Most of us are familiar with traditional staging; the act of decorating and furnishing a home for sale to appeal to potential buyers. A well staged home can produce stunning listing photos that will encourage buyers to tour the home. It can also help buyers envision themselves living in the house. In recent years, a new trend has emerged in home staging: virtual staging.
What is Virtual Staging?
Virtual staging takes photos of empty rooms and then uses photo-editing software to add in attractive furniture and decor (like mirrors, plants, rugs, etc). While it is possible to download a DIY staging software, typically, you will get the best results by having a professional company virtually stage the photos. It’s also important that the photos you use are high-quality, preferably taken by a professional photographer.
Why opt for Virtual Staging?
When compared to traditional staging, virtual staging is much less expensive and saves the hassle of moving lots of furniture into the house or painting several rooms. According to realtor.com, “the average cost for most stagers is $300 to $600 for an initial design consultation, and $500 to $600 per month per staged room.” By comparison, most virtual staging companies will charge between $50-$200 per room depending on how much redecoration the room requires. Virtual staging can even include decluttering or “painting” rooms. In addition to saving money, virtual staging can be done quite quickly. Most companies offer a 2 day turn around on your photos.
Keep in Mind:
Bad virtual staging can immediately turn buyers off from perusing your listing photos and make them write off visiting your home. Alternatively, when you use a professional company, you should have a disclaimer in the caption of the photo that it has been virtually staged so the buyer is aware that when they visit the house, it will not look the exact same as the photos. You may decide you want to include the original photos of the empty rooms with the staged photos for this purpose. Virtual staging is not intended to trick buyers; it is a tool sellers use to help showcase a property while providing depth to the rooms so buyers can envision the space better. Ultimately, you may still decide to physically stage your house or use a mix of virtually and traditionally stages rooms for your listing. As always, a realtor can offer great advice and guidance for your particular situation.
As a buyer or a seller in the Harrisonburg and Rockingham housing market, you may be wondering what the average difference is between the listing price and sale price for a property. Ultimately, the difference represents the negotiation process. If you are a seller, this provides insight on how much you may want to list your house for, knowing negotiations may bring down the sale price slightly. If you are a buyer, this can help give you an idea of what is reasonable to offer for your housing market. Of course, your realtor will be the most valuable source of information during the listing and negotiation process; but, seeing the recent trends is a great place to start.
Harrisonburg Sale-to-List Ratio by Property Type
Let’s start with Harrisonburg. At the time of writing this, the average difference between the list price and sale price for all types of properties and price points is 98.5% (meaning the property sold at 98.5% of the list price) which is up from 97.34% from last year. So far this year, townhomes and duplexes have sold for 99.33% of their list price, condos have sold for 96.17%, and single family homes have sold for 98.2%. In 2019 townhomes/duplexes sold for 98.37%, condos for 96.23%, and single family homes for 96.63% of their listing price.
Harrisonburg Sale-to-List Ratio by Price Point
If we break down the Harrisonburg properties sold in 2020 by their price point* we find slight variations between categories. $0-$199,999 properties sold for 98.1%, $200,000-299,999 sold for 100.12%, $300,000-$449,999 sold for 95.89%, and $450,000 and up sold for 96.23% of their list prices. For reference, in 2019 the same price point categories sold as follows: $0-$199,999 properties sold for 96.96%, $200,000-299,999 sold for 98.46%, $300,000-$449,999 sold for 96.22%, and $450,000 and up sold for 93.53% of their list prices.
Rockingham Sale-to-List Ratio by Property Type
Now let’s look at Rockingham. The average difference between the list price and sale price for all types of properties and price points is 97.49% which is also up from 96.27% in 2019. Looking at property types, this year townhomes and duplexes have sold for 99.35% of their list price and single family homes have sold for 97.09%. In 2019 townhomes/duplexes sold for 99.29% and single family homes for 95.75% of their listing price.
