Seems like a simple thing — to measure the square footage of a house. Just multiply the length by the width of each room and add up all your numbers. Not so fast. First of all, what’s a “room”? Do closets count? Basements? And why does accurate measuring even matter? There’s a lot to unpack.
What’s so important about getting square footage right?
If you’re moving into a new home and you want to know if your California king is going to fit into the primary bedroom, it’s nice to know the room’s square footage.
But there’s more riding on how to calculate the square footage of a house than just being able to fit your stuff. The square footage of a house determines its value. Lenders rely on square footage for mortgage calculations, tax assessors rely on square footage for assessments.
So, if you’re renting a house now but thinking of buying, it’s important to understand your current square footage so you can make a good comparison when house hunting.
What’s included in a house’s square footage?
There are several different answers to this question. First, here are a few terms to understand:
GLA (gross living area) is a home’s finished livable space above ground. And, if any part of the finished space is below grade, the entire area is typically known as below grade. GLA calculates when appraisers measure the home’s exterior. It goes in public records and is often important for tax purposes.
TLA (total living area) is like GLA but it includes finished basement space or possibly an accessory dwelling unit (ADU).
Living space is determined by American National Standards Institute (ANSI) Z765, which is a voluntary guideline for describing, measuring, calculating and reporting area for single-family homes.
Living space generally refers to “anything that is under the roof, within the house that is finished and heated — space heaters don’t count,” said Bryan Reynolds, a Certified General appraiser in Kentucky and Tennessee and president of the National Association of Appraisers.
Rooms to measure when calculating the square footage of a house
You might be surprised by which rooms are included — and which are not — when determining how to figure out square footage:
Areas that don’t count towards the square footage of a house
There are plenty of rooms or spaces in your home that would qualify as “living space,” but don’t get counted in the total square foot calculation:
Finished basement: Say you have a ranch home with 1,000 square feet above ground and a 1,000-square-foot finished basement. An appraiser would say it’s 1,000 square feet of above-grade space and 1,000 square feet below grade. A real estate agent might say that there are 2,000 total square feet.
Enclosed porch: “If it’s unheated or used seasonally and there’s a separate door to the livable area, then it’s not included,” Reynolds said. But “if it’s finished in similar quality to the rest of the home, functional in design and has a heat source that is permanent in nature, then it can be included.”
Garage: The normal garage storage space doesn’t count. However, a bonus room above the garage might count. Only if it’s heated and 100 percent finished to a similar quality as the house. And, if it’s directly accessible from the inside of the house though.
Accessory Dwelling Unit: Unless it’s actually part of the house, it’s considered a separate entity.
Then, if you want to really get into the weeds, what about the sort of dead space under the stairs? According to Reynolds, ANSI says to include it, but AMS (American Measurement Standard) allows you to remove it from the square footage equation.
And, if you’ve got a bay window with a bench under it, one could argue that if you were to take the bench away, there would be useable floor space and that should come with the square footage.
How to figure out the square footage
Now that you know what to measure, here’s how to measure. But first, remember the aforementioned ANSI Z765?
For a room to make it in a home’s total square footage, the ceiling must hit a certain height — seven feet or higher or six feet four inches if there are beams or soffits. Plus, no portion of the finished area can have a ceiling height of less than 5 feet.
Let’s say you’ve got a Cape Cod with a sloped ceiling and knee walls. That portion under the sloped ceiling (if it’s five feet or less) is not counted in the square footage (see image). In addition, the rest of the ceiling must hit at least seven feet for at least half of the room’s floor area.
Photo source: AccurateHomeMeasuring.com
Keep in mind that an appraiser will, hopefully, look around inside the house but will measure the house from the exterior — unless there’s that pesky sloped ceiling situation, in which case they will have to go inside or the square footage will be off.
According to Hamp Thomas, certified residential appraiser and author of “How to Measure a House Using the ANSI Standard,” the pros use a 100-foot tape measure to do their job. Certainly, a shorter tape measure would work. However, there is a lot of stopping, starting and adding that can lead to inaccuracies.
Measure around the outside of the house above the foundation. Multiply the length by the width of each rectangular space. If you’ve got a second story and can’t reach a corner on the exterior, for example, measure from the inside and then add the width of the exterior walls.
Know why you’re measuring
It’s likely that, if you’re reading this, you’re not a professional appraiser. If you’re interested in getting a general sense of how much footage you have in your house, grab a measuring tape and measure each room’s length and width and multiply those numbers. Then add all the square footages together. “Don’t forget to include any outside walls thickness, or just measure from the exterior,” Reynolds said.
If a room isn’t a nice rectangular shape and has jogs and bumps, create rectangles, measure and multiply the length by width. Then, add up all the bits and pieces.
And if old-school tape measures aren’t your thing, there are lots of free measurement apps that you can download to your phone. You can also put the information into Calculator Soup’s square footage calculator, which can help you figure out the square footage of differently shaped rooms.
Stacey Freed is an award-winning writer and former senior editor for Remodeling, a trade publication focused on the business of the remodeling and construction industry. As an independent writer, she continues to write about the building, design, architecture and housing industries. Her work has appeared in Better Homes and Gardens and USA Today special interest publications, Realtor magazine, This Old House, Professional Builder and online at AARP, Forbes.com, House Logic and Sweeten.com among other places.
Plunk, an AI-powered home analytics platform, announced a proptech partnership with BHR, a housing data aggregator.
Through this collaboration, BHR’s RealReports platform will integrate Plunk’s proprietary AI technology, making property data even more accessible to real estate professionals. Property research, comprehensive valuation and remodeling insights will all be available in one place.
BHR’s flagship product, RealReports, gathers property data, ranging from climate risk to property valuation, in one place. RealReports pulls information from over 30 data providers. The tool also comes with an AI-powered assistant, Aiden, which can answer questions about a property.
“In this current market, the more insight you have into a property, the more competitive you can be. Plunk’s real-time valuation and AI-powered remodel recommendations are a powerful layer of insight for agents using RealReports and their clients to drive more informed decision-making,” James Rogers, co-founder and CEO of BHR, said in a statement.
In an environment in which agents increasingly have to demonstrate their value, having a clear understanding of data and trends will be a competitive advantage for real estate professionals.
Plunk has been widening its presence in the real estate space.
In September, it announced a partnership with Local Logic, a location intelligence platform, to empower end-users with the technology and insights they need to inform their home-purchase decisions.
Plunk also partnered with two real estate industry marketing companies, Union Street Media and Realforce, to scale its real-time data and analytics across multiple digital channels.
With soaring home prices and mortgage rates putting a damper on the market for new home loans and refinancing options, it’s a challenging time for homebuyers and lenders alike.
But it’s not all grim news.
While the current climate may be causing existing-home sales and inventory to fall, it’s driving renewed interest in home equity options. And that offers an incredible opportunity for banks and non-banks alike to improve their digital channels to better support home equity lending.
The average rate on a 30-year fixed mortgage remains above 7%, the highest it’s been in more than 20 years.
Mortgage holders, on average, now have close to $200,000 of available equity in their homes, making home equity options an attractive alternative.
Home equity line of credit (HELOC) and home equity loan originations increased 50% in 2022 compared to two years earlier, according to the Mortgage Bankers Association’s Home Equity Lending Study.
Bank and non-bank lenders are now confronting the urgency to improve their digital experiences to better support home equity lending.
Here are five best practices lenders can adopt to enhance the consumer lending experience, informed by Keynova Group’s review of 12 leading U.S. mortgage and home equity lenders’ digital customer experiences.
Now more than ever, consumers want practical financial guidance and support.One way to do this is by helping them make the best lending decision based on their unique circumstances.
Lenders that provide access to a recommendation tool can help consumers select the appropriate loan or line of credit option, such as a HELOC, home equity loan, refinancing, personal loan or credit card. And offering to connect the consumer with a lending specialist to walk through the application process can also help lenders win business.
Presenting a debt consolidation calculator that includes a home equity option (something 25% of the reviewed lenders offer today) can help homeowners determine whether home equity or another lending solution is most suitable for their needs.
Key stat: According to the Federal Reserve, credit card delinquency rates increased in the second quarter of 2023 for the seventh consecutive quarter. With this continuous increase in outstanding credit card balances among consumers, a home equity loan can be a practical debt consolidation option compared to balance transfers, as the rates are often much lower than those associated with credit cards.
2. Include a soft credit pull option in the application process
Enable the home equity application process to determine if a consumer is eligible — as well as how much they may be eligible to borrow and at what rate — by offering a soft credit pull.
This is an excellent incentive for prospective borrowers to test the waters before committing, as it doesn’t impact their credit score.
Few home equity lenders currently enable soft credit pulls within the home equity application process, making it a significant area of opportunity for bank and non-bank lenders.
3. Support digital from application to closing
As the world becomes increasingly digital, expectations for a completely digital lending experience continue to grow. Consumers don’t want to start an application digitally only to have to finish it or complete the closing process at a brick-and-mortar location.
Lenders that support a fully digital process from application to closing will speed the lending process and offer the seamless — and digital — experience that consumers demand.
Only 25% of the reviewed lenders currently offer digital closing for home equity.
4. Accelerate lending approvals
Much like consumers don’t want to have to start in one channel and end in another, they don’t want to wait for answers. And this sentiment holds true when it comes to waiting on lending approvals.
However, just two of the lenders Keynova Group reviewed support same-day approval. Comparatively, it’s a best practice for credit card issuers. Most credit card issuers offer card applicants instant approval for these unsecured credit lines.
Speeding up the approval process for home equity lending will go a long way when it comes to consumer satisfaction.
5. Add support for Spanish-speaking consumers
With over 41 million native Spanish speakers in the U.S. in 2022, support for Spanish-language content and applications are critical. And with a renewed interest in home equity options, deepening Spanish-language support will help home lending become more digitally accessible to Spanish-speaking consumers.
None of the reviewed lenders have a Spanish-language application for home equity. Yet 25% now offer Spanish-language versions of their mortgage applications.
Additionally, Spanish-language educational content about home equity is lacking on lenders’ websites, making this another key opportunity for improvement.
