Monthly Archives: October 2016

Mortgage Madness… What is the best home loan for me?

 

 

What home loan program is the best one?

What home loan program is the best one?

Last week our Hot Topics took us through the why’s of finding a lender you trust before you find the home you love. First things first and if you are not an all cash buyer then finding your dream Denver home for sale, just to lose it from not being prepared with a proper plan of action in place is heartbreaking.

This week we are going to explore your options that you have with your loan. Before we get too deep here let’s just clarify there are as many home loan options out there as there are homes for sale in Denver. So, this is a broad view with some guidelines to help you ask the right questions to help you decide which loan program is right for you and your situation. This is not a substitute for sound guidance from your attorney, accountant and of course your lender.

So, when you decide the time is right to buy a home and you will be utilizing one of the many loan programs out there. Which is right for you? They all have their advantages and disadvantages depending on the situation. Ultimately it’s important to keep a few things in mind. First is the more skin you have in the game the less risk for the lender and ultimately to less cost to you as the borrower. The least amount of money you put up means more risk to the lender and therefore the more expensive over the long haul the loan will be. However, that’s not always to your disadvantage. In fact, I have many clients and myself included who over the years have taken advantage of low interest rates, borrowed from the bank and used their money instead of my own.

So, as I said earlier there are so many different loan options out there that we cannot possibly go over all of them or even get too in-depth on any one of them without putting you to sleep. so let’s touch on three of the most popular options out there today Conventional Loans, FHA (Federal Housing Administration) and VA (U.S. Dept. of Veterans’ Affairs)

Conventional – Many years ago Conventional loans meant you saved up your pennies until you gathered at least 20% down payment plus about 3% of the loan amount set aside for closing costs to purchase a home. This may or may not make sense for you. If you are in the position to have the money available to you to cover the upfront money and you plan on being in the home for at least 10 years then this may be a great option. If you don’t have the money upfront but you are in a good job and you are out-pacing the current housing market, meaning you are saving faster than the real estate market is appreciating you may do better to save up the money. However, be honest with yourself; It’s very difficult to save up that kind of money, especially for first time home buyers in Denver, and you may be better off looking at a couple different options. Today there are many options even with a “Conventional Mortgage” you can borrow more than the 80%. However; if you borrow more than 80% of the purchase price the bank will require you to carry an insurance policy which covers their losses should you default on your loan. Commonly known as PMI (Private Mortgage insurance) or MIP (Mortgage Insurance premium) We’ll talk a little more about PMI in the next section which is FHA loans.

FHA – “Federal Housing Administration” –  OK, so we do not have a living situation where we are saving more money and garnering wealth faster than the housing market and home ownership is fading away and getting harder to obtain. So, we are out of luck and are going to pay rising rents and our landlord’s mortgage for them for life right? Not so fast, FHA might be a way for you to get your foot in the door. You hear it all the time… “What about first time home buyers programs??”  FHA loans are one way you can become a homeowner and not have 20% plus closing costs. In Fact you can put as little as 3.5% down plus closing costs. so instead of 80,000 down payment on that 400k home you need to only put down 14,000. WHAT? from 80K to 14K on the same home?? What’s the catch right?? The catch is two-fold first and foremost is you will pay PMI there is an upfront cost that you pay at closing AND you are borrowing more money meaning your loan amount is higher and your costs on that loan will be higher. Then of course each month you will pay the mortgage insurance until you get to a point where you have either paid down or the market values rise to a point where you could re-finance the loan to a conventional loan where you would not have the PMI. There was a time where once you got below 80% you could do an appraisal and get the PMI dropped. There may still be a few lenders who will but most likely you will need to refinance the loan. There is another option if you serve or served in the military next we will discuss VA. For more information regarding FHA Loans

VA – “U.S. Dept. of Veterans Affairs. – Calling all veterans – Now, the VA loan is another option if you do not have the 20% upfront for down payment. The VA loan is great because not only do you NOT need 20% in fact in some cases you need ZERO dollars for down payment. Now part of the risk is taken on by the VA, they actually will guarantee your loan to your lender. Meaning if you default they will make up the bank’s losses. What’s even better is unlike FHA you do not pay mortgage insurance. However, there is a “funding fee” and that funding fee is paid as part of your closing costs. The fee varies and if you use the VA loan program more than once you can but the funding fee goes up as well. The VA loan has some other quirks to it as well, the appraisal is more strict on the home and has to meet certain safety guidelines and so the home you want to buy may not qualify for a VA loan. This was the case for my first home I bought, it was a condo and the VA was more strict than FHA on the condition so in the middle of escrow I had to switch from VA to FHA. So, if you are going to use the VA loan that is something to keep in mind, you may have a hard time buying a “fixer.” More VA loan info

I hope you enjoyed this week’s Real Estate Hot Topics – If you have questions on who to talk to for your loan call or e-mail me I have access to some great loan officers and can get you in touch with them. I’d love to get you started on your journey to homeownership. Call me direct at 720-688-5110 or shoot me an e-mail; rickyschoonover@gmail.com

Next week we will jump back to helping out sellers with pricing their home and which is the right way to go?? Price it high and work your way down to where the market is “OR” price it low and let the buyers bid it up to the market value. Is there a right or wrong answer? Tune in next week….

