Loan rates continued their gradual upward trend as May drew to a close, according to mortgage giant Freddie Mac.
The average cost of a long-term, 30-year fixed-rate mortgage ended the month at 6.62 percent. Last year at this time, the rate on long-term loans averaged 5.65 percent, almost a full percentage point less.
The 30-year rate hasn't been this high in almost four years, Freddie Mac reported. To be exact, the rate last averaged 6.63 in the week ending June 20, 2002.
The cost of intermediate-term money also continued to move higher, but rates on adjustable loans dipped, albeit just a tad.
The average rate on a 15-year intermediate-term loan rose to 6.23 percent, up from 5.21 percent a year ago. But five-year Treasury-index "hybrid" ARMs - loans with a fixed-rate for the first five years and an annual adjustment feature thereafter - slipped 2/100ths of a point (two basis points), as did the average for regular one-year adjustables. At the end of the month, the rate on those loans stood at 6.2 percent and 5.6 percent, respectively.
"Currently, mortgage rates are roughly a half a percentage point higher than they were at the start of the year," Frank Nothaft, a Freddie Mac vice president and its chief economist, pointed out.
The good news, perhaps, is that in all cases, the amount of points being charged by lenders to make loans is less than one on average. A point is 1 percent of the loan amount.
Makeover Obsession
It is said that change is often good. But if the results on a nationwide survey of 750 adult male and female home owners is any indication, we may be obsessed with it, perhaps to the point of neglecting ourselves.
How else to explain that when asked to choose between a $10,000 home makeover and a personal makeover, a staggering 75 percent picked the house?
Our addiction to our homes was found by a national pollster working on behalf of Minwax. Surveyors also found that almost half would do the work themselves, so maybe there's also a recreational and/or physical aspect to fixing up our manses. Or, when you consider that nearly nine out of ten responsdents said they worked together with their spouses on a previous project, maybe it's a form of slow, excruciating suicide. Or just a form of torture.
Just kidding on that last part. Truth be told, most husband-and-wife teams seemed to work together fairly well, at least according to the survey. One out of four of those claimed they made a great team and almost that many said the work went "surprisingly." Nearly 15 percent said "it wasn't perfect but I wouldn't switch," partners that is. But a previous do-it-together do-it-yourself project was not a bed of roses for the 6 percent who said "they fought like cats and dogs." And smart 13 percent said, "next time I'll do it myself."
Not One But Two
Maybe it does take two to tango.
An unexpectedly high number of vacation-home owners, 21 percent, own two or more vacation homes, according to the latest study from the National Association of Realtors. Nearly a third of those who own vacation properties also report they hold title to two or more investment properties.
On the flip side, NAR that more than half of all investment property owners, 53 percent, own two or more investment homes and 12 percent own two or more vacation homes.
Overall, the analysis of Census Bureau data shows there are 6.8 million vacation homes in the United States and 37.4 million investment units. That's in addition to the country's 74.6 million owner-occupied units.
NAR President Thomas M. Stevens, a Vienna, Va., broker, commented that the fact that so many owners of vacation homes and investment property have more than one is "a bit of a revelation."
"We've always known that a certain segment has invested heavily in the rental market, and some people earn their living simply by holding and managing investment property," Stevens said. "What we see now is a crossover between largely vacation or investment-home owners, with people recognizing the value of those investments and pouring more assets into real estate."
For what it's worth, the typical vacation-home owner has a property that is 220 miles from his primary residence. Half are located within the same state's as the owner's primary residence. Also, three-fourths were purchased solely for personal use, while18 percent were intended to become a primary residence in retirement. Only 13 percent of vacation owners listed rental income as a reason to buy.
And finally, the typical owner spends 39 nights per year at their property, three-quarters of which are not rent out to anyone else.
Remodeling: Money in the Bank
With so many home owners looking to remodel as a way to increase the value of their homes, the National Association of Home Builders Remodelors' Council offers these tips to get the most bang for your buck:
- Keep Up With the Joneses. When searching for project ideas, look at amenities of other homes in the neighborhood. Building an addition may not be a sound investment if yours is the first on the block, yet it would be very wise to add should all the neighbors have one.
- Kitchens and Bathrooms Count. These rooms are consistently rated the best places to spend your remodeling dollars. But don't neglect the rest of the house. Money spent on a beautiful kitchen is wasted when other rooms have cracked drywall and 1970s shag carpeting. Make sure the entire home is updated to an acceptable level.
- A Topical Solution. One of the cheapest and easiest ways to add value is through a fresh coat of paint, breathing new life into a room for just a little money and some elbow grease.
- Nice, But Not Too Nice. While you may want to have the best house on the block, the return diminishes if your home becomes the most expensive in the neighborhood.
- Square Peg, Round Hole. When renovating or adding on, avoid too much customization of space so potential buyers can envision the home suiting their needs. A well-designed fourth bedroom to you could be an office, workout room or home theater for someone else.
There is no single project that guarantees a 100 percent return on investment. However, careful planning and professional work will ensure your remodeling dollars go farthest. To learn more about home remodeling, visit www.nahb.org/remodel.