High interest rates and the lack of housing inventory make home renovations and remodeling an attractive alternative for homeowners looking to upgrade their spaces. As well, the rapid expansion in credit card balances offers opportunities for borrowers to consolidate their debt at lower interest rates than are available through credit cards.
Increasingly, homeowners are turning to HELOCs and home equity loans to finance these improvements or consolidate debts, making it a favorable time for lenders to zero in on their lending processes to ensure they’re providing the seamless digital experiences homeowners expect.
Beth Robertson is a managing director with Keynova Group.
Ah, fall. It’s the time of year that comes with many welcomed changes: new colors; cooler temperatures; and, perhaps the most exciting, festive home transformations. While some take the spooky route and adorn their abodes with macabre Halloween decorations, others opt for a more classic look that isn’t so holiday-specific. Although both approaches can be great if executed correctly, it appears Melissa Gorga falls into the latter group.
How to Watch
On Saturday, October 21, The Real Housewives of New Jersey mom lifted the curtain on her freshly decorated front porch. Melissa posted a handful of Instagram photos of her posing outside her Franklin Lakes home on a recent rainy day. One shot showed the RHONJ cast member with her arms spread out as she stood atop the entrance steps, which were covered with dozens of cascading pumpkins in various shapes, colors, and sizes.
Melissa credited the design to Nicki Wszelaki’s A Tufted Life, a New Jersey-based lifestyle brand that specializes in home decor.
Melissa Gorga embraces fall “with pumpkins On Display”
“Rainy days with pumpkins On Display. I love fall!” she captioned the carousel. “Thanks to [A Tufted Life] making it perfect! Now how long you think before I start decorating for christmas?!!”
Melissa shared the update more than two years after she and her husband, Joe Gorga, purchased the property and embarked on an ambitious house renovation. After months and months of construction and remodeling, the family finally moved into the Jersey home last November, and have continued to make it their own.
Melissa and Joe Gorga showcase their beautiful backyard
Earlier this month, Melissa shared another peek at her home’s sprawling backyard where she spotted a little deer “just chilling.” The snap highlighted her amazing swimming pool, lush landscaping, and inviting cabanas.
As Joe previously revealed, the outdoor space was finally completed at the beginning of June, just in time for the warm-weather months.
“We got this done. Let me tell you something, it looks gorgeous,” he said in an Instagram Story which focused on the pool. “Love this… Look at that — waterfalls. Look at these lights. Gorgeous!”
RHONJ ladies reveal their Halloween home decor
Melissa’s RHONJ castmates have also taken to Instagram to show off their fall home decor. Jennifer Aydin enlisted Christmas Designers of NJ to transform her foyer into an eerie yet elegant space complete with faux spider webs, torches, florals, and string lights.
Dolores Catania also embraced the spooky spirit by decorating her front lawn with purple and orange lights, as well as a towering Jack Skellington statue.
“Love my Halloween lights,” the Jersey mom captioned a Story. “Thank you to [Christmas Designers of New Jersey].”
A higher resale value of your home is one of the many rewards for carrying out home improvements and renovations. But remodeling projects cost money, and financing them can be expensive, depending on the amount you borrow and the type of loan you use.
Options for home improvement financing include home equity loans (HELOCs), home equity lines of credit, and cash-out refinancing. These types of financing allow homeowners to borrow against the equity they have built up in their home. Other financing options are personal loans, credit card financing, and government programs. Any of these could be the best option depending on the circumstances.
Here’s what homeowners need to know about the different types of home improvement loans and what factors they should consider before settling on a lender.
1. Home Equity Loans
If you have built up equity in your home, which means you have paid off a portion of your mortgage, a home equity loan could be the right choice to finance home improvements. To find out how much equity you have, subtract the balance due on your mortgage from the assessed value of your home. For example, if your home is worth $400,000 and you owe $200,000 on your mortgage, you have $200,000 in equity. A bank will let you borrow up to a certain percentage of that amount — up to 100% in some cases.
A home equity loan acts like an additional mortgage, where the homeowner pays back the loan in monthly payments. The payments are in addition to the original mortgage payments. Home equity loans often have low fixed interest rates because the home is used as collateral for the loan. However, there are closing costs to consider that could be between 2% to 5% of the loan amount.
On the plus side, home equity loans usually qualify for the mortgage interest tax deduction as long as the funds are used to substantially improve the home.
If you have plenty of equity and need a sizable amount to finance a big project, a home equity loan could make sense. You will receive a lump sum payment, and the improvements you make may increase the value of your home.
Advantages of a Home Equity Loan
Disadvantages of a Home Equity Loan
Low interest and terms from five to 30 years
There are origination fees and closing costs
You can borrow up to 100% of your home’s equity
Funds are disbursed as one lump sum, so borrowers need to budget carefully
The interest is tax deductible
The monthly payments add to existing mortgage payments
💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. One question can save you many dollars.
2. Home Equity Line of Credit (HELOC)
A home equity line of credit also borrows against the equity you have built up in your home. But the funding works more like a credit card and is not distributed as a lump sum payment. A bank will allow a qualified homeowner to borrow up to a preapproved limit and then pay it back. HELOC loan terms are typically between five and 20 years.
Interest rates differ for HELOCs because they are adjustable and rise and fall over the life of the loan. However, interest is only due on the outstanding balance — the amount borrowed — not the full credit limit.
The amount you can borrow through a HELOC depends on your credit score, income, and the value of your home. Your lender can change the loan terms, too. For example, if your credit score drops during the loan term, your lender may reduce the amount you can borrow.
One advantage of a HELOC is that you can use funds from the line of credit, make payments, and then borrow again. A HELOC is a better option if you have smaller projects to do over a longer term. You can borrow as you go, only pay interest on how much you use, and avoid paying closing costs.
Advantages of a HELOC
Disadvantages of a HELOC
No closing costs
Interest rates may go up and down
Interest payments are tax deductible
Interest rates are typically higher than those for a home equity loan
You only pay interest on the amount you use
Your lender can change the amount you can borrow and the repayment terms
3. Cash-Out Refinancing
Another option to fund home improvements is cash-out refinancing. In the case of cash-out refinancing, a homeowner takes out a new mortgage that is higher than their original mortgage. The borrower then pays off the original mortgage and uses the leftover cash to fund home improvements. The amount of cash they can access depends on the equity they have in the home.
For example, let’s say the homeowner currently owes $100,000 on a $300,000 mortgage. They take out a new mortgage for $350,000, pay off the old mortgage ($300,000), and now have $50,000 left to spend on home improvements. The catch is that their new monthly mortgage payments will be higher because they have increased the size of the loan, and they will have to pay origination fees and closing costs.
Money from refinancing does not have to be used to improve a home; it can be used to consolidate debt, pay for school, or anything else the borrower wants to use it for. Also, the cash is not considered income from the IRS and is not taxable.
Cash-out refinancing may be a good option if interest rates have dropped since you took out your original mortgage. You can take out cash and pay a lower interest rate on the new loan. You might also be able to reduce the term length of your original mortgage and pay off your home loan sooner. This will be the case if the total cost of your new loan including closing costs is less than the total cost of your original mortgage.
Advantages of Cash-Out Refinancing
Disadvantages of Cash-Out Refinancing
You will still have one monthly mortgage payment
Your new mortgage will have a higher balance
You might be able to lower your interest rate and loan term
Your loan term will start from the beginning, so you will be paying off your mortgage for longer
You can use the cash for anything
If interest rates have gone up, your monthly payments may be higher
4. FHA 203(k) Rehab Loan
An FHA 203(k) rehab loan is a loan taken out at the time of the home’s purchase. These loans are typically used for a fixer-upper, when the owners need funding right away for improvements. This could be the best type of loan for home improvements for big projects. The advantages of this type of loan for the borrower are that they have funds available for improvements from the outset, and they only have to pay back one loan with one set of closing costs.
These loans are also backed by the government and come with benefits. Borrowers can qualify with a less-than-stellar credit score (typically, a minimum of 620), and the down payment expected is lower than it would be for a traditional mortgage loan (as low as 3.5%).
Two things to remember are that the renovation costs must exceed $5,000 for the borrower to qualify for this type of loan, and the closing process can take a long time. Lastly, work covered under an FHA 203(k) loan must start within 30 days of closing, and projects must be completed within six months.
This type of loan may be worth considering if you are buying a fixer-upper that requires significant work, and your credit score qualifies you for this type of loan.
Advantages of a FHA 203(k) Rehab Loan
Disadvantages of a FHA 203(k) Rehab Loan
One loan and one set of closing costs
Only old homes or homes in bad repair may qualify
Federally-backed with low interest rates and low closing costs
You are likely to be charged costly monthly mortgage insurance
You can qualify with a lower credit score
Cash must be used for specific home improvements
5. Personal Loans
If you don’t have sufficient equity in your home to take out a home equity loan or a HELOC, a personal loan is an option. A personal loan will come with a higher interest rate, adjustable or fixed, because this type of personal loan is unsecured. Your home is not used as collateral. These loans are processed much quicker than home equity loans or HELOCs, sometimes the same day.
Personal loan terms are shorter, from two to five years, which will mean higher monthly payments, and you’ll have to pay closing costs.
These loans may work if you lack equity or if you have an emergency, such as a broken water heater or HVAC system. That said, they are probably one of the most expensive borrowing options.
Advantages of a Personal Loan
Disadvantages of a Personal Loan
Higher interest rate than mortgage loans
You can qualify for a good interest rate even with an average credit score
Shorter terms, which increases monthly payments
Your home is not used as collateral and is not at risk
Fees and possible prepayment penalties
6. Credit Cards
A credit card can be used for financing, and it’s a fast, simple way to access funds. The amount you can spend on improvements will depend on your credit limit (although you could use multiple cards), and the interest charges are likely to be much higher than other financing options.
A credit card can be a good option if you think you can finish your renovations quickly and pay off the balance on the card. Look for cards with an introductory 0% annual percentage rate (APR). Some cards allow you up to 18 months to pay back the balance at that introductory rate. If you can pay off the balance by the deadline, that’s interest-free financing. However, check for fees and other hidden costs.
The danger here is that if you don’t pay off the balance by the end of the interest-free rate, the interest charges can skyrocket. That’s why credit cards should not be used for long-term financing.