Rockingham Sale-to-List Ratio by Price Point
The Rockingham properties also have slight variations between their price categories. For 2020, $0-$199,999 properties sold for 97.28%, $200,000-299,999 sold for 98.08%, $300,000-$449,999 sold for 97.85%, and $450,000 and up sold for 94.48% of their list prices. By comparison, in 2019 the same price point categories sold as follows: $0-$199,999 properties sold for 95.86%, $200,000-299,999 sold for 96.96%, $300,000-$449,999 sold for 96.36%, and $450,000 and up sold for 94.49% of their list prices.
If you want more details on the local sales statistics check out the monthly market reports.
*Price point was determined by the sell price, as opposed to the list price.
If you are considering putting your house on the market in the near future, you may be wondering what prospective homebuyers are looking for before investing in a home improvement project. Afterall, you don’t want to sink a lot of money and time into an upgrade that won’t appeal to buyers. These improvements go beyond fixing major issues that would come up during a home inspection (which should be addressed prior to putting your house on the market) or quick/ inexpensive fixes like cleaning the carpets or fixing chipped paint. So, what do buyers want in a house?
Renovated or Updated Kitchen
According to realtor.com, a survey they conducted in early April of this year found that 13.3% of 1,300 surveyed (both renters and owners of houses) rated an updated kitchen a must have for their next home. The 2019 Realtor Remodeling Impact Report found that 40% of realtors recommend sellers update their kitchen before listing their home (and 20% said it helped close a sale). Now more than ever, the COVID-19 pandemic has encouraged more people to cook at home, thereby making a kitchen with updated appliances a sought-after commodity. Check out these blog posts on counters, cabinets, and DIY renovation tips for more ideas on how to update your current kitchen. Also keep in mind that 75% of agents surveyed in HomeLight’s Q3 2019 Top Agent Insights Report said that stainless steel appliances are the most in demand appliance finish among buyers.
Gone are the days of wall-to-wall carpeting, homebuyers of recent years want hardwood floors. This home project has one of the best ROIs you can find in home remodeling; there is a 106% cost recovery of new hardwood flooring and 100% cost recovery to refinish existing hardwood floors (according to the same Realtor Remodeling Impact Report). If hardwood throughout the house is not in the budget, opting for another hard surface, like laminate, is still preferred over carpeting. Prioritize the main living areas and keep the carpet in the bedrooms if you can’t update all the flooring. The best practice is to keep the flooring consistent in the house by using the same color and material in all the rooms you plan to make hard surface floors.
Buyers today want modern interiors with clean lines. Bathrooms are similar to kitchens in that they are a high traffic area for family members and so they can wear out faster than other rooms in the house. Buyers like bathrooms with big showers that give off a spa-like environment. If you are not in a position to remodel a bathroom, re-grouting tile and replacing water stained ceilings will go a long way to refresh the space.
Even if you have all the amenities a prospective buyer could dream up inside your home, it’s the exterior of the house that will immediately create an impression on the buyers before they even step foot inside. Create some curb appeal to ensure you impress the buyer from the start. For a quick and relatively inexpensive face-lift, keep the yard mowed and powerwash the exterior of the house. Homebuyers also want ample exterior lighting for both aesthetic and safety reasons. If you can take on a bigger project, the number one outdoor feature buyers want in a house is a patio. Check out this blog post for tips on how to upgrade your existing patio or talk to a contractor about building one.
To get an offer on your house it’s important to help potential buyers envision making your house their new home. There are several ways to accomplish this, particularly with proper staging, but one of the best ways is to paint all the walls neutral colors. A neutral palette (think whites and grays) makes the furniture pop and gives the home a move-in ready appearance.
