- According to CoreLogic, homeowners across the country are gaining significant equity.
- Over the past year, the average homeowner gained $9,800 in equity, growing their overall net worth.
If you’re ready to sell your current house and ready to look for your dream home, contact me to learn how your home equity can help make that possible.
With the recent lower interest rates, many homeowners are wondering if they should refinance.
To decide if refinancing is the best option for your family, start by asking yourself these questions:
Why do you want to refinance?
There are many reasons to refinance, but here are three of the most common ones:
- Lower your interest rate and payment– This is the most popular reason. If you have a 5% interest rate or higher, it might be worth seeing if you can take advantage of the current lower interest rates, hovering below 4%, to reduce your monthly payment and overall cost of the loan.
- Shorten the term of your loan– If you have a 30-year loan, it may be advantageous to change it to a 15 or 20-year loan to pay off your mortgage sooner.
- Cash-out refinance– With home prices increasing, you might have enough equity to cash out and invest in something else, like your children’s education, a vacation home, or a new business.
Once you know why you might want to refinance, ask yourself the next question:
How much is it going to cost?
There are fees and closing costs involved in refinancing, and Lenders Network explains:
“If you were to refinance that loan into a new loan, total closing costs will run between 2%-4% of the loan amount.”
They also explain that there are options for no-cost refinance loans, but be on the lookout:
“A no-cost refinance loan is when the lender pays the closing costs for the borrower. However, you should be aware that the lender makes up this money from other aspects of the mortgage. Usually pay charging a slightly higher interest rate so they can make the money back.”
If you’re comfortable with the costs of refinancing, then ask yourself one more question:
Is it worth it?
To answer this one, we’ll use an example. Let’s assume you have a $200,000 home loan. A 4% refinance cost will be $10,000. If you want to lower your interest rate from 6% to 4%, then refinancing is going to save you $244 per month. To break even ($10,000/$244), you need to continue owning your home for over 40 months.
Now that you know how the math shakes out, think about how much longer you’d like to own your current home. If you plan to stay for more than 3 years, then maybe it is advantageous for you to refinance.
If, however, your current home does not fulfill your present needs, you might want to consider using your potential refinance costs for a down payment on a new move-up home. You will still get a lower interest rate than the one you have on your current house, and with the equity you’ve already built, you can finally purchase the home of your dreams.
There are many opportunities for growth in the current real estate market. To find out what’s right for your family, let’s get together to help you understand your options and guide you toward the best decision.
Good news & less restrictions for Santa Cruz homeowners who want to build an Accessory Dwelling Unit (other wise known as ADUs, Granny Flats, Inlaw Units).
Here are the approved amendments adopted for ADU’s at the Santa Cruz City Council’s meeting on Feb 26th meeting:
- Eliminate parking requirements for ADUs;
- Eliminate the requirement for a Minimum Parcel Size (ADUs can now be added to any size lot);
- Allowing ADUs by right in all Residential Zones, when built with a single family home;
- Eliminate requirements for Use Permits/Design Permits for ADUs on substandard lots;
- Allow ADUs above garages to provide setbacks of 5 feet to side and rear lot lines (previously required minimum of 10 feet from the rear);
- Allow full reconstruction of existing structures(previously limited to 50% of the structure) to qualify for the fee exemptions allowed under state law for Conversion ADUs;
- Allow expansions of Conversion ADUs of up to 120 square feet of floor area and 2 feet of height to qualify for the fee exemptions allowed under state law;
- Allow interior connections between an attached ADUs and the Primary Home on the parcel; and
- Change the definition of Owner-Occupant to include immediate family members (limited to Spouses, Siblings, Parents, and Adult Children), so a property owner can have a family member living on the property manage the property and any tenants.
For more information on ADUs, read here.