A credit card can be a great option for home improvement financing if you can find one with a low introductory rate, low fees, and you are confident you can pay off the balance within the introductory rate period.
Advantages of Credit Card Financing
Disadvantages of Credit Card Financing
High interest rates, particularly after a low introductory interest rate period has expired
Some cards offer 0% introductory rates
Possibly low credit limits
7. Government Assistance Programs
The federal government has grants and programs that can help homeowners pay for renovations. Two home renovation loan options are Title I loans and Energy Efficient Mortgages. Lenders for Title I property improvement loans for your state are listed on the U.S. Department of Housing and Urban Development’s website.
Title I Loans
An FHA Title 1 loan is a fixed-rate loan used for home improvements and rehabilitation. Loans under $7,500 are usually unsecured, but bigger loans may use your home as collateral. These loans may be used in conjunction with a 203(k) rehabilitation mortgage.
The maximum loan terms are between 12 and 20 years, and loan amounts are $7,500 to $60,000, depending on the home’s size and type.
The loan must be used for property improvements, and an FHA mortgage insurance premium of 1% of the loan amount will be added to your interest rate. There is no minimum credit score required, but your debt-to-income ratio may factor into your loan terms.
Energy Efficient Mortgage
FHA’s Energy Efficient Mortgage program (EEM) finances energy-efficient improvements with their FHA-insured mortgage. The borrower must qualify for the loan amount used to purchase or refinance a home. However, they’re not required to be qualified on the total loan amount that includes the amount used to finance energy-efficient improvements. The FHA insures the loan to protect the lender against loss in the event of payment default.
Starting in 2023, homeowners can also get tax credits for some energy-efficient updates, including windows, insulation, new doors, heat pumps, and air conditioners.
These types of programs will reduce the cost of financing for home improvements and are great options if you meet the criteria.
Advantages of Government-Assisted Financing
Disadvantages of Government-Assisted Financing
Low interest rates
Financing must be used for property improvements.
Broad range of loan terms
Strict qualification standards
Larger loans may require your home as collateral.
How to Decide the Best Type of Home Improvement Loan for You
If you’re trying to decide what home improvement loan is best for you, consider the following factors:
Are You Purchasing a Fixer-Upper?
If you are buying a fixer-upper, check if you qualify for either an FHA 203(k) rehab loan or a government-assisted program. You may get cheaper financing this way.
Do You Need Funds Right Away?
If you need funds quickly — for example, you have a broken heat pump or HVAC system — a personal loan or credit card financing are options to explore.
Do You Have Equity Available?
If you have built up equity, a home equity loan or line of credit will provide cheaper financing than a personal loan and over a longer term, so that your monthly payments will be lower. A cash-out refinancing loan might also mean that you could lower your payments and reduce your term if interest rates have dropped significantly since you took out your original mortgage.
How to Get a Home Equity Loan
The first step in getting a home equity loan is to decide which loan is best for your situation. Next, find a lender with the best terms and fill out an application to see if you qualify.
1. Check Your Financial Health
The better your credit score, the better the loan terms will be. If you can boost your credit score before you apply for financing, you’ll boost your chances of getting a better deal. Lenders will also look at your debt-to-income ratio when setting the interest rate and term, so lowering your debt before you apply for a home improvement loan can help lower the cost of your financing.
2. Compare Lenders
You should contact a few different lenders to compare their rates and loan terms. Look for benefits, such as rate discounts for enrolling in autopay, and watchouts, such as late payment fees and minimum loan amounts.
3. Gather Documentation
You will need to submit a few basic pieces of information when you apply for a loan. As a general guide, you will need:
• Proof of income, such as W-2s or 1099s, bank statements, pay stubs, or tax returns.
• Proof of residence, such as your Social Security number and utility bills.
Your current debts, housing payment, and total income will also play a role. Be sure to have all the information your lender may need on hand when you apply to speed up the application process.
💡 Quick Tip: With home renovations, surprises are inevitable. Look for a home improvement loan with no fees required — and no surprises.
4. Apply for Prequalification
Some lenders will prequalify you, which will tell you your interest rate and how much your monthly payments will be. Prequalification should not affect your credit score, whereas a formal loan application could. Applying for too many loans in a short space of time could lower your credit score.
5. Complete the Loan Application Process
Your loan application might be fully online, via phone and email, or in person at a local branch. In cases where you are borrowing against equity, your lender may require a home appraisal. Provided your finances are in good shape, the lender should approve your application, and you’ll receive funding.
How Your Credit Affects Your Home Improvement Loans
Your credit score will affect the total cost of a home improvement loan. The higher your score, the less of a risk you pose to a lender, so the better the loan terms will likely be for a mortgage or long-term loan. The same goes for credit cards and personal loans. Also, if you have good credit, you’ll probably have an easier time securing a home improvement loan.
Can You Use Home Equity Loans for Non-Home Expenses?
Home equity loans and HELOCs are flexible and can be used for anything, not just home expenses or renovations. However, these loans are best suited for long-term, ongoing expenses like home renovations, medical bills, or college tuition.
The types of loans for home improvements include loans based on the equity you have built up in your home, such as a home equity loan, a HELOC, or cash-out refinancing. You can also use personal loans, credit card financing, and government programs. Loans based on equity tend to cost less over the loan’s lifetime, but they also tend to have longer loan terms. Equity-based loans also tend to be best when you need to borrow a larger amount, because you can spread out the cost over a longer period.
A personal loan will have a higher interest rate and a shorter term, but the higher your credit rating, the better the interest rate tends to be. Alternatively, credit card financing is favorable if you need funds quickly, the amount you need is not too high, and you can take advantage of a 0% introductory rate and pay off the balance before the rate expires.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.
SoFi’s Personal Loan was named NerdWallet’s 2023 winner for Best Online Personal Loan overall.
What type of loan is best for home improvements?
The type of loan that is best for home improvements depends on your finances and how much you need to spend. If you hold a fair amount of equity and need a sizable amount of cash, a home equity loan, HELOC, or cash-out refinancing may be good options. Cash-out refinancing might be particularly appealing if interest rates have dropped, and you can refinance with better loan terms.
If, on the other hand, you have a smaller project that you expect to complete in a short timeframe, using a credit card that gives a 0% interest rate for a period could be the way to go.
What is the best renovation loan?
If you’re taking on a big project, buying a fixer-upper or planning to renovate an older home, you may want to consider the FHA 203(k) mortgage. The 203(k) rehab loan lets you consolidate the home and renovation costs into a single remodel home loan and avoid paying double closing costs and interest rates.
If your home is newer or higher-value and you have equity, cash-out refinancing can be a good option, particularly if interest rates have dropped.
Should I use a personal loan for home improvements?
Personal loans are a more expensive option for home improvements, especially if your credit score is average. However, using a personal loan for home improvements might be the best option if you don’t have a lot of equity to borrow from.
Are home improvements tax deductible?
Home improvement loans are generally not tax deductible. However, if you use a refinance or home equity loan, some of the costs might be tax deductible. Check with a CPA or tax specialist.
What credit score is needed to get a home improvement loan?
Credit score requirements for a home equity loan depend on the lender. A credit score in the mid-600s might be enough to be approved by some lenders, while others might not approve you with a score above 700. Lenders consider many factors, including your debt-to-income ratio and equity in the home, when considering you for a home equity loan.
Photo credit: iStock/Hero Images
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The holidays are upon us, and our thoughts turn to shopping, eating and decorating. But safety is never far from our minds. Keeping the holidays fun and safe takes a little prepping and planning. Here are eight holiday safety tips to keep you and yours healthy and safe as you head into the jolliest of seasons.
1. Avoid delivery dramas
The holidays are prime time for thieves. The USPS delivers more than 28 million packages per day for the 10 days before Christmas. Here are a few holiday safety tips to keep your packages secure:
Install a safety camera or video doorbell
If there’s not one in your building, talk with your landlord or property manager about creating a dedicated package room with a door
Get to know your neighbors as a lot of folks are working remotely. They could keep an eye out for deliveries.
Add delivery instructions to packages such as leaving them in a spot where no one will notice them
Employ one or more of these tactics to keep your holiday goodies safe and out of the hands of would-be thieves.
2. Don’t fan the flames
Candles and fireplaces are romantic but can also become problems if you don’t take precautions. Keep children and pets away from burning candles and lit fires and always remember to snuff out candles before going to bed. If you do have little ones, consider using battery-operated candles and flameless tea lights for that warm glow.
If you want to make a fire, ensure your fireplace flue is open and keep the damper open until the fire is out. Clear away any flammable clutter — books, magazines, draperies, furniture — before lighting the fire. Keep a screen in front of the fireplace at all times. Make sure the fire is completely out before you go to bed or leave the house.
While the risk of fire attributed to Christmas trees is small — about 160 fires (out of roughly 358,500 home fires) according to the National Fire Protection Association (NFPA) — it’s still something you should consider. Most of those fires involve real trees, which is why many apartment buildings do not allow tenants to use living trees for the holiday (check your lease agreement or with your property manager or landlord before dragging home a tree from the local scouts).
Keep your Christmas tree at least three feet from fireplaces, radiators and other heat sources. Make sure you keep up with the watering. There’s nothing worse than stepping with your bare feet on dry, spiky needles — except those dry, spiky needles catching on fire.
Unplug the lights if you leave the house and before you go to sleep. If you purchase an artificial tree, make sure it has a fire-retardant label. And if you have a metallic tree, never decorate it with electric lights. If the lights are faulty, the tree can become charged and anyone touching it could be electrocuted.
And this might be the biggest holiday safety tip of them all: Once the holidays are over, don’t wait too long to take down your tree and lights. Not only will it be safer, but it will make your neighbors happy.
3. Tame your travel troubles
If you’re heading out of town for the holidays, there’s a lot to think about beyond directions for getting over the river and through the woods.
Make sure your car has a roadside emergency kit that includes items such as blankets, a first aid kit, a tool kit, a small shovel, a flashlight and extra batteries. Keep a few gallons of water on hand.
Holiday gatherings are what the holidays are all about, and they often involve alcohol. Seems like this holiday safety tip should be a no-brainer, but, always name a designated driver or take an Uber, Lyft or taxi home.