Let’s face it, Americans today have a lot of stuff. Minimalism, while trendy, is a challenge for most of us. We want to live in simple, calm spaces without sacrificing our beloved possessions. This creates a demand for more storage areas in the house. Homebuyers want walk-in closets, garages with shelving, large pantries, and laundry rooms. While it’s not always possible to create these spaces if they are not part of your floorplan, with a bit of creativity, you can still improve these areas. Try installing an organizational system with shelves and hanging rods to optimize the space in a reach-in closet. Similarly, you can add shelves and a peg wall for tools to increase the storage capacity for your garage or even invest in a shed.
Energy Efficiency and Smart Technology
According to 2019 survey results from the National Association of Home Builders (NAHB), energy-saving features such as Energy Star appliances, windows and whole house certification are among the most wanted home features. Buyers are willing to spend a little more upfront in the interest of saving money on utilities down the road. In addition to replacing old windows and appliances with energy-efficient ones, consider installing ceiling fans and smart thermostats which will also help lower utility costs. You may also decide to upgrade your insulation which boasts a recovery value of 83%. Be sure to have these features highlighted in your listing since they can be overlooked in a typical home tour.
When in doubt about which projects to focus on, ask your realtor! They will have the most up-to-date data and trends, plus know what appeals to buyers specific to your local housing market.
COVID-19 has changed just about every aspect of our lives, from the way we interact with others to our work environment. In the past four months, several companies have instituted work from home policies and have found that employees are not only still able to get their work done, but many of them enjoy working remotely. Working remote means that employees cut out their commute time, giving them more time to spend with their family. It also cuts down expenses for the company in utilities and rent on the office space they lease. Many companies are now considering keeping some of their workforce remote, even as restrictions ease. Aside from lowering their costs, they are also able to hire from a much broader pool of candidates by allowing employees to work virtually anywhere. So, if you don’t have to live close to where you work, what does this mean for the housing market?
In general, potential homebuyers are house hunting in the suburbs and more rural areas. Many of the attractive aspects of city life have been put on hold during the pandemic in the name of social distancing. Meanwhile, urbanites may feel cooped up in small apartments, apprehensive about sharing amenities and common spaces (elevators, laundry rooms, on-site gyms) with their neighbors.
A survey of 1,004 people by the International Council of Shopping Centers found that twenty-seven percent of adults in the U.S. are considering moving because of COVID-19, and many of them are looking to the suburbs or rural towns. Realtor.com surveyed 1,300 people over the first two weeks of April and found that 15.7% of homebuyers want more space in their next house and 13.6% want “more and better outdoor space.”
For many people, being able to work remotely means they can afford their dream home by moving away from the city, where the cost of living is often quite high. In fact, Vic Lederman of Stansberry Research makes the case that remote workers in the tech industry (like Facebook or Twitter) will make well above the U.S. median household income level and so if they settle in these more rural towns, the entire area will experience a rising-tide effect.
That said, working from home isn’t everyone’s ideal situation. Some employees are anxious to get back to the office, away from the distractions of home. While these employees may want to stay within driving distance of the office, we could see more offices move to the suburbs as they seek more affordable buildings with sprawling floors that are conducive for social distancing. Whether or not this trend will be short-lived or the new way of doing business, the need for social distancing has certainly created a desire for more space on both a personal and commercial level.
With the Fourth of July right around the corner, you may be brainstorming ideas on how to celebrate with friends or family in a time of social distancing (a term we are very familiar with and perhaps tired of). Having an outdoor gathering can be one way to still socialize with friends while minimizing the risk of exposure from COVID-19. If you decide to host a BBQ, you may realize your backyard needs a bit of TLC before you can entertain. Investing in a patio might be the answer; afterall, a “Remodeling Impact Report” from the National Association of Realtors in 2016 found that 102% value is recovered from building a new patio and 106% is recovered from a new wood deck. Whether you are designing a new patio or deck, or are lucky enough to already have one, here are a few ways you can improve the area and make it one of your favorite places “in” the house.
Choose Versatile Furniture
Great furniture doesn’t have to be expensive to make a patio inviting. You may already have some chairs and tables that just need a quick facelift. You can easily remove rust and repaint/ spray paint metal pieces for a refreshed look. You can use benches for flexible seating or buy chairs that are ideal for both dining and lounging. A hammock is also a budget-friendly way to add a relaxing place to kick your feet up.
