Minnesota Homes Today Local & National News

This Summer, Cool Your Home For Less Money

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Home cooling costsAccording to ENERGY STAR®, the typical household spends close to $2,000 per year on heating and cooling, and up to $600 of those costs are a waste; the result of energy inefficiencies in every U.S. home.

With the hot months of July and August ahead of us Minneapolis in , therefore, consider these simple-to-follow, cost-saving tips for keeping your home cool. None are expensive and each can yield quick results.

First, convert your home’s light bulbs to to CFLs.

It’s well-known that CFL bulbs use less energy than comparable incandescent bulbs, but they also generate far less heat. A “traditional” bulb converts 97.5% of its electricity into heat, which will require extra cooling in your home. CFL bulbs give off heat, too, but at a fraction of the level of an incandescent.

Next, make sure your HVAC air filter is clean. A dirty filter can add up to 7% to your cooling costs because your HVAC unit works harder to move the same amount of air. Change your filters quarterly, at least. If your home has shedding pets, consider changing monthly.

There’s other steps you can take, too, including:

  1. Keep your shades drawn. By blocking out the sun through your windows, you can lower a room’s temperature by as much as 20 degrees. That will require less cooling.
  2. Tune your HVAC unit. If you air conditioning unit has not been inspected this year, call a service technician to make sure it’s running optimally.
  3. Use a programmable thermostat. When you’re not home, set your home’s temperature to be higher. You don’t need to cool an empty home.

And, lastly, use your ceiling fans. A room’s temperature can feel up to 8 degrees cooler when a ceiling fan is running. Just remember that the ceiling fan cools you and not the room. Remember to turn it off when the room’s not in use.

Get customized cooling recommendations from the EPA.

5-Year ARM Falls To Historic Lows

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30-year fixed vs 5-year ARM

The interest rate differential between fixed-rate and adjustable-rate mortgages continues to widen and has now reached historic levels.

There’s never been a better time to lock an ARM.

According to Freddie Mac’s weekly Primary Mortgage Market Survey, homeowners in St Paul who lock their mortgage rate today will save 129 basis points on rate, on average, by choosing a 5-year ARM as their mortgage product as compared to a 30-year fixed rate loan.

The average 30-year fixed rate is 4.51%. The average 5-year ARM rate is 3.22%.

It’s the biggest interest rate spread between fixed-rate and adjustable-rate mortgage rates in Freddie Mac’s recorded history; a gap which is the result, in part, of the 5-year ARM dropping to all-time lows this week.

Rates for the 5-year ARM are even lower than during last year’s historic Refi Boom.

Putting today’s “spread” in action against a hypothetical $250,000 loan size, a homeowner that chooses an ARM over a fixed-rate loan would save $184.30 monthly, and would have $500 fewer closing costs.

That’s a 5-year savings of $11,558 — nearly triple what you would have saved just 2 years ago.

The main reason why today’s adjustable-rate mortgages are priced so aggressively relative to comparable fixed-rate loans is that Wall Street expects the economy to drag for the next several quarters, after which it expects an acceleration. 

ARMs tend to reflect short-term expectations for the U.S. economy which is why short-term mortgage rates are dropping.  Fixed products, by contrast, take a longer view and expectations for an economic rebound are pulling fixed-rate mortgage rates up.

For now, mortgage applicants can exploit the difference — especially those who plan to move within the next 5 years — but adjustable-rate mortgages aren’t right for everyone. ARMs carry particular risks about which you should be aware before locking.

Before you choose an ARM, therefore, talk it through with your loan officer.

Pending Home Sales Unexpectedly Spike In May

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Pending Home SalesThe summer housing market is heating up.

According to data from the National Association of REALTORS®, the Pending Home Sales Index smashed analyst expectations, jumping 8 percent on a monthly basis in May. 

Wall Street calls were for an increase of just 0.5 percent. 

It was a surprise result that, coupled with the recent stronger-than-expected New Home Sales and Existing Home Sales readings, has sparked housing market optimism in Minnesota and nationwide.

The biggest reason for the optimism is because of what the Pending Home Sales Index measures. 

In contrast to “traditional” housing data which reports on how housing performed two months ago, for example, the Pending Home Sales Index is a forward-looking indicator; a predictor of future market activity based on freshly-written contracts between buyers and sellers.

In other words, the Pending Home Sales Index looks ahead — not back. This is reflected in its methodology which states that 80% of homes under contract close within 2 months, and a large percentage of the rest close within Months 3 and 4.

Because May’s Pending Home Sales Index rose sharply, therefore, we can expect similar jumps in the Existing Home Sales figures of June and July.

For housing and home prices, this is a positive but the gains won’t apply to each home equally. The Pending Home Sales Index is still a national report for a market built on local sales. What’s happening on your particular street in your particular neighborhood may not reflect what’s happening somewhere else.

For accurate, real-time data in your local market, ask a real estate agent for statistics.

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