We’re still facing the effects of the pandemic. When you stop at roadside facilities, wear masks and avoid crowds. The CDC still recommends staying at least six feet from people who are not traveling with you. Wash your hands often.
4. Ditch your decorating dilemmas
From fires to choking to cuts and poisoning, decorating your home for the holidays is a minefield of potential hazards.
That box of old decorations may no longer be safe: broken lights and wires are an electrical hazard; older tinsel might be lead-based; aging angel hair is abrasive to your skin. And breathing in spray-on artificial snow can cause everything from a headache and nausea to difficulty walking and heart palpitations.
Read the labels for proper use of these products or update your box of decorations with some newer products that have safety labels from an independent testing laboratory.
Take extra precautions if there will be children around. To you it’s a decoration, but to them, the colorful baubles look like candy. Keep trimmings out of reach and avoid those that are easily breakable or sharp.
And take care when decorating. Remember that chairs are not ladders. There are about 200 decorating-related injuries every holiday season — usually involving a fall.
5. Lose lighting liabilities
With its tangle of wires, peering into your holiday decorating box is like looking into a snake pit. The U.S. Consumer Product Safety Commission suggests you check light strings for broken bulbs, frayed wires, cracked sockets and loose connections. Replace damaged ones and don’t use more than three standard-size sets of lights for each extension cord. Keep “bubbling” lights away from children. These lights have a chemical that’s hazardous if ingested.
Here’s a simple holiday safety tip for your lights: If you’re hanging lights outside, make sure they’re securely fastened to the house, trees or walls to protect them from wind damage.
6. Set shopping safeguards
Don’t forget that thieves also have holiday wish lists, and they don’t go on vacation between Christmas and New Year. (Although they are less active on Thanksgiving.) You don’t want to make it easy for them, so keep these holiday safety tips in mind when you’re shopping.
If you’re out with your car, park in a well-lit area and stow any purchases in the trunk. Pay attention to your surroundings. Thieves often troll parking lots and wait for the right moment — like after you’ve unloaded your packages and you head back into the mall. Be sure to lock your car and don’t leave your fob behind.
Use electronic payments as much as possible, and don’t carry around too much cash. Check your bank statements regularly to make sure your purchases and only your purchases are accurately recorded.
If you’re shopping online, be alert for scams. Make sure you’re on a reputable site before you hand over your credit card number. (And, if you can, use a credit card that’s designated for your online purchases.) This holiday safety tip should be followed all year round: When you get emails announcing great deals, don’t click on any links. Check out sites separately and never through an unsolicited email.
7. Cut out cooking calamities
Cooking fires top the list of residential fires, and according to the Consumer Product Safety Commission, three times the average number of daily cooking fires occur on Thanksgiving Day (about 1,700 each year). For fire safety, always have a fire extinguisher on hand and use it to smother flames (don’t use flour or water). Remember to turn pot handles toward the back of the stove, and don’t wear loose clothing while you cook.
Frying turkeys has become increasingly popular at holiday time. The NFPA reports that these deep fryers cause an average of five deaths, 60 injuries and more than $15 million in property damage each year. If you use one, don’t leave it unattended and don’t overfill it. Wear safety goggles, closed-toed shoes and use the fryer outdoors, making sure it’s far from flammable materials.
Practice good food safety. Wash your hands often, separate raw meat from produce, cook all meat to the right temperature and refrigerate leftovers within two hours of serving.
8. Consider holiday safety tips for pets
The holidays are exciting but dangerous for pets. They love shiny objects. Lots of guests “accidentally” share food with them. Beware of the following, especially:
Tinsel: It’s not poisonous, but if your dog or cat eats it, the tinsel can get stuck in their teeth or stomach. It may cut or bunch up in their intestines. If you think your pet had a tousle with tinsel, get your pet to the vet’s office right away.
Toxic foods: Chocolate, grapes, raisins, currants and macadamia nuts can all be toxic to both cats and dogs. The iKibble app offers information on what foods are toxic for dogs, as well as the general healthiness of foods.
Mistletoe and holly: If your pet eats these, they may get diarrhea and vomit. Never a good look on Christmas morning. Feature these plants in places your animals can’t reach.
“Adult” party substances: A jolly night for you and your friends is downright dangerous to your pets. Keep alcoholic beverages and marijuana (now legal for recreational use in 19 states) stowed away. Clean up anything that might have hit the floor. No one likes a hangover, and you certainly don’t want to spend precious holiday time off at the emergency vet’s office.
Keep your furry friends in mind as you set up your holiday decorations. They want happiness and healthiness this year, too.
Take extra precautions by following these holiday safety tips
With COVID still an issue, you’ve got an additional layer of concern this year. We’re all looking forward to gathering in person, but we still need to be cautious. Schedule smaller gatherings. Ask people about their vaccination status and determine what works for you. Wear a mask when you’re in a crowd and shop online if you’re uncomfortable being among the throngs of shoppers.
Be healthy, be safe and happy holidays to all.
Stacey Freed is an award-winning writer and former senior editor for Remodeling, a trade publication focused on the business of the remodeling and construction industry. As an independent writer, she continues to write about the building, design, architecture and housing industries. Her work has appeared in Better Homes and Gardens and USA Today special interest publications, Realtor magazine, This Old House, Professional Builder and online at AARP, Forbes.com, House Logic and Sweeten.com among other places.
Architect Louis Naidorf had a disastrous 80th birthday cake. In 2008, Naidorf, who designed the Capitol Records building in Hollywood, was presented with a celebration cake that had been custom-baked in the shape of his iconic cylindrical building. But the pastry soon reflected the rather substantial difference between concrete and flour.
“When the cake was brought out, it gently collapsed, and everyone applauded,” Naidorf says, laughing over the phone from his home in Santa Rosa. “It was like in one of the movies where the Capitol Records building was destroyed.” Thankfully the cake for his 95th birthday, which he celebrated last month, was more structurally sound.
Designated a historic-cultural monument in 2006, the building has long been a favorite Los Angeles landmark to demolish on film — especially for filmmaker Roland Emmerich, who blew it up with an alien spaceship in “Independence Day” and slammed it with twisters in “The Day After Tomorrow.” Yet no movie can ever write the building out of a central place in popular music history. The tower is synonymous with the illustrious Capitol Records, home of Nat King Coleand Frank Sinatra, and the American record label of Pink Floyd and the Beatles, with the latter’s stars lining the Hollywood Walk of Fame right in front of the building.
Over the last several years, the building has been illuminated in support of various sociopolitical causes. In 2020, it was lighted red to support independent music venues. Last year, during their performance in Hollywood, Duran Duran lighted the Capitol Records building blue and yellow in solidarity with Ukraine. “I think that’s excellent,” Naidorf says. “Anything that vigorously engages the public on the right side of good causes transcends other issues. I’m flattered they use the Capitol Records building. It means it has enough cachet to merit being chosen to do that.”
Like the famous landmark he designed, Louis Naidorf has of late been experiencing his own brush with stardom, with postcards from autograph seekers arriving at his door. He is flattered but doesn’t take the attention too seriously.
“It’s obvious that if someone asks me for four signatures I’m part of trading baseball cards or something,” he says. “They are going to trade four Lou Naidorfs for one Joe Smith.”
Still, he’s surprised and somewhat baffled by the sudden burst of recognition after all these years. “I guess my name ended up on a list or something,” he shrugs.
Naidorf was just 24 years old when he designed the Capitol Records building, in 1953. It was the world’s first circular office building.
Though it was 70 years ago, he vividly recalls how he felt when he received the assignment for his first solo project. “At one level, I felt enormous anxiety that if I didn’t get a solution, very, very quickly, something terrible would happen,” he says. “On the other hand, I felt a total confidence that I could do it. So it was a crazy contradiction.”
Naidorf notes the building’s porcelain enamel sunshades with carefully spaced gaps to play with light and shadow. These cause spiral lines to appear on the building, drawing the eye into a rhythm rather than straight up and down. “You can see Capitol Records from quite a distance and you get a first impression of its basic form and character. You have a reading of it as complete,” he says. “But the building is designed so that the closer you get to the building, you discover more details.”
What about the long-standing myth that its round shape was designed to look like a stack of records with a rooftop antenna resembling a phonograph needle? As hard as it might be to believe, the legendary story about the building is just a coincidence — an urban legend that Naidorf has tried to debunk for decades.
In fact, when his boss, Welton Becket, tasked him with the assignment, the building was simply referred to as Project X. Shrouded in secrecy, Naidorf was given little guidance for the project other than being asked to design a 13-story building on a sloped side street in Hollywood that had to be kept as cool as possible and had smaller than usual floor space. He also didn’t know for whom he was designing it. Naidorf says it was common for clients’ identities to be kept confidential during the initial planning stages of a project.
However, Naidorf relished the creative latitude. The absence of information left him unburdened by preconceived ideas. “I knew the door was open for something special. It urged me so strongly,” he says earnestly. “I felt, and I think all architects feel this way … there’s a drive to translate the mundane bare requirements that clients come in with into something that has some poetic qualities about it.”
Naidorf then had an epiphany: The project’s requirements were “eerily resonant” with a series of circular buildings he had designed for his master’s thesis in college. “The round shape is a very efficient enclosure of space,” he says. “You get more bang for your buck.”
Not everyone agreed with his approach. Naidorf says that Capitol Records co-founder and President Glenn Wallichs became irate when Naidorf presented him with a model and drawings of a round building, and “violently rejected” the design. “He thought it was a cheap stunt designed by a young guy to make the building look like a stack of records,” Naidorf says, laughing.
Wallichs insisted that Naidorf replace the round design with plans for a rectangular building. But when both rectangular and circular designs were presented to the insurance company financing the land, Naidorf says that Wallichs was urged to proceed with the round design.
Soon after, when talk of the building housing a radio station (that never came to fruition) was raised, Naidorf fretted when he was asked to design an antenna. He was worried that it would look like a phonograph needle and cement the idea that the building was designed to look like a stack of records.