Create Outdoor Storage
Part of having versatile furniture is finding storage options that can help utilize the area if you have a smaller yard plus keep it looking tidy. An ottoman with an empty base can house magazines and sunscreen. A bench with built-in storage can hold cushions and pillows. Wooden crates can be painted and then treated with sealant to weather-proof them.
Add a Fire Pit
One easy way to instantly make your patio cozier plus establish a focal point in the yard is to add a fire pit. Not only do they provide heat in the cooler months, they are entertaining to watch and fairly inexpensive to install. A quick Google search will yield dozens of DIY fire pits (just be sure to stick closely to the materials list so you know you are constructing a safe fire pit) and you can always purchase a smaller, more portable one from a home improvement store or online. One of the biggest benefits of a fire pit right now is that people can easily congregate around the fire while staying six feet apart from each other.
Throw Some Shade
A backyard hangout or BBQ doesn’t have to be a sweaty, sunburnt ordeal. Incorporate shade to keep you and your guests cool. If your backyard doesn’t have many trees, you can purchase shade sails or umbrellas to cover the areas of the patio you plan to lounge in. You can also install a retractable awning or even build a pergola and add vines for a more natural feel.
Have a Pop of Color
After getting the basics set up, adding a bit of color is a great way to really make the space your own and show off your style. Quick ways to make your patio more visually appealing include laying down a big outdoor rug, planting bright flowers, using fun-shaped or colorful planters, or tossing in some weather-proof pillows with interesting designs.
Focus on the Accents
If you are looking for a way to really make your patio/ backyard stand out, there are plenty of things you can do. You can create a stone path to a bench or your favorite area of the yard. Bonus points if you cast your own stones using quick-mix concrete. A vertical succulent garden can be a great conversation piece, especially if space is an issue. Hanging up string lights or investing in a water feature are other great ways to instantly add some curb appeal to your backyard.
The Patio is Ready, Now What?
Now that your patio is ready for entertaining, what should those who are social distancing keep in mind while hosting the perfect BBQ?
Summer has officially started and downtown Harrisonburg is once again open for business, following some temporary closures due to COVID-19. An exciting new addition to the downtown Harrisonburg scene is the second location of a local coffee shop currently gaining a national reputation for high quality, ethically sourced coffees.
Merge Coffee Company was founded in 2017 by two different families who came together through a shared love of coffee. Cousins Darryl and Charles Mathews and sisters Emily and Larisa Martin started out getting together as friends who stayed up late drinking coffee. They were all impervious to the effects of caffeine, enabling them to drink coffee until midnight, and then go soundly to sleep. They began to source coffee from all over the country to sample different types. That led to the purchase of a 1 pound coffee roaster and a hobby of roasting “terrible” coffee. Gradually, the group got better at coffee roasting and their friends started to enjoy their efforts. From there, the hobby became a business.
Merge started their business as a coffee roaster that sold to established coffee shops, then expanded into a retail location in Park View at 821 A Mt. Clinton Pike, next to A Bowl of Good. Co-owner Darryl Mathews explains how direct trade sourcing is a key aspect of the business. “For us, sourcing well is very important, most of our coffee is direct trade, purchased directly from the farmers. Coffee is the third largest commodity in the world. Because of this there are a lot of middle men typically involved in the coffee supply chain, which ultimately doesn’t help on the farm end for their profits and being able to invest in infrastructure. So we eliminate those middle men, so that the farmers get a better profit margin, but also reinvest in infrastructure”.
