It may be natural for first-time buyers to be unsure of the process of buying a home because they haven't been through it before but even repeat buyers need to know changes that have taken place since the financial housing crisis.
The steps in the home buying process are predictable and generally, follow the same pattern. It certainly makes the move stay on schedule when you know all the different things that must be done to get to the closing.
One of the responsibilities of your real estate professional is to make sure that things are done in a timely manner so that the transaction will close according to the agreement on time and without unforeseen or unnecessary problems.
Even if you're not ready to buy or start looking yet, you need to be assembling your team of professionals. Let us know and we'll send you our recommendations, so you can read about them on their websites.
If you have any questions, call us at (970) 388-3692; we're happy to help. Informed buyers lead to satisfied homeowners and that is better for everyone involved.
It's been said that if you can find a home that has most of what you want, you should go ahead and purchase it. Many first-time buyers are using everything they have for a down payment and closing costs and would have to "live" with the less than perfect home until they can save the money to make the changes.
The FHA 203(k) mortgage allows a borrower to purchase a home and provides additional funds for improvements to be made. These types of renovations can include kitchen and bathroom remodels, flooring, plumbing, heating, and air conditioning systems, additions and other things.
The benefit to the buyer is that they have the opportunity to consider a home that needs repairs and might have been unacceptable without a program like this. Being an FHA loan, a minimal down payment is required, fair interest rates and generous qualifying requirements.
The 203(k) Streamline can be used for cosmetic improvements, appliances and minor remodeling up to $35,000 in cost.
As you can imagine, this is a specialized program and not all lenders choose to make 203(k) loans. They usually take longer to process and getting firm bids on the work to be done will be required. It is important to find out how much experience a lender has with this particular type of loan.
It will also be required that you work with a 203(k) consultant in addition to the mortgage officer.
For more information, go to Hud.gov. FNMA has a similar conventional loan program called HomeStyle Mortgage. Your real estate professional will be able to help with recommendations. Call me at (970) 388-3692.
FHA allows owner-occupants to purchase up to a four-unit property with a minimum 3.5% down payment. The rent collected on three units could be used to make the payment and the owners' pro-rata share would be less than ¼ of the payment itself.
The owner-occupied unit would be considered their principal residence. The other three units are treated as rental property and eligible for cost recovery, a non-cash deduction plus all the normal business expenses. The rental income of the three remaining units is calculated as income and assists the buyer in qualifying.
A homeowner could buy a four-unit, live in one for two years, buy another four-unit with a minimum down payment, move into one unit, rent the other three as well as the previous unit in the first property. Then, after another two years, repeat the same process over again.
The fifth year, the homeowner/investor would have a total of 11 rental units plus the one that they are occupying. An acquisition strategy like this might be difficult for a family with children and a single person or couple might find it easier to move more frequently.
As the equity increases in these properties, due to appreciation and amortization, the money could be pulled out through refinancing to purchase additional income properties. Another objective might be to pay the mortgage off as soon as possible and any cash flow after tax could be applied directly to the principal.
FHA has a nationwide mortgage limit for a four-unit of $521,250 but some high-cost areas have been designated with increased limits. There are also loan programs for two and three-unit properties with limits of $347,000 and $419,425 with similar exceptions for high-cost areas.
The low mortgage rate and minimal down payments for owner-occupied FHA mortgages makes this strategy attractive because it gives investors an opportunity to highly leverage their investment. Most non-owner-occupied (investor) mortgages would require 20-25% down payment and have a slightly higher interest rate than for an owner-occupant.
To learn more about this opportunity, call (970) 388-3692 and we can give you information on specifics in a variety of areas.
It may be an all too common belief that a person will have a house payment and a car payment for the rest of their lives. However, with a plan and some determination, you can be mortgage free.
Planning for retirement is obviously important and many times, an activity plagued by procrastination. Some homeowners' goal is to have their home paid for by retirement, so they won't have payments. It makes sense to eliminate a sizable recurring expense before they quit working.
By making regular principal contributions in addition to the payments, the debt can be eliminated by the target retirement date.
Assume a homeowner refinanced their $300,000 mortgage at 4% last year for 30 years with the first payment due on May 1, 2017. With normal amortization, the home will be paid for at the end of the term.
Additional principal contributions with each payment will save interest, build equity and of course, accelerate the payoff on the home. An extra $250.00 a month would pay off the mortgage 7.5 years sooner. $786.81 extra with each payment would pay off the loan in 15 years.
Having a home paid for at retirement has the apparent benefit of no house payment. A debt-free home is also a substantial asset that could be borrowed against or sold if unanticipated events should occur.
To make some projections to pay off your own mortgage, use this use the Equity Accelerator calculator.
The gutters and downspouts on your home are intended to channel rainwater away from your home and its foundation. When they're blocked and not functioning properly they can lead to the gutters coming loose, wood rot and mildew, staining of painted surfaces, and even worse, foundation issues or water penetration into the interior of the home.
