings than their own parents did two or three decades earlier. While the cyclical effect of the recession might hasten downsizing for some boomers, the long-term secular trend means boomers are reaching older adulthood in an era when downsizing is less common and comes later in life than it used to.

Note: the CPS ASEC data were downloaded from IPUMS, which requests to be cited as: Miriam King, Steven Ruggles, J. Trent Alexander, Sarah Flood, Katie Genadek, Matthew B. Schroeder, Brandon Trampe, and Rebecca Vick.Integrated Public Use Microdata Series, Current Population Survey: Version 3.0. [Machine-readable database]. Minneapolis: University of Minnesota, 2010.

See the complete article with charts on Trulia.

Jed Kolko is the chief economist of Trulia.

MONEY buying a home

Can Buying a Fixer-Upper Ruin Your Marriage?

That beautiful Victorian or mid-century modern home has its charms -- and headaches. (That remodel can even ruin a relationship.) Check out these pros and cons to help you evaluate whether an older home is for you.

Ah…the charm, the detail, the attention to architectural style that you’ll find in a ’20s Craftsman,’40s cottage,’50s postwar,’60s ranch style, ’70s split level, and my personal favorite, the midcentury modern. They each have their own unique elements that add to their charm, and they’re abundant across the United States. Older homes — which are defined as any home or condo that has been “lived in”—constitute the largest category of home sales in the United States.

There are many advantages to purchasing an older home. However, there are some potential hazards to consider before signing up for the house that will need some serious TLC, including the strain it can put on your relationship. In fact, according to a survey by Houzz, 12% of couples admitted to considering a separation or divorce mid-remodel.

But before you decide – let’s look at ALL the pros and cons.

The Pros

  • They’ve got more charm. The older a home is, the more likely it is to have architectural details and decorative elements that give it personality that you rarely find in new construction.
  • There’s more selection. There are more of these homes than in any of the other categories of homes. More to choose from means more opportunities to find what you want, and better bargaining power for the buyer!
  • They’re often less expensive than their new construction counterparts. More often than not, an existing home is more affordable. Some stats even suggest new homes are 20% more than an existing home – and that’s a big price to pay for brand spanking new. In Trulia’s latest survey, just 46% of the people who strongly prefer a new home are actually willing to pay the 20% premium that new homes typically cost.
  • They’re spacious. Many older homes have room for life to happen, since they’re a bit more spacious than today’s cookie-cutter new construction.
  • Some land of your own. An older home usually sits on a larger piece of land. Most new construction sits on a developed sub-division or new community, and often, there’s not much open space in the back or the front of the home.
  • Where everybody knows your name. An older home is usually located in a more developed and established community. I grew up, for example, in the small town of Collingswood, New Jersey. You could walk or ride your bike to the main street with lots of shops and stores.
  • Upgrade and add value. You have the opportunity to add value to your home with renovation.
  • Make it your own. Upgrades allow for a degree of personal satisfaction, and you can tailor the home to your specific taste.

The Cons

  • Press the brakes on that moving van. These homes may not always be move-in ready. Most have varying degrees of repairs, upgrades, and renovations that need to be completed prior to even moving in.
  • Show me the money. Older homes can sometimes require lots of renovations, which, of course, require lots of money.
  • Rather not DIY? To be fair to those of you who aren’t handy, willing to get your hands dirty, or face the demands of fixing up a property, this might not be your best option.
  • Down payment PLUS more. For first-time buyers, dishing out the down payment is enough to break the bank. Coming up with the extra cash to fix up the house to your standards can be extremely difficult.
  • Upkeep can bring you down. As opposed to new construction homes, you will be faced with more maintenance issues sooner than later. Older homes generally have older systems. Heating, air plumbing and electrical, and even the roof may need to be replaced at some point in the near future.
  • A messy predicament. Your house will be messy, and perhaps even unlivable for an uncertain amount of time.
  • What’s the real cost? You never really know how much it will all end up costing. My rule of renovation is that it will always cost you 20% more than you planned.
  • Shut out of an open floor plan. The desirable open floor plan is going to be harder to find, because that home design didn’t come into popularity until the ‘60s, so many older homes have more rooms and less open flow.
  • Going green is going to cost you more green! Older homes may not be as energy efficient as some of the new homes with new, more efferent building materials and appliances that cost less to operate on a monthly and yearly basis.

Thus, trying to navigate the move, significant repairs, renovations, your relationship, and the family, may be a lot to juggle all at once. However, the purchase price savings, the more established neighborhood, and all the wonderful charm of an older home may outweigh all the possible downsides. In the end, it’s up to you to decide!

More from Trulia:
What’s Your Home Buying IQ?
9 Sacrifices You Must Make to Find an Affordable Home
The 10 Most Costly Home Selling Mistakes – & How To Avoid Them

Michael Corbett is Trulia‘s real estate and lifestyle expert. He hosts NBC’s EXTRA’s Mansions and Millionaires and has authored three books on real estate, including Before You Buy!

MONEY renting

Be a Successful Renter With These 3 Moves

For Rent sign
Zachary Zavislak

Whether you're renting an apartment or single-family home, taking these three steps will help you avoid costly blunders.

Whether you’re fresh out of college, or downsizing out of a suburban home, you may think renting a place is fairly risk-free. As long as you find a suitable unit you can swing each month, you need not worry about much else, right? Isn’t that one of the big advantages of renting over buying?

You don’t get off that easy! These three steps will secure both your home and your wallet.

Related: Avoid These Rookie Landlord Mistakes

1. Budget for upfront costs

Everyone knows this one, right? Renters will likely need to hand over at least their first month of rent plus a month as a security deposit before moving in. But consider this: If you’re moving from one rental to another, you’ll probably have to put down the cash before getting the security deposit back from the place you’re leaving.