Merge’s primary supplier is a multigenerational complex of over 10 farms, started three generations ago by a pair of brothers in Honduras. All the farms are still run by members of the Santiago family, and among the various farms grow a wide variety of different coffees. “They can serve everybody as far as their coffee tastes go, within these farms,” says Darryl. The Santiago farms produce several coffee varieties that are certified fair trade organic, but the certifications, which the farmers must pay for, apply only to certain lots on the farm. For Merge, it is more important that they and their customers know they are sourcing responsibly whether or not there is an official government certification. Darryl explains, “Fair trade organic is not as good for the farmer as it sounds, because the cost of getting and keeping that certification up could go towards other things.” Currently Merge carries seven different types of coffees from different parts of the world. Some are certified organic, and most are bought directly from the farmers.
Although a young company, Merge has already won two awards for coffees they roast from the Specialty Coffee Association. The SCA hosts an annual, national coffee roasting competition, with about 20 different categories into which coffee roasters can enter their various coffees. Merge entered two African coffees, one from Ethiopia and one from Burundi. Darryl described both coffees as being “very fruit forward”, with the Ethiopian roast having berry notes and the Burundian roast having a stone fruit flavor. Out of 1200 coffees, these two were included in the top 150 coffees chosen, winning Merge two bronze medals.
In addition to their commitment to direct trade relationships and an excellent quality product, Merge is also passionate about community building and heroic hospitality.
“We love the fact that coffee shops are a springboard for communities to flower,” says co-owner Darryl. We enjoy being the canvas for people to come in and work on that podcast, work on that book, get to know friends, debate, reflect. We love to be that canvas for neighborhoods to dream, to explore, and to grow.” After putting down roots in Park View, Merge has recently opened its second location in downtown Harrisonburg, at 425 North Main Street. The light-filled, airy interior has clean lines punctuated by vibrant green plants. Darryl describes the company’s aesthetic as fresh and modern, but still comfortable and inviting. The atmosphere feels warm and open, reflecting Merge’s vision of a coffee shop as a space for community building. Service is another important aspect of Merge’s business. “We want to serve people well with excellence, and have a great experience, we want the experience to always be consistent,” Darryl explains.
Both Merge locations are now open Monday through Saturday from 7 am until 4pm.
In addition to their coffees and classic espresso drinks, Merge is featuring some signature summer beverages. Darryl shared some highlights from the summer menu. “One thing that’s really popular right now is our coconut macaroon latte. That’s an iced latte with coconut, a little caramel and toasted coconut garnish. And for the non-coffee drinker we’ve got a rose gold lemon soda.” The soda is made in house from fresh, hand-squeezed lemons. “It’s a sparkling drink with a mineral-based glitter that goes in it as well. So it has bit of a shimmer to it.”
Merge’s new location is a welcomed addition to a vibrant, and growing downtown Harrisonburg scene. It is sure to become a hotspot for excellent quality, ethically sourced coffee and a neighborhood hangout. For more information about Merge, please visit https://www.mergecoffeeco.com/.
Buying a Home is More Affordable than 2019!
Due to record low interest rates, homes are more abordable this year than last! This may come as a surprise to many as house prices are higher.
Full commentary in video above and full report downloadable below.
A kitchen is central to both the style and functionality of a home. The average American spends about 40 minutes per day in the kitchen preparing food and cleaning up after meals. We want to enjoy the environment that we spend this time in. A beautiful kitchen countertop can really define the space and set the tone for the style of your kitchen. A countertop also must be functional for cooking on. Most countertops in residential kitchens are made of one of ten common materials. In this post we’ll explore the 10 best countertop materials currently on the market.
With so many options to choose from, finding a countertop material for your kitchen includes considering subjective and objective criteria. When you are looking at countertop materials, take these five factors into consideration:
A budget friendly and versatile option, laminate countertops are made by bonding a plastic laminate sheet to a particleboard (MDF) core. Popular brands of laminates include Formica, Nevamar, and Wilsonart. These countertops can be purchased ready-made as a post-form countertop or custom made to your specifications.
While they have been seen in a negative light in the past for being cheap, laminates have recently become more popular because of the thousands of varieties available. They come in an endless array of colors and patterns and are now popular in retro style kitchens, particularly mid-century modern styles.