Owing to his nagging concern, Naidorf positioned the rooftop spire asymmetrically, poised to appear as if it touches the roof delicately, like “a ballerina en pointe.” He calls it the building’s “grace note.” Still, the stack-of-vinyl myth persists. Laughing, Naidorf says, “It’s the most enduring myth of all.”
Despite his good humor, it leaves him conflicted. “The building was not designed as a cartoon or a giggle. To have it trivialized with the stack-of-records myth is annoying and dismaying,” he says. “There’s not a thing on the building that doesn’t have a solid purpose to it.”
Naidorf’s ingenuity has been especially impressive to Los Angeles-based architect Lorcan O’Herlihy, who says he has “often responded strongly to the fact and admired that here was this interesting architect [Naidorf] who was combining science and art, or artistry and technology. Welton Becket [& Associates], very much to their credit, were at a period where modernism was at its heyday and they had to come up with ideas that were new and fresh and they did it, and Lou was certainly instrumental in that. His work is extraordinary.”
Naidorf was born in Los Angeles in 1928. His father owned a shop where he made and sold women’s clothing, with Naidorf’s mother lining the garments. Owing to his father’s lack of accounting skills and business acumen, however, the business often collapsed, forcing his parents to work at a garment factory until debts could be paid off to reopen the store.
Throughout his childhood, Naidorf’s family struggled financially as they moved around, living mostly in Silver Lake and Los Feliz. With only enough money to rent studio apartments, Naidorf’s parents slept on a Murphy bed while Naidorf spent his nights on a mattress on the floor.
As a little boy, Naidorf felt drawn to buildings. When his third-grade teacher decorated the classroom with a Hawaiian vacation theme, his fascination morphed into a calling. “I asked my teacher who made the drawings and she said, ‘Naval architects.’ And then I asked her who draws the plans for houses and she said, ‘Architects.’ She told me to ask my mother to show me the floor plans that were published in the real estate section of the Sunday edition of the newspaper.
“When I saw them, I was a goner,” he swoons. “I now knew what I wanted to do. I wanted to be an architect.”
Naidorf remembers, at age 8, designing a three-bedroom house, using a card table as a makeshift drafting table. Soon after, he began designing small towns. “It wasn’t anything brilliant, but I was learning to draw, learning to scale and learning to think in spatial terms,” he says. When he was 12 years old, Naidorf got a part-time job at a bookstore, where he spent his first two paychecks on architecture books, absorbing them until they were threadbare.
Beyond literature, Naidorf amassed a growing collection of architectural materials (T-square, rectangles, instruments for ink drawings), thanks to his bar mitzvah presents, and decided he was ready to get to work. Sanford Kent, a young architect who had just graduated from USC, hired a tenacious 13-year-old Naidorf, paying him out of his own pocket.
Naidorf says tackling the abstract problems Kent gave him at once stimulated his mind and were instrumental in forming his long-standing ethos. “It got me thinking about architecture in terms of its effect on human emotions. The key issue is, ‘How do people respond to your work, whether from a distance or by living it?’” he says.
He continued to soak up whatever he could about architecture, gearing his junior and high school classes toward studying architecture in university. He attended UC Berkeley instead of the privately funded USC, not only to leave home and expand his horizons but also because of its affordability.
Even still, Naidorf couldn’t afford all of the program’s required materials. He borrowed airbrushes from his fellow students, who would also give him their pencil stubs instead of tossing them out. Naidorf submitted his assignments on pebble board, which was not only cheaper than illustration board but allowed him to draw on one side, flip it over and draw on the other.
In 1950, Naidorf graduated at the top of his class and got his master of architecture degree a year early. He skipped his graduation ceremony because he had a job interview the next day at Welton Becket & Associates, where he was promptly hired. Among his earliest design assignments: a tray slide for a hospital cafeteria, a clothes closet and a “Please Wait to Be Seated” sign for a restaurant.
Three years into his employment, he began working on the Capitol Records building. Naidorf says he would design it the exact same way if he were given the assignment today.
Andrew Slater, former Capitol Records president and chief executive (2001-07), attests to the building’s distinctive charm. “When you go to work every day in that building it’s like you’re going into a piece of art, and it informs your attitude … to do something with that mindset, which is great,” he says. “Even though working in the music industry is, in a sense, an industrial endeavor, you never felt like you were doing anything industrial when you walked into that building.”
Still, Naidorf fears being perceived as a “Johnny One Note,” as he puts it. Noting the plaque bearing his name outside the building’s main entrance, he expresses gratitude but wariness “that this one modest project has to carry my whole reputation on it.”
It’s a fair point, given the magnitude of Naidorf’s notable oeuvre. It’s earned him 17 regional honor and merit awards and AIA California’s Lifetime Achievement Award (2009). His work also has been featured at the J. Paul Getty Museum in Los Angeles.
“I know Capitol Records is always the first one people talk about and it’s a splendid, iconic building that fuses artistry and functionalism, but he’s also produced other projects over the years,” says fellow architect O’Herlihy. “The Santa Monica Civic Auditorium is brilliant.”
Naidorf designed the 3,000-seat capacity Santa Monica Civic Auditorium on the heels of the Capitol Records building, in the late 1950s. Essentially two buildings in one, it was a challenge to design a locale that functioned at once as a performance space with a sloped floor and an exhibit hall with a flat floor for sports events, banquets and trade shows.
He transformed the floor from flat to tilted using a hydraulic system that was hailed for its innovation. “I don’t think you’ll find any place that has a symphony on a Friday night and a gem show, or some kind of hobby show, on Saturday,” he says.
Formerly home to the Santa Monica Symphony Orchestrabut currently sitting vacant, the Civic Auditorium opened its doors to the public in 1958. From 1961 to 1968, it hosted the Academy Awards. It also was the site of live recordings including George Carlin’s comedy record “Class Clown” and the Eagles’ “Eagles Live,” a double LP recorded during their three-night run at the venue. It also hosted “The T.A.M.I. Show” in 1964.
In the meantime, while the Civic was still under construction, Naidorf designed the 15,000-seat capacity Los Angeles Memorial Sports Arena, the biggest arena in Los Angeles when it opened in 1959. (The arena was demolished in 2016 to make way for the Banc of California Stadium, now called BMO Stadium.)
Naidorf says the Sports Arena, home to various Los Angeles sports teams including the NBA’s Lakers (1960-67) and Clippers (1984-1999) and the NHL’s Kings (1967-68), was built to attract sports teams to Los Angeles, but uncertainty about whether they’d catch on meant the facility had to be viable for other purposes.
In 1960, a year after it opened its doors, the Sports Arena hosted the first Democratic National Convention in Los Angeles, where John F. Kennedy became the presidential nominee. Muhammad Ali (then known as Cassius Clay) won a boxing match there in 1962. It also hosted rallies by Martin Luther King Jr. and the Dalai Lama, and saw concerts by legendary rock acts including the Grateful Dead.
Bruce Springsteen played the venue’s final concerts before the building was demolished, a three-night stint during which he dedicated his song “Wrecking Ball” to the building lovingly nicknamed “The Dump That Still Jumps.” “Well, it was pretty dumpy by the end,” Naidorf says, laughing. “Not all architecture is permanent,” he continues. “I’d rather it was demolished and some useful purpose made of the site than having it sit there old, shabby and neglected as it was.”
Naidorf’s credits also include the Beverly Hilton Hotel, the Beverly Center and the Reagan State Office Building downtown. Outside of Los Angeles, Naidorf helmed the restoration of the California State Capitol Building in Sacramento, a six-year undertaking and then the largest-ever restoration undertaken in the U.S., and he designed President Gerald Ford’s house in Rancho Mirage.
The tallest building in Arizona, the Valley National Bank building (now Chase Tower) in Phoenix, also was designed by Naidorf, as well as the Hyatt Regency Dallas and adjacent Reunion Tower, the most recognizable landmark of the city’s skyline.
He details these and his other high-profile projects in his 2018 book “More Humane: An Architectural Memoir”, filled with photos, backstories and personal anecdotes. Flipping through its pages, one learns that Naidorf not only took risks designing his projects but even risked his job on occasion.
He writes in his memoir that in 1958, when he was designing the Humble Oil (now Exxon) headquarters in Houston, he refused to design separate locker rooms and drinking fountains for Black and white people, as the company asked him to. When he went home on that Friday night, he describes not knowing if he’d have a job the following Monday. Not only did Naidorf not lose his job, he says, but the company ceased segregating its locker rooms and drinking fountains after that.
“I realized architects have access to some of the most powerful people in the world and it is our job to bring up issues that represent social issues rather than just architectural design,” he says. “The only thing for evil to triumph is for good people to remain silent. Architects should not remain silent.”
Naidorf also understood that sometimes he was designing projects where people don’t want to be, like the Naval Medical Center in San Diego, which opened in 1988. “I felt that there were two emotions we had to contend with,” he says. “One was to lay the sense that this would be welcoming and have a more personal quality. But if you go to a hospital you want a quite contradictory thing. You want to have a sense that it’s state-of-the-art, that whatever powerful forces can cure you, they’re there.”
Instead of one medical building, which he felt would seem ominous, he designed several structures and a series of outdoor walkways to make the facility feel warm and comforting. The treatment and diagnostic part of the facility was bold, with an abundance of steel and glass. Walkways were lined with floor-to-ceiling glass to allow patients to see the outdoor courtyard, grass, trees, sky and distant views of a golf course “based on the primitive feeling you have in the hospital, which is to get out of the damn place,” he says.
When he was out shopping a few months ago, Naidorf met a woman who mentioned that she had been in the Navy, forcing her to move around a lot when her son was battling childhood leukemia. Without knowing she was talking to the Naval Medical Center’s designer himself, she told Naidorf that it was the only hospital that didn’t scare her ill 6-year-old son, who has since made a full recovery.
“What kind of an architect…,” Naidorf says, overcome with emotion and his voice breaking, “do you have to be not to hold that as better than any design award?”
Though Naidorf had risen through Welton Becket & Associates’ ranks to become vice president, director of research and director of design, he grew increasingly unhappy after the firm’s merger with Ellerbe Associates (it was renamed Ellerbe Becket). He moved into academia full-time in 1990, spending just one day a week at the firm.