This timeline is standard practice among landlords but continues to trip up unprepared renters, says Niccole Schreck, consumer insights and marketing manager for Rent.com. Rather than having to hit up mom and dad, or — horrors — start charging everyday expenses to conserve cash, begin saving a few months in advance. In fact, you should always have a few months of rent saved in case your landlord does not renew your lease. That could happen if, say, owners decide to sell the place.

And don’t underestimate the costs of boxes, tape, bubble wrap and other packing supplies. A moving kit for a three-bedroom home from Staples can run $400. Even ten 24” x 24” x 18” boxes for a studio can run $40, and that doesn’t include tape, wrapping paper, garment boxes, and other incidentals. Costs add up quickly.

Hiring professional help? Make sure you’re ready to go when the movers arrive. “If you aren’t organized and haven’t quite finished packing, it’ll take more time, and they generally charge by the hour,” says Schreck.

2. Read the lease. Really.

After an exhaustive search, it may feel like you can breathe easily once you’re approved for the rental. Not so fast. “Many people will just sign the lease without actually reading it,” says Schreck. A recent survey from Rent.com found that 26% of renters had lost their whole security deposit at some point. One culprit: not knowing the terms of the lease. “You can’t play by the rules if you don’t know them,” she says. For example, your lease may specify no painting, or have rules about putting holes in walls. Ask your landlord to include in the lease or as an attachment anything he verbally tells you, such as holes are fine or your cat won’t be an issue. Also double-check that utilities included in your monthly rent match what your landlord said.

3. Get renters insurance now.

Many renters assume if catastrophe strikes, such as a fire or break-in, the landlord’s homeowners insurance policy will cover their belongings. Wishful thinking. Landlord policies cover the structure of the home, and perhaps owner-provided extras such as appliances, but will not reimburse losses for the personal belongings of the tenant, says Paul Bruemmer, a landlord insurance expert at Farmers Insurance. Yet 60% of renters do not have renters insurance, a Rent.com survey found.

A typical policy runs between $15 and $30 a month, according to the National Association of Insurance Commissioners. (Unusually expensive items such as fine jewelry and art may need additional coverage.) So for the cost of, say, a fine pair of jeans, you can ensure the rest of your beloved belongings will be covered in the event of bad luck.

MONEY Ask the Expert

How Do I Get Rid of My High-Interest Second Mortgage?

140605_AskExpert_illo
Robert A. Di Ieso, Jr.

Q: I have a $23,000 second mortgage with a high interest rate—8.25%. Should I refinance both my mortgages into one to save money, and at what term? — Jim Davis, Weymouth, MA

A: One of the most important factors in deciding whether to refinance is how long you plan to stay in the home, says Shant Banosian, an executive at lender Guaranteed Rate. The longer you stay, the more you will benefit from any savings from a lower rate. You told us that you are hoping to sell your two-bedroom townhouse in about 18 months so you can move your family of four into a larger home.

You’d like to boost your home equity so you can walk away from your sale with enough money for a nice down payment. Given your time frame, Banosian says it would be a mistake to refinance into a shorter-term mortgage that would significantly raise the monthly payment. Instead, he says, open a home equity line of credit and use that to pay off the second mortgage. HELOC rates average 4.63%, according to Bankrate, and it costs very little to open one, Banosian says. “They’d cut their payment in half.” You could then apply those savings (about $130, you said) to your principal balance.

Related: Should I Refinance So I Can Stop Paying Mortgage Insurance?

 

MONEY house hunt

‘At 27, I’m the First of My Friends to Own a Home:’ A Buyer’s Story

Nathan Davenport's condo in the Buckhead neighborhood of Atlanta. Courtesy of Zillow

At 27, Nathan Davenport seems to have most of what he wants -- a steady job, a girlfriend and even his own home.

When Nathan Davenport moved from Birmingham to Atlanta three years ago, he was fairly certain he wanted to make Atlanta his home for at least a while. So the sales associate with AT&T recently closed on a condo in the Buckhead neighborhood of Atlanta, two blocks from a new mega-development bringing 80 high-end retailers to the area by the end of the year. Just shy of 27 and single, Davenport is the first among his friends to own a home. This is the story of his House Hunt.

He knew exactly what he wanted.

I knew that I am not going to change my job anytime soon. I knew that I wanted to be around people and have stuff to do. Buckhead seemed really attractive with all the stores coming for the first time. I wanted grocery stores and restaurants within walking distance, like in New York. And, I knew that I did not need a lot of space.

I figured property rates will go up, which also motivated me to buy a condo in the neighborhood. And the commute to work is an ideal 15 minutes.

Although he was looking at condos, he did not want to compromise on amenities.

I wanted hardwood floors and granite kitchen tops. And, this might sound weird coming from a guy — but a walk-in closet. I definitely wanted one. I did not like the modern open bedroom, loft-like apartments that I saw.

Once he found his ideal condo, he waited five months for the exact unit to become available.

I started looking at places in August last year and purchased the place in April this year. The unit with the floor plan I wanted had just sold out, and it took five months for another one to get on the market. As soon as it did, I put in my bid, even without actually looking at the unit.

He bid the asking price of $205,000. But then …

The appraisal valued it at $190,000. I changed my bid to $195,000 and closed the deal. I put down 5%, most of what I had saved and the rest is financed through a mortgage.

I wouldn’t say I want to live here long-term. When I get married, I might want to move out. I will rent out this place then. I might think of buying my next house in five to eight years. But I definitely want to stay in Atlanta, preferably in this neighborhood.

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