Laminates are the best option for those on a tight budget. They are easy to clean, but can stain if not cleaned quickly enough. They are somewhat heat resistant, but can be scorched or discolored by hot pans. Laminate will not melt.
Cost: $15-40 per square foot, installed
2. Ceramic Tile
A second budget-friendly and DIY-friendly option is ceramic tile. Tiles come in more options than ever before, they can be made to look like wood, marble, leather, or cork. In fact, ceramic tile comes in more options than any of the other ten materials.
Tile is very durable and heat resistant, but much less expensive than natural stone, quartz, or solid-surface countertops. On the downside, tile creates an uneven surface that may make it more difficult to prepare food on. It can also be difficult to maintain clean grout lines between the tiles, although grout comes in a variety of different colors.
Generally, ceramic tile countertops do not contribute to the resale value of a home, but tile is still very popular as backsplash, wall and floor material.
Cost: $18-35 per square foot, installed
3. Solid-surface material
This relatively new material has been around for about 50 years. Solid-surface material is a manufactured material that blends acrylic particles and resins, which are formed into sheets and other shapes. It can be formed into countertops or sinks and can create a seamless surface. It was initially seen as a “space age” material that tried to mimic natural stone, although it does not convincingly resemble either natural or engineered stone.
Solid-surface material is a mid-range cost option that can be a good alternative to natural stone or quartz for large kitchens with lots of countertop space.The material will eventually wear out over time. It can be scorched by hot pans, but scorch marks can also be sanded out.
In terms of resale value, solid-surface material is generally perceived more positively by buyers than laminate or tile.
Cost: $35-85 per square foot, installed
A timeless source of beauty, marble is a natural stone widely used in ancient architecture. Traditionally associated with luxury, marble actually costs less than many of the other options in countertop materials. It is sometimes used in only a small part of a kitchen. It comes in a variety of colors and patterns, and because it is natural, each piece is unique.
Marble is one of the softer natural stones, making it less durable and easier to damage than granite or soapstone. It can scratch and stain, but using a sealer will help to maintain its appearance.
Cost: $40-100 per square foot, installed
Considered a premium material, granite is the most popular natural stone used for kitchen countertops. Granite is thought of as elegant and luxurious, and remains a common option for kitchen projects where money is no object. It comes in a very wide array of colors and patterns. Although it is expensive, the cost has come down in recent years as supplies have increased. Granite is a clear favorite of both realtors and home buyers.
Granite is one of the hardest natural stones, and may be the most durable of the stone options in the top 10 countertop materials. It will not burn, but lighter colors can stain. Sealing helps prevent granite from staining. It varies more in price than any other countertop material.
Cost: $45-300 per square foot, installed
A third option for natural stone, soapstone has a dark gray color and a smooth, satiny texture.It has recently become a popular choice in kitchen countertop material, and can also be made into a sink. Soapstone is particularly popular in historic homes, but can also lend a striking element to modern kitchen designs.
Soapstone is very hard and resistant to heat and stains. Over time, it develops a patina that lends it an antique look. Although it is a durable surface, it will scratch. It has a more expensive starting price than marble or granite, but does not go into the higher ranges like granite does.
Cost: $55-100 per square foot, installed
7. Quartz (Engineered Stone)
“Quartz” is a manufactured stone product made from 93% quartz particles and other minerals formed into slabs that are bound with resins. The quartz comes from leftover stone from quarries, making it a low-environmental impact option. Companies that produce quartz include DuPont Zodiaq, LG Viatera, Cambria, and Silestone. It was created as a stone product that performs better than granite or marble, and can closely resemble either of those natural stones. It comes in even more colors than granite, and overall, may be the best value. Some buyers even prefer quartz to granite .
Quartz has a non-porous surface, unlike porous natural stone. It doesn’t stain, scratch or scorch, and may be the least high-maintenance option. Quartz does not require sealing.