Naidorf became dean of the School of Architecture and Design at Woodbury University, earning numerous distinctions, including teacher, faculty member and administrator of the year. He was also a guest professor at UCLA, USC, Cal Poly Pomona and SCI-Arc. At his retirement ceremony in 2000, he was awarded an honorary doctorate, marking not only the end of his academic career but also his time in Los Angeles.
Charmed by the beauty of Northern California, Naidorf moved up the coast to Santa Rosa. For the next 15 years, he continued working with Woodbury University as campus architect, designing and remodeling some of its buildings, and was invited to be a board member.
When he parted ways with Woodbury at 87 years old, it was not with the goal of taking it easy. Naidorf had other pursuits in mind, including his work with City Vision Santa Rosa revitalizing the city’s downtown area.
He also helped his close friend, Mike Harkins (who edited Naidorf’s memoir), design his new house free of charge after the 2017 Tubbs Fire burned Harkins’ home to the ground and he and his wife lost 99% of their belongings.
“Lou offered without solicitation: ‘I’d like to design your house,’” Harkins says. “To me or anyone else who knows him, it was a heartfelt offer that of course he would make, and yet so much more. One analogy might be if Eric Clapton said, ‘I’d like to play at your wedding.’ The knowledge and sensibility that comes along with a Naidorf design offering is huge, just like his heart.”
Most recently, Naidorf has been experimenting with plans for a project to help people who are unhoused.
Naidorf has made the most of his architecture license over the last 71 years. His voice fills with pride when he reveals that he holds the earliest issued active architecture license in the state of California, obtained in 1952.
“It’s something I wanted to be since I was a little kid. My architecture license was so hard to come by. I don’t want to give it up,” he says with palpable emotion. “I don’t want to be retired. I want to be an architect until I fall over. I plan to be buried as a licensed architect.”
Of recently turning 95, he jokes that he feels like a bad vaudeville performer who soon will be pulled offstage by a hook. But Naidorf remains in remarkably good health after surviving both prostate and esophageal cancer in his 80s.
To keep his brain sharp, he does exercises including counting backward from 100 by sevens and taking IQ tests online.
As a nonagenarian, he says there is no key to living a long life. He suggests, though, that it helps to try to use it well. “It’s not how big the steak is but how tasty it is,” he says. “I think you have to seek a calling, listen for it and search for it. Find something in your life that is really yours. … Get engaged with something that’s going to scare you, something where the problems are hard. And take risks. There is no failure.”
He also notes the importance of adaptability. “I have had four marriages. I’d better be resilient,” he quips. Twice divorced and twice widowed, Naidorf has a daughter from his first marriage, four stepchildren (who call him “Dad”) from his fourth marriage, 11 grandchildren and six great-grandchildren. An intensely private man, he’s reticent to speak publicly about his relationships and family, preferring to focus on his work.
“I remain so fascinated with architecture,” he says. “I cannot even walk past a store where somebody is putting in an electrical outlet without stopping to look in and watch it.”
The chatty Naidorf turns summarily succinct, saying, “I certainly have had a good run.”
Wouldn’t it be great if we all had a crystal ball that told us what the interest rate environment would do? We could figure out the best time to get a mortgage or the best time to buy a car. And of course, we would know exactly when to put all of our money into certificates of deposit (CDs) to maximize our yield.Unfortunately, that isn’t the case. Nobody knows what interest rates are going to do in the future — not even the people in charge of setting benchmark interest rates. However, we can use the latest economic projections to consider the most likely scenario and what else could happen instead. So here’s what we know (and don’t know) about what CD yields will do in 2024.Where do CD yields come from?The short explanation is that CD rates are a combination of three main factors:The current interest rate environmentThe bank or financial institution that offers themThe maturity termIn other words, when benchmark interest rates rise, CD rates generally tend to rise along with them. However, the rates paid by CDs can vary dramatically between banks.For example, as I write this, our top 12-month CDs have APYs ranging from 4.25% to 5.65%. The same is true for CDs of other maturity lengths as well. But because the Federal Reserve has raised benchmark interest rates so aggressively in the past couple of years, this range is significantly higher than it was.When it comes to different maturity lengths, it’s a little tricky to explain, but the general idea is that shorter-term CDs tend to track benchmark interest rates rather closely. The current federal funds rate (the most important interest rate the Fed controls) is set to a range of 5.25% to 5.5%, and this is certainly aligned with most of the top 1-year CDs we track.With longer maturities, there are a lot of economic factors at work, but the simple explanation is that CD yields are a combination of the current interest rate environment and expectations for future interest rate movements. In most environments, longer-maturity CDs tend to have higher yields, since banks typically pay a premium if customers agree to leave their money on deposit for a longer time. But as of Oct. 2023, the range of 5-year CD yields on our top CD list is 3% to 4.85%, with the average yield significantly lower than the average 1-year CD.This makes sense. According to the latest projections from the policymakers at the Federal Reserve, the benchmark federal funds rate is expected to fall to 4.6% by the end of 2024 and to 3.4% by the end of 2025.What will CD rates do in 2024?There’s no way to predict with accuracy what CD rates will do next year. Even the Federal Reserve’s own projections can be very wrong. In fact, the Fed’s projections in Sept. 2021 called for a federal funds rate of just 1% at the end of 2023.Having said that, the latest projections call for one further quarter-point rate hike by the end of 2023, which would likely push CD yields slightly higher to start 2024. And if the Fed’s projection of a 4.6% federal funds rate proves to be accurate, we could expect 1-year CD rates to gravitate towards that level, with other maturity terms drifting generally lower as well.However, it’s tough to overemphasize that we don’t know what is going to happen. If inflation proves far more difficult to control than the Fed expects, it’s entirely possible that several more interest rate hikes will be needed and CD yields will be much higher at the end of 2024. On the other hand, there’s the possibility of a recession coming and the need for the Fed to aggressively cut rates if the economy takes a worse downward turn than expected.The bottom line is that CD rates are higher right now than they’ve been in a long time, and the best course of action is to put your money in CDs that make sense for you now — not to leave your cash on the sidelines in anticipation of rates rising even further.However, one smart strategy could be to create a CD ladder, which gives you the best of both worlds. If rates end up rising in 2024, you’ll end up with some money to take advantage. And if rates fall, most of your money will be locked in at today’s rates.
Costco Is Selling a Full Thanksgiving Meal Kit So You Don’t Have to Do a Thing
By: Maurie Backman |
Oct. 23, 2023 – First published on Oct. 23, 2023
Some people absolutely love hosting Thanksgiving and getting creative in the kitchen. But if you’re someone who dreads Thanksgiving and the hours upon hours of preparation that tend to come with it, then you may be in luck. Costco is selling a Thanksgiving meal kit for $199.99 that’s designed to feed a party of eight. You’ll need to pre-order yours by Nov. 5, but it could be worth it for the time-related savings involved. And you may even find that Costco’s Thanksgiving dinner kit saves you money, too.When you’re looking to outsource your Thanksgiving mealEven if you’re someone who likes to cook, being in charge of Thanksgiving isn’t easy. There’s a lot of pressure to throw together a massive feast, and you may not have the time or desire to spend an entire day preparing food. If you’re not at all looking forward to a day of cooking, let Costco come to your rescue. For $199.99, you’ll get the following:Five pounds of skin-on turkey breastA two-pound tray of stuffingA 1.5-pound trap for mashed potatoes with a side of gravyA 1.6-pound tray of macaroni and cheese A two-pound pack of sweet cornA two-pound pack of green beansCranberry relish12 dinner rollsOne pumpkin pieOne apple pieAll of this food will ship frozen, and you can expect delivery to your home between Nov. 8 and 17. Will Costco’s Thanksgiving meal kit save you money?You probably won’t save money by purchasing Costco’s meal kit compared to buying ingredients for the above dishes at Costco, or even elsewhere. At your local grocery store, turkey might cost about $3.50 per pound. So a five-pound turkey might cost you just $17.50. A Costco pumpkin pie, meanwhile, is generally only $5.99 (though prices can vary). So right there, you’re looking at $23.50 for 20% of your meal. The cost of the other items included in Costco’s Thanksgiving dinner kit can vary based on how you prepare your sides. But macaroni and cheese, for example, can be an extremely inexpensive dish to prepare. A single box of Kraft might cost under $1.50, so even if you need five boxes, you’re looking at $7.50 or less in total. (Of course, if you insist on making yours from scratch with high-end cheese, that’s a different story.)All told, you can probably throw together a Thanksgiving meal for eight for under $200 — but not so much under. So the question you’ll want to ask yourself is how much time you want to save.Also, if you’re so not looking forward to cooking to the point where you think you’ll pay to cater your Thanksgiving dinner, then you’re likely to put more than $200 on your credit card by going that route through a local restaurant or caterer. In that regard, Costco’s offering could save you some money.All told, Costco’s Thanksgiving dinner kit may be worth considering if you’re not excited to cook for the holiday this year. But chances are, this meal kit is going to be a popular item, which means it may sell out soon. If you are interested in ordering it, do so quickly so you don’t miss out.
3 Costco Perks You Aren’t Taking Advantage of — but You Should
By: Brittney Myers |
Oct. 23, 2023 – First published on Oct. 23, 2023
Just $250 a month at Costco would earn enough back to pay for the upgrade. In other words, if you spend more than $250 a month at Costco, upgrading makes financial sense.If that sounds like a ton of money to you, then definitely stay with your regular membership. But if your family goes through Kirkland Signature toilet paper like they flush it down the toilet, and you’re one of the people who actually finishes that 3-liter bottle of olive oil, then a membership upgrade could be a smart idea.Double up with rewards cardsWhether an Executive membership is right for you or not, there’s another way to earn rewards that everyone should be taking advantage of: rewards credit cards.Unfortunately, you can only use Visa credit cards in a Costco warehouse. If you’re shopping at Costco.com, you can use Visa or Mastercard credit cards. While these restrictions certainly stymie some of my favorite rewards cards, you’re not completely out of luck. There are still some great options from either issuer. Costco even offers its own cobranded Visa card, which can be especially rewarding when it comes to gas purchases. I prefer to use my Chase Freedom Unlimited®, however, for 1.5x points per $1.
