Calculate payback before refinancing

Q. We have done the obvious things to get our home ready for sale, such as getting rid of much of our extra stuff. We would just like a few last tips before we go to market.

A. Use all five senses to sell your home. You want your home to look great and you want homebuyers to feel welcomed by attractive aromas, soothing music and other hospitable ideas so they appreciate the home’s environment on every level.

Sound. Put on some relaxing music to invite homebuyers to take their time and see the property thoroughly. Check built-ins, doors and floors for squeaks and creaks and get noisy fixtures repaired or oiled. Remove and kennel pets during showings.

Sight. Focus on the first things homebuyers will see from the curbside to the living space inside. Make sure the yard is trimmed, flowers are planted, paint is refreshed and the walk is freshly swept. Polish the front door hardware and sweep cobwebs from the entry lights. Provide plenty of light by opening curtains and blinds and turning on light fixtures. Neutral paint and décor help homebuyers visualize themselves in the home and removes the focus from the homeowner’s preferences.

Touch. During this pandemic, homebuyers and agents aren’t supposed to touch things during a tour. But it is still good to make sure doors, drawers and windows open smoothly and that all surfaces are sparkling clean.

Smell and Taste. Treat homebuyers to a fresh-baked cookie smell. Your family can enjoy them later because you can’t offer them to homebuyers during the pandemic. Steam-clean carpets, curtains and fabric furniture and freshly launder all linens.

Q. Is it wise to refinance now?

A. I inquired with investopedia.com. They warn that refinancing could be a bad idea if it’s done for the wrong reasons, such as taking cash out of your home to invest or consolidating credit card debt. Refinancing comes with considerable costs and fees – typically 3-6 six percent of your loan amount. That can take three years or more to pay back. If you decide to move sooner than three years into the new loan, you’ll lose money. You must also avoid the temptation to “reload” your paid-off credit cards.

Trading your 30-year mortgage for a new 30-year loan doesn’t make sense, as you’ll be adding more years of interest. But it can work if you have an FHA loan with private mortgage insurance (PMI) that can’t be canceled and you go for a shorter term than your current mortgage. If you have more than 20 percent equity, you can refinance into a conforming loan with no PMI due.

Over the summer of 2020, refinances of existing mortgages rose by 200 percent, driven by the lowest interest rates and the highest home prices in recent history.

The best outcome is a healthy break-even point, where the costs of refinancing are covered by the monthly savings provided by your new loan. Explore the numbers with your lender before deciding.

Lynne French is a Realtor with Compass Real Estate and captain of the Lynne French Team. Contact her at lynne@lynnefrench.com or 925-672-8787.