Cost: $55-155 per square foot, installed
8. Wood or Butcher Block
A unique option for a kitchen countertop, wood or butcher block has a distinctly warm, organic look to it. Wood countertops are particularly attractive in historic homes. Wood countertops are available in a wide variety of colors and finishes, but most are made from hardwoods like maple and oak.
Wood is fairly durable and very resistant to heat. It needs to be well-cared for to remain clean and attractive, and must be sealed very frequently to prevent staining. Use mineral oil on wood frequently to keep it in good condition. Although it can look very beautiful, wood countertops are an unusual choice that do not add any resale value to your home.
Cost: $60-100 per square foot, installed
Endlessly malleable and extremely durable, concrete can be custom made in almost any shape and form a seamless countertop and sink unit. Currently, concrete is very trendy in new, modern homes. Concrete countertops are cast into forms directly in your kitchen, and must be installed by skilled professionals.
Although countertops are made from a different type of concrete from that used for sidewalks, they remain very heavy. They are heat resistant and scratch resistant, but can be scorched by hot pans.
Cost: $70-$140 per square foot, installed
10. Stainless Steel
Originally reserved for commercial kitchens, stainless steel has recently become trendy in high-end residential kitchens. It has a distinctive contemporary and industrial style that works well in a new, modern home. Unlike most other materials, stainless steel can’t be modified, so it always looks the same. Stainless steel can create seamless countertop and sink units.
Stainless steel is very heat resistant, and doesn't burn. It can stain, but it does not rust. In addition to being the most expensive countertop material, stainless steel may be seen as unattractive by buyers who don’t follow new trends in materials.
Cost: $80-250 per square foot, installed
If you currently have a mortgage you may be wondering how you can lower your monthly payments without refinancing. Recasting your mortgage is one way to accomplish this.
What is mortgage recasting?
Recasting is when a borrower pays a large lump-sum payment towards their principal and the remaining monthly payments are then adjusted to reflect a new amortization schedule. The lower loan amount means you will also pay less in interest over the life of the loan. All the terms of the mortgage will remain unchanged.
How is recasting different from refinancing?
Refinancing is essentially replacing one loan with another one. Your new lender will pay off the balance to your old lender and then you begin making payments with the new lender. This means there are new loan terms including a new interest rate. Refinancing can lower your monthly payments if you refinance for a lower interest rate and because the length of the loan essentially starts over (you pay a 30 year mortgage for a few years and then refinance to another 30 year mortgage with the lower balance). Recasting will not change your pay-off date or your interest rate.
What are the pros of recasting a mortgage?
Recasting is often less expensive than refinancing since you are not paying for closing costs or an appraisal. Recasting is usually easier to qualify for than refinancing as well; your lender might not require proof of income or your credit scores. Additionally, while your interest rate will remain the same, you will still end up paying less in interest as the principal balance is lowered after you make the lump-sum payment. With a refinance, if you replace a 30 year mortgage you’ve paid on for several years with another 30 year mortgage, you may end up paying more in interest as mortgage payments start interest-heavy in the early years.
What are the cons of recasting a mortgage?
For starters, you might not even be able to recast a mortgage; not all lenders allow a recast and certain loans (like FHA or VA loans) do not qualify for recasting. If you have a high interest rate with your current loan, you will not be lowering your rate because the loan terms are not changed. You will not be shortening the length of the loan whereas a refinance could shorten your loan term if you move from a 30 year mortgage to a 20 or 15 year term. It’s also worth noting that recasting requires you to make a large, lump-sum payment (typically at least $5,000.00), thereby tying up your cash in equity. Keep in mind that while less expensive than refinancing, there is still a fee to recast a mortgage as well.
Recasting a mortgage can be an attractive option for someone looking to lower their monthly payments without the hassle of refinancing (as well as spending less than what would be required to refinance). A quick discussion with your lender can help you decide if a mortgage recast might be the right move for you.