I Bought a $278.99 Walmart Mattress. Here’s How It Compares to My Expensive Tempur-Pedic
By: Christy Bieber |
Oct. 27, 2023 – First published on Oct. 27, 2023
Recently, we bought a mattress that we plan to use temporarily for a few months as most of our furniture is in storage while we complete a remodeling project. We didn’t want to spend a lot of money since this mattress will be relegated to a guest room, if it is used at all, once we get our furniture back in place.We opted to buy a memory foam mattress from Walmart and paid $278.99 for a king size. This was a fraction of the cost of our regular mattress, which is a Tempur-Pedic that cost several thousand dollars.After sleeping on the cheap mattress for a while, here’s how they compare.Both are equally comfortableFirst and most importantly, my husband and I have found that both of the mattresses are equally comfortable to sleep on. Both provide a similar level of firmness and support. And, we don’t feel the other person moving around in either bed. In fact, if forced to pick which of the two we like better, we would not be able to based on the comfort factor alone.Both have the same warrantyOur Tempur-Pedic mattress came with a 10-year warranty. We didn’t expect our new bed to offer this same guarantee since it cost so much less. But, we were wrong. The new, inexpensive mattress also has a 10-year warranty and a 30-day refund policy to make sure we’re comfortable with it.Both have multiple layersOur Tempur-Pedic came with multiple different layers of material including a comfort layer on the top, a support layer in the middle, and a base layer. Each of these layers is supposed to serve a purpose, like distributing body weight evenly along the mattress or dispersing heat.Our inexpensive mattress actually comes with more layers, referred to as the “five floors of comfort.” There’s a top breathable fabric, a second layer to avoid heat, two separate support layers, and a non-slip layer at the bottom.I’m not exactly sure if all of these layers are serving their exact purpose, but I have noticed that neither bed sleeps warm and both feel like they provide adequate support. The non-slip layer on the cheaper mattress also seems to help it stay in place on my box springs.The Tempur-Pedic feels heavier and more substantialThe Tempur-Pedic stands out by feeling more substantial. The cheaper mattress came vacuum packed in a tiny little package and it took a while to fluff up. And it just doesn’t have the same heft as the Tempur-Pedic mattress.However, while this is a point in the Tempur-Pedic’s favor because the substance has me feeling like it may last longer, it also means the Tempur-Pedic is more of a pain to move around.Ultimately, I feel like the cheaper mattress was a better buy. It left more money in my bank account than the Tempur-Pedic, and it provides a similar level of comfort as well as the same warranty.The experience has shown that buying a more expensive bed isn’t always the best option, so before breaking out your credit cards, be sure to explore and fully compare different mattresses to find one that feels the best at a fair price. Visit some stores and try them out. Don’t immediately dismiss one just due to a lower price point, as you might miss out on a comfortable mattress at a great discount. And don’t forget to consider the return policy and warranty so you end up happy with your purchase in the long run.
Mark Cuban Thinks You Should Buy a 2-Year Supply of Toothpaste. Here’s Why
By: Christy Bieber |
Oct. 27, 2023 – First published on Oct. 27, 2023
Mark Cuban is the owner of the Dallas Mavericks and is well-known for his business skills and investing prowess. Over the years, he has provided some tips to others who want to get rich, and one of them was a pretty surprising one.His advice: Buy a two-year supply of toothpaste. Here’s why the billionaire suggested making this unconventional move.Cuban has a simple reason for buying so much toothpasteMark Cuban doesn’t just want your teeth to be really clean. He had a good reason for suggesting purchasing such a large stockpile. Specifically, he advised doing this if you use the same brand of toothpaste regularly and can find it at a deep discount.”If we, hopefully we’re all using toothpaste every day, right, couple times a day, and we’re gonna go through toothpaste every month, whatever it may be, you’re better off buying two years’ worth of toothpaste when it’s on 50% discount,” he said. “That’s an immediate return on your money.”Cuban’s point was that the prices of items go up over time, so you’re better off purchasing them at the lowest possible price as this puts guaranteed money in your pocket. You also immediately benefit from the savings since you get to spend less now and in the coming years, keeping more cash in your bank account.Toothpaste isn’t the only item Cuban believes you should stock up on. “Any of your reusables, consumables that you have to have, when they’re on a huge sale on Amazon, buy them, because chances are, their prices are gonna go up, but that’s a real savings that you get to put in your pocket.”Cuban said that while it can feel difficult to make a profit by investing in a brokerage account, this is a simple step that anyone can take that will have an immediate positive impact on their personal finances.Should you follow Cuban’s advice?Listening to Cuban just makes good sense — especially as the recent few years of rising prices and surging inflation have demonstrated that routine products and services that we use every day can and do see big price increases.If you’re able to get many of your consumer products at discounted prices, this can make a noticeable difference in your personal finances. It’s not difficult to do either. Most stores put items on sale on a predictable schedule, such as marking down a product once every six or eight weeks. If you can stock up when there’s a good price — and especially if there’s a deep discount, then you’ll be able to slash what you spend on groceries and personal care.Use this extra money wisely to do things like repay debt or invest for your future, and you will end up being able to build wealth without changing your lifestyle at all. But, no matter what you do with the money, you probably have better stuff to spend it on than paying full price for toothpaste.
Refinancing your mortgage can be a smart financial move if you do it the right way. You can tap into your home equity, get a lower interest rate, or even shorten or lengthen the terms of your loan. All of these are great outcomes for you and your wallet.
But here’s something that’s not so great: Picking the wrong mortgage refinance lender.
This one major mistake can potentially cost you tons of money in closing costs, hidden fees, and high interest rates.
You can avoid that by learning just a bit about what to expect throughout the refinance process and how to find the right lender. We’ll walk you through everything you need to know and give you some suggestions for the big decision.
9 Best Mortgage Refinance Lenders of 2023
We’ve compiled a list of the best mortgage refinance companies with the most competitive mortgage rates. Read through our short reviews to understand what kind of mortgage products they offer and how their process works. It’s an excellent resource for narrowing down your list of refinance lenders to consider.
loanDepot is a lender that values and earns customer loyalty. This is evident by their refinancing lifetime guarantee. Once you refinance with them the first time, they will waive their lender fees and reimburse your appraisal fee.
It’s also an excellent choice for people who like a person-to-person connection. You can call them at any time to talk directly to a loan officer.
This can be especially helpful for a refinance because there are many reasons for refinancing and many ways to refinance.
After defining your goals, they let you choose from both fixed-rate and adjustable-rate loans. There are other loan types available, such as jumbo and government, or even home equity loans. The minimum credit score is 620.
They are committed to customer satisfaction and back it up with extensive refinance products.
Terms and conditions apply.
Read our full review of loanDepot
LendingTree offers a ton of benefits when it comes to refinancing. First, the online process is very easy and can even get you a mortgage rate quote in under three minutes.
LendingTree isn’t a direct lender and instead matches you up with multiple loan offers with mortgage lenders, so you can compare your options.
Here’s why that’s so helpful.
It makes LendingTree’s refinance options much more robust than many other online lenders. For example, you can convert an adjustable-rate mortgage into a fixed rate or refinance your FHA loan or even VA loan.
You can also cash out home equity as part of your refinance or choose from multiple loan terms.
If you’re still in the information-gathering stage of your refinance journey, LendingTree’s website has many valuable resources.
Play around with numbers to check out different scenarios using tools like their refinance calculator and cost estimator.
Read our full review of LendingTree
3. Rocket Mortgage
Another driving force in the online refinance marketplace is Rocket Mortgage, which is part of Quicken Loans.
The application process is straightforward and can be completed entirely online. You can pick your goal for your refinance to help Rocket tailor your loan offers.
You can even link your financials and property information so that you don’t have to gather and upload all the documentation manually. In fact, 98% of financial institutions in the U.S. can be imported for both your bank statements and investment assets.
Rocket Mortgage also allows you not only to browse different options but also customize them. You can choose from a traditional mortgage product, FHA loans, VA loans, USDA loans as well as fixed or adjustable rates. The minimum credit score is 620.
For an exceptional customer service focused experience that’s entirely based online, Rocket Mortgage is certainly worth exploring.
Read our full review of Rocket Mortgage
4. New American Funding
Another direct lender, New American Funding, is a mortgage company that simplifies the online mortgage process. Get started by selecting the type of real estate you want to refinance.
You can choose from:
Single family home
You’ll then answer a series of questions about your personal information, including the existing loan amount and your credit scores.
Afterward, you’ll get a quote estimate on the type of refinance loan you could potentially receive. You can also call the 800-number at any time to speak to one of New American Funding’s loan officers.
The average refinance saves their customers about $360 per month. So, they’re definitely worth checking out, especially if your goal is to lower your payment amount.
Read our full review of New American Funding
SoFi started as a student loan refinance company and has recently branched out to mortgage refinancing as well. One of the key advantages here is that they go beyond the traditional credit score and base your qualification on high-tech algorithms using various criteria.
In addition to the typical refinance and cash-out refinance options, SoFi also offers a refinance product specific to paying off your student loan debt.
As a result, you could end up lowering your monthly mortgage payment on top of getting rid of your student loan payments.
SoFi lets you check your prequalification for a refinance in just two minutes without affecting your credit score. You can usually close on your new loan within 30 days, and you don’t have to pay any lender origination fees.
A final bonus? If you have an existing SoFi loan, you can qualify for an additional 0.125% rate discount on your refinance.
Read our full review of SoFi
6. Guaranteed Rate
This major lender has offices in each state (plus the District of Columbia) but also lets you get started using its Digital Mortgage platform.
Guaranteed Rate requires a minimum credit score of 620 for mortgage approval. However, alternative credit data, such as utility and rent payments, are considered in some cases.
Guaranteed Rate is highly rated for customer service. They consistently receive stellar customer reviews with a satisfaction rate above 95%.
Whether you want a completely online refinance experience or a more personal one, they deliver.
Read our full review of Guaranteed Rate
7. Carrington Mortgage Services
Carrington begins the process by asking you to select one of four goals:
Lowering your interest rate
Lowering your payments or consolidating debt
Remodeling your home
Getting cash out
Fill out a contact form to have them get in touch with you. Alternatively, you can call Carrington anytime between 7:00 a.m. and 6:00 p.m. PST, Monday through Friday.