Most experts recommend cleaning the gutters at least once a year. More often might be necessary depending on the proximity of leaves and other debris that could collect.
If this is a task that you feel comfortable about tackling yourself, there are few things to consider. If the debris is dry, it will be easier to clean the gutters. Safety is important, and precautions should be taken such as using a sturdy ladder and possibly, having someone hold it while you're on the ladder.
Other useful tools will be a five-gallon plastic bucket to hook on the ladder to hold the debris; work gloves to protect your hands from sharp edges of the gutters; a trowel or scoop and a garden hose with a nozzle.
? Start by placing the ladder near a downspout for the section of gutter to be cleaned.
? Remove large debris and put it into the empty bucket. Work away from the downspout toward the other end.
? When you're at the end of the gutter, using the water hose and nozzle, spray out the gutter so it will drain to the downspout.
? If the water doesn't drain easily, the downspout could be blocked. Accessing the spout from the bottom with either the hose with nozzle or a plumber's snake, try to dislodge the blockage.
? Reattach or tighten any pieces that were removed or loosened while working on the downspout.
? Flush the gutters a final time, working from the opposite end, as before, toward the downspout.
Congress enacted the Dodd-Frank Act in 2010 in response to the mortgage crisis that led to America's Great Recession. The two parts that apply closely to homebuyers are the Ability-to-Repay (ATR) and Qualified Mortgages (QM).
A Qualified Mortgage is a category of loans that have certain, more stable features that help make it more likely that borrowers will be able to afford their loan. These loans do not allow certain risky features like an interest-only period when no money is applied to reduce the principal; negative amortization that would allow the mortgage balance to increase; and, "balloon payments" at the end of the loan that are larger than the normal periodic payments.
A debt-to-income ratio of less than or equal to 43% has been established to provide a limit on how much of a borrower's income can go toward total debt including the mortgage and all other monthly debt payments. However, the Consumer Finance Protection Bureau believes these loans should be evaluated on a case-by-case basis and in some cases, can exceed 43%.
There is a limit for up-front points and fees the lender can charge.
By showing that the lender made an effort to be certain that the borrower has the ability to repay the loan, the lender in turn, receives certain legal protections. Underwriting factors considered by the lender include:
For more information, see the Consumer Financial Protection Bureau fact sheet ... protecting consumers from irresponsible mortgage lending.
No one wants to waste water or money. For that reason, take a few minutes every other month to do the following inspections:
If you need a recommendation for a good plumber to take care of something you discover, please feel free to call me at 303-573-5791
Whether it is hesitation or procrastination due to uncertainty, it can cost buyers by having to pay more for both the house and the financing. This is one of those markets where most of the experts expect interest rates and prices will continue to rise through 2019.
The National Association of REALTORS? reports there is currently a 4.2-month supply of homes for sale which is close to the same as last year's inventory. Normal inventory is considered to be a 6-month supply.
If during the period you're waiting to buy, the price of the home goes up by 5% and the mortgage rate increases by 1%, the payment on a $275,000 home with a 95% mortgage could be $233.80 more each and every month. Over a seven-year period, the delay to purchase would total close to $20,000.
To act decisively, you need good information; a confused mind will not generally make a decision. In today's market, you need to know exactly what price home you can qualify for and you need to know what kind of home you can expect for that price.
You'll want a housing and a mortgage professional you can trust to give you the information you need to make good decisions for yourself and your family. We'd like to be your real estate professional and can recommend a trusted mortgage professional.
To get a better idea about what it may cost you for a home in your price range, use the Cost of Waiting to Buy calculator. If you have any questions, call me at (970) 388-3692.
There is much more than a lower rate and payment to determine whether to refinance a mortgage. Lenders try to make refinancing as attractive as possible by rolling the closing costs into the new mortgage so there isn't any out of pocket cash required.
The closing costs associated with a new loan could add several thousand dollars to your mortgage balance. The following suggestions may help you to reduce the expense to refinance.
1. Tell the lender up-front that you want to have the loan quoted with minimal closing costs.
2. Check with your existing lender to see if the rate and closing costs might be cheaper.
3. Shop around with other lenders and compare rate and closing costs.
4. If you're refinancing an FHA or VA loan, consider the streamline refinance.
5. Credit unions may have lower closing costs because they are generally loaning deposits and their cost of funds is less.
6. Reducing the loan-to-value so mortgage insurance is not required will reduce expenses and lower the payment.
7. Ask if the lender can use an AVM, automated valuation model, instead of an appraisal.
8. You may not need a new survey if no changes have been made.
9. There may be a discount on the mortgagee's title policy available on a refinance.
10. Points on refinancing, unlike a purchase, are ratably deductible over the life of the loan ($3,000 in points on a 30-year loan would result in a $100 tax deduction each year.)
