Rates have risen again this past week topping 7% on fixed 30-year mortgages and consumers who were contemplating moving are now thinking twice. Those who have much lower interest rates are now deciding on staying where they are or possibly moving to lower-priced states. Most important depending on where you are currently residing, finding that the prices of homes going to your next destination are more than the proceeds that you might receive on the sale of your current home could cause some anxiety and fear to set in.
Taking on another mortgage with considerably higher rates and purchasing at the very top of the market have some rethinking their course of action. This might be a major deterrent in moving, especially if you need a mortgage with the highest rates in 20 years since April 2002 when gas at that time was $1.37 per gallon. We all are experiencing how so many important things have increased in price and have become so much more costly since then.
But if you are making an outright purchase in cash, then you might begin to have a bit of an edge over those financing as “cash is king” as and an advantage in this ever-changing and challenging market. The savings on not having to pay those higher rates will save you hundreds of thousands of dollars in interest. Faster closings can occur without a bank involved.
Planning on renovating your current home to accommodate your growing family or just lifestyle changes can be a solution that can be a better way to go. If you need more room and have the lot size to accomplish this or if you can add or expand with a second floor and build up and out to add more square footage, then these are possibilities to consider. Also, as the population ages, one can surely make one’s home more handicap-accessible by enabling wheelchairs to go under tables and installing stair lifts to gain access to a second floor. To make access easier, have a primary bedroom and bathroom constructed on the first floor.
There will be trade-offs on whether or not you can continue to stay in your home, while construction is taking place and whether there is enough space to live in. Depending on the style, splits and high ranches many times can enable you to stay while upgrading one area of the home and living in the other section as my daughter and son-in-law are currently doing during their renovation process.
Sacrifices can be made when visualizing the big picture and finally seeing the end results. You will also add appreciation to your home over the long run. If and when rates subside and come down to what you feel makes sense for you and your family, you could then potentially sell at a higher price or could also refinance and be able to take out more money than you could have otherwise before your expansion.
For investment, business purposes or anything else you desire without any tax consequences, a mortgage is a loan and not considered income. But you must be very prudent and think pragmatically when considering refinancing and not to over-leverage yourself financially; because you are obviously obligated to pay the lender back.
The lack of inventory has caused many to continue to rethink what they should do: whether staying and renovating and/or increasing their living area or moving away from their current state to those locations where lower prices are beginning to exist, making for better deals. Whatever you decide to do, take enough time to cross your t’s and dot your i’s to come to your best solution.
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Philip A. Raices is the owner/Broker of Turn Key Real Estate at 3 Grace Ave Suite 180 in Great Neck. He has 40 years of experience in the Real Estate industry and has earned designations as a Graduate of the Realtor Institute (G.R.I.) and also as a Certified International Property Specialist (C.I.P.S) as well as the new “Green Industry” Certification for eco-friendly construction and upgrades. For a “FREE” 15-minute consultation, value analysis of your home, or to answer any of your questions or concerns he can be reached by cell: (516) 647-4289 or by email: [email protected] or via https://WWW.TurnKeyRealEstate.Com Just email or snail mail (regular mail) him with your ideas or suggestions on future columns with your name, email and cell number and he will call or email you back.