If you like a lot of personal care and attention throughout the process, you’ll appreciate Carrington. Their mortgage professionals walk with you every step of the way to ensure you have a speedy and successful closing.
Read our full review of Carrington Mortgage Services
8. Bank of America
One of the biggest banks out there, Bank of America puts its resources to good use by creating a comprehensive and easy online user experience.
You can zip through the application from start to finish by uploading all of your supporting documentation and e-signing with a touch of your finger.
Plus, Bank of America practically has a complete offering of refinancing products, including fixed-rate loans, ARMs, jumbo loans, FHA loans, and VA loans. B of A’s interactive website also makes it easy to get a rough estimate of current mortgage interest rates.
All you have to do is type in your zip code and desired loan amount, and you can see where refinance rates start for various mortgage types.
If you already bank with B of A and are a Preferred Rewards member, you may also be eligible for a reduction of your mortgage origination fee anywhere between $200 and $600.
Read our full review of Bank of America
You don’t need to be a bank member to refinance with Chase. And if you prefer to work with a traditional bank over a strictly online lender or matching website, then Chase is a strong choice.
Start the process online by choosing one of two goals: lowering your monthly payment or cashing out your home equity.
From there, you can get started on the prequalification form. Be prepared to enter information on your current mortgage and your finances.
If you ever have a question before or during the application process, you can either call or connect with a home lending advisor in person in one of 28 states.
There are plenty of refinancing options available through Chase, including jumbo, FHA, VA, and HARP loans. As with most other lenders, the minimum credit score is also 620.
Read our full review of Chase
How does refinancing a mortgage work?
Applying for a refinance is very similar to applying for a home loan. It’s also important to note that you don’t have to use your current lender or servicer. You can pick any mortgage lender that you’d like for your refinance.
After shopping around for lenders and comparing your loan options, you’ll have to complete a formal application. This involves submitting your income and financial statements. The loan officer and underwriter will review your materials to make sure you can afford the new terms.
Mortgage Refinance Requirements
Mortgage refinance lenders are primarily concerned with three things: credit score, debt-to-income ratio, and average loan-to-value ratio (LTV).
Credit score: The minimum credit score for most mortgage refinance companies is around 620.
Debt-to-income ratio: Your monthly debt should not exceed 43% of your monthly take-home pay, just like a regular mortgage. In addition to personal loans and credit card debt, they also include your new mortgage payment in that number.
Loan-to-value ratio (LTV): Lenders would like to see a low loan-to-value ratio (LTV). Typically, you should have at least a 20% equity in your home. In addition to personal loans and credit card debt, they also include your new mortgage payment in that number.
You’ll be required to get an appraisal of your home as part of the process. This makes sure the property lives up to its estimated value and helps determine your total equity in the home. You don’t need to do anything special before the appraiser arrives. However, it is wise to clean and tidy up to make a favorable impression.
Thereafter, you just have to wait for closing. Usually, your lender lets you pick the date, time, and location. Next, they’ll send a notary who will walk you through signing the closing documents. Then, you’ll start fresh with your new payment schedule. If you’ve cashed out some of your home equity, you can typically receive a check or have it deposited directly into your bank account.
How to Choose a Lender to Refinance Your Mortgage
When you decide to refinance, picking the right lender is vital to your financial success.
Mortgage refinance lenders structure loans differently, depending on whether you want to minimize closing costs or lower monthly payments—or a combination of the two.
The first thing to look at is what kind of refinance loans the lender offers. For example, you can find FHA refinance loans with lower minimum credit score requirements than conventional loans if you’re looking for a government-backed refinance.
Alternatively, you may want to refinance into a shorter term than the standard 30-year fixed mortgage. Look for mortgage refinance companies that offer multiple options, such as 10, 15, or 20-year mortgages. Then, you can compare refinance rates and payments and pick the best one.
As with any kind of loan, you also want to shop around for mortgage rates. Not every lender automatically offers the same interest rate or APR. You’ll also want to compare closing costs as part of the evaluation process. You need to know both your upfront costs and long-term costs in terms of interest.
If you want to minimize the amount of cash you bring to the table, ask whether your closing costs can be rolled into the loan.
There are numerous ways you can tackle mortgage refinancing. That’s why picking the right refinance lender can make a huge difference. They can help you understand the pros and cons of different options, so you can make the right choice.
Don’t be afraid to ask questions. Ask for specific numbers, and talk to a few different lenders to get an idea of their recommendations and refinance process.
When to Refinance a Mortgage
Now that you’ve learned of the best refinance lenders out there, make sure you’re refinancing for the right reasons. Here are some of the most common reasons for refinancing a mortgage.
Lower Your Monthly Payments
It’s entirely possible to refinance to lower your payment amount. To save money over the life of your loan, you could refinance into a lower interest rate if mortgage rates have dropped since you got your loan. Or, if your credit score has improved, you might be able to qualify for a lower refinance rate as well.
If you’re having trouble making your payments, you could also consider refinancing into a longer loan term. This spreads out your existing mortgage amount over more years.
For example, if you’ve been paying your mortgage for 10 years on a 30-year loan, you could extend the existing 20 years over another 30 years. However, you should proceed with caution, depending on your financial situation and retirement plans.
Cash Out Your Home Equity
If you have equity in your home—at least 20%—you could potentially qualify for a cash-out refinance. This allows you to get a lump sum of money and then add that amount to your existing loan. Usually, you can borrow up to 80% of your equity.
Let’s take a look at an example.
Say your home is valued at $200,000, and your mortgage is down to $150,000. That leaves you with $50,000 in equity. The bank will let you borrow up to 80% of that, which is $40,000.
If you qualify for the mortgage, you could then refinance a total of $190,000. You can then use the cash for home renovations, college tuition, medical bills, high-interest debt, or anything else.
Change the Terms
Shorter loan terms typically come with lower mortgage rates since there’s less of a chance for you to default on the loan. Once you’ve paid off a portion of your current 30-year mortgage, you may be able to save on interest by switching to a 15-year mortgage.
If, for example, you’re 15 years into a 30-year fixed mortgage, you only have 15 years left to pay. So, you could potentially save thousands by getting a lower interest rate via an actual 15-year fixed mortgage.
Switch to a Fixed Rate Mortgage
If you initially took out an adjustable-rate mortgage (or ARM) and your fixed period is ending, you should consider refinancing your loan. There’s a cap on how high your adjustable mortgage can go. It could potentially be much higher than current fixed interest rates.
Talk to a lender to see the best option to avoid a significant jump in your monthly payment. And be sure to plan ahead since it can take time for the approval process to finish.
See also: How to Refinance Your Mortgage
When Not to Refinance
When shouldn’t you refinance? If your credit score has dropped significantly since you took out your original mortgage, you may be surprised by higher interest rates. Similarly, refinancing today may not save you money if you qualified for a rock-bottom rate during the recession.
Furthermore, consider that every mortgage refinance comes with closing costs, just like your initial home loan. Therefore, you need to make sure any financial benefits you expect to receive from your refinance outweigh the added closing costs.
All of these considerations can be discussed with a suitable lender, whether in person, on the phone, or online. Do the research it takes to make sure you’re making an intelligent decision on your next home refinance.
Frequently Asked Questions
What are the steps to refinancing a mortgage?
The process of refinancing a mortgage typically includes the following steps:
Determine if refinancing makes sense for your financial situation and goals.
Research and compare different mortgage lenders.
Choose the right lender and loan product for your needs.
Complete a formal application, providing all necessary income and financial documents.
Wait for the lender’s underwriting process, which includes verifying your information and appraising the home.
Once approved, arrange for a closing where you will sign all required documents.
Begin your new payment schedule, or receive your funds if you’ve done a cash-out refinance.
How does refinancing a mortgage affect my credit score?
Refinancing a mortgage can temporarily lower your credit score, as the lender will perform a hard credit check during the application process. This is typically a small drop and should recover over time as long as you continue to make regular, on-time payments. Additionally, the old mortgage will be marked as paid off on your credit report, which can be beneficial to your credit history in the long run.
What are some reasons I might not qualify for a mortgage refinance?
If your credit score has significantly dropped since you took out your original mortgage, you may not qualify for a favorable interest rate, making refinancing less beneficial. Additionally, if your debt-to-income ratio is too high, you may not qualify. Lastly, if you do not have sufficient equity in your home (usually at least 20%), you may not qualify for certain types of refinancing.
Can I refinance my mortgage with bad credit?
While it may be more difficult to refinance your mortgage with bad credit, it’s not impossible. Some lenders specialize in loans for individuals with poor credit, and government programs like the FHA refinance loans may have lower credit score requirements. However, be aware that you will likely be offered higher interest rates.
How much does it cost to refinance a mortgage?
The cost of refinancing a mortgage typically includes an origination fee, an application fee, an appraisal fee, and closing costs, among other potential costs. This can usually amount to between 2% and 6% of the loan amount. However, in some cases, you may be able to roll these costs into your loan to reduce your out-of-pocket expenses at closing.
Can I refinance my mortgage more than once?
Yes, you can refinance your mortgage more than once. However, it’s important to consider the costs of refinancing, such as closing costs and possible prepayment penalties, and weigh them against the benefits you expect to receive. You’ll want to make sure that refinancing makes financial sense each time.
What’s the difference between a cash-out refinance and a rate-and-term refinance?
In a cash-out refinance, you take out a new mortgage for more than what you currently owe, and then receive the difference in cash. This can be useful if you need to cover large expenses or consolidate higher-interest debt.
A rate-and-term refinance, on the other hand, changes the interest rate, the term length, or both of your existing mortgage, but you don’t receive any cash. This is typically done to lower monthly payments or to pay off the loan faster.
When should I consider a fixed-rate mortgage over an adjustable-rate mortgage?
A fixed-rate mortgage may be a better option if you plan to stay in your home for a long period of time and want predictable, stable monthly payments. On the other hand, an adjustable-rate mortgage (ARM) may initially offer a lower interest rate, but it can fluctuate over time. An ARM could be a suitable option if you plan to sell or refinance your home before the interest rate starts adjusting.