11. Consider a 15-year loan. If you can afford the higher payments, you can expect a lower interest rate than a 30-year loan and obviously, it will build equity faster and pay off in half the time.A lender must provide you a list of the fees involved with making the loan within 3 days of making a loan application in the form of a Loan Estimate and a Closing Disclosure Form. Every dollar counts, and they belong to you.
Moisture is mold's best friend and it thrives between 40 and 100 degrees Fahrenheit which is why it is commonly found in homes. Mold spores float in the air and can grow on virtually any substance with moisture including tile, wood, drywall, paper, carpet, and food.
Moisture control and eliminating water problems are key to preventing mold. Common sources of moisture can be roof leaks, indoor plumbing leaks, outdoor drainage problems, damp basements or crawl spaces, steam from bathrooms or kitchen, condensation on cool surfaces, humidifiers, wet clothes drying inside, or improper ventilation of heating and cooking appliances.
- Control the moisture problem
- Scrub mold off hard surfaces using soap and water or other cleanser; dry completely
- Do not paint or caulk moldy surfaces
- Discard porous materials with extensive mold growth
- Avoid exposing yourself or others to mold
- Periodically, inspect the area for signs of moisture and new mold growth
The EPA suggests that if the moldy area is less than ten square feet, you can probably handle the cleanup yourself. If the affected area is larger than that, find a contractor or professional service provider.
Increasing ventilation in a bathroom by running a fan for at least 30 minutes or opening a window can help remove moisture and control mold growth. After showering, squeegee the walls and doors. Wipe wet areas with dry towels. Cleaning more frequently will also prevent mold from recurring or keep it to a minimum.
A simple solution to clean most mold is a 1:8 bleach/water mixture. Since homes have thermostatically controlled temperatures and water is used all day long in the kitchen and bathrooms, the environment is conducive to mold.
It's understandable; you’re excited; you've found the right home, negotiated a contract, made a loan application and inspections. Closing is not that far away, and you are making plans to move and put personal touches on your new home.
Even if you have an initial approval on your mortgage, little things can derail the process which isn't over until the papers are signed at settlement and funds distributed to the seller. The verifications are usually done again just prior to the closing to determine if there have been any material changes to the borrower's credit or income that might disqualify them.
Most lending and real estate professionals recommend NOT to:
The lender and I are working together to get you into your new home. It's understandable to be excited and feel you need to be getting ready for the move.
Planning is fine but don't do anything that would affect your credit or income while you're waiting to sign the final papers at settlement.
Rising Rates Affect the Cost Too
Mortgage rates have risen 0.5% in 2018 on 30-year and 15-year fixed rate mortgages and experts expect them to continue to increase. Buyers paying attention to the market understand the relationship that inventory has on pricing; when the supply is low, the price usually goes up. Rising interest rates can affect the cost of homes also.
When interest rates go up, fewer people can afford homes. Lower numbers of buyers can affect the demand, which could cause prices of homes to come down. The question is how much do the interest rates have to go up to affect demand?
As the rates gradually go up, the affect may not be noticeable at all except for the fact that the payments for the buyer have increased.
A ½% change in interest is approximately equal to a 5% change in price. A $300,000 mortgage at 4.5% for a 30-year term will have a $1,520.06 principal and interest payment. If the mortgage rate goes up 0.5%, it would affect the payment the same as if the price had gone up 5%. The difference in payments for the full term of the loan would be $32,547.
There are some things beyond buyers’ control, but indecision isn’t one of them. If they haven’t found the “right” home yet, it is understandable. However, when that home does present itself, the buyer needs to be ready to make a decision. If they are preapproved and have done their due diligence in the market, they should be able to contract before significant changes occur in the mortgage rates.
If it's not broken, why would a homeowner consider replacing something as expensive as a toilet when there may be other things in the home to replace that provide more aesthetic appeal. Don't be too quick to ignore the functionality and the reliability of this basic convenience.
The first rationalization might take place at the economic level. A water-saving model could easily pay for itself in a few years and then, there is the good feeling of participating in the conservation of our natural resources.
Having to plunge a toilet more than once a week could motivate a homeowner to spend money on a replacement especially, if having made repairs to the flapper and fill valve didn't solve the issue.
Maybe your existing toilet has ugly scratches that make it difficult to clean. Maybe there are cracks in the tank or bowl that you're concerned will develop into a leak at the worst possible time.
The average cost to replace a toilet is around $400 with models ranging more and less based on the features and brands. Round toilet bowls tend to take up less room, are less expensive and better suited for children. Elongated bowls generally take more room, have more powerful flushing action, more comfortable, more stylish and cost more.
Replacing the shut-off valve for the toilet could be a good thing to do while you're replacing the toilet. Generally, it is as old as the toilet and having a reliable valve that works could be very convenient in a future repair or emergency.
There are a variety of videos on YouTube that could give you the confidence to do it yourself or simply, to have a better understanding of the scope of the project
These easy-to-handle suggestions may protect your belongings while you're gone while adding a level of serenity to your trip.