 

 

Thinking About Buying a Home But Do You Have A Lender?

Have you spoke to your lender?

Have you spoke to your lender?

Finding Lenders before you buy

Last week our seller focus took us on a top ten essentials list to selling your Denver home. We learned that it takes a well thought out plan to sell your home. There are many things to consider to getting you the highest selling price in the least amount of time. This week we will focus on Home Buyers and the importance of speaking to a lender BEFORE starting your search.

Imagine that you finally find the home of your dreams after weeks of browsing. After a few days of dealing with the seller, you find another offer can be accepted over yours! This is because you were not prepared to purchase the home with a clear plan. By the time of purchase, sellers have gone through an entire tedious process. In many cases they have time and money invested into preparing the home for market. The last thing they want to do is accept an offer and watch that deal fall through because nothing was agreed upon between the buyer and their possible lenders. This, in turn, makes it that much harder to obtain the next buyer. There is always some burning question that repels buyers from the house going forward…

“So, this home was in escrow…What happened? Why did it fall through? What’s wrong with this house?” These are just a sample of questions that goes through potential home buyers minds when a house falls out of contract.

Of course we do our best to explain there was nothing wrong with the house, the buyers could not get financed and the previous deal fell through. However, there is always that cloud of doubt and if there is any doubt it is unlikely for someone to make such a grand investment such as buying a home. In short, a prepared buyer is one who has a clear plan.

One of the first steps in the home buying process

A major part of that plan, if you are not paying all cash that is, figuring how you are going to finance the home? This seems like a simple question however, you may be surprised how many buyers out there do not think of this initially. They are just looking around and probably not going to find the home of their dreams while just out and about. So, there they are out in their car, they pass an open house sign, “Honey, stop the car.. look at that house! It looks perfect. I mean I love this area” Once they make it inside the home, they are really impressed. “OMG, look there is a workshop. There’s 3 car garage too, nice. Oh,it has 3 bedroom, 2 bathrooms, and it even has that office space we need. This is right by (Child’s) school and such a short commute for work.”

Now, just wait a minute

There are two questions that I generally ask early on during my open house conversations.

1. “Are you working with a broker?” and the next one is;
2. “Have you spoke to any lenders?”

The response I usually get is “Oh no we are just looking, we want to buy a house in Denver and we have been looking for a few weeks but we are not ready to talk to a lender yet.” There is a wealth of knowledge to be gained that can save you time and money by first off speaking with your Lender and selecting a Local Denver Real Estate professional early on. Buying a home is already stressful enough, then to not have a clear plan BEFORE you start wasting time and gas money driving around neighborhoods looking for open houses. If you don’t already have a lender who you want to work with to buy your home then it’s even more important to select your a Real Estate Professional to help you.

One of their first tasks is going to help you determine the right lender to help you in this transaction. We tend to know the local mortgage professionals who know the market and how the navigate the process to ensure your success in buying the home. There are so many different loan programs and they are not a one size fits all type thing. They are very specific, what might be perfect for one person may not be the right fit for another. There are many factors that go into determining the right loan program for your situation and goals. If you are a veteran such as myself then the VA loan program might be the perfect fit if you don’t have much money for down payment. Another great program to save on the upfront costs might be an FHA mortgage or maybe you have more money to put down and you can get a better deal on your rate and / or your payment with a conventional mortgage. The amount of money you can borrow and thus which home you can actually purchase will vary greatly on all these factors and more.

I cannot stress to you enough, When you hire a Real Estate Professional in Denver early on your chances of being prepared when you do find that home are greatly increased. You don’t pay any more in commissions if you hire me a month or more out from when we find your home than if you call me from the front yard of a sign you see and want to offer on the home you are standing in front of. However, if you have been working with me for a period of time you are going to be fully informed and have a clear plan to purchase. If you are ready to write an offer and standing in front of a “For Sale” sign chances are you simply are not prepared, no clear plan, no pre-approval letter from a lender and your chances for success of actually buying this home are greatly diminished.

If you are even just thinking you may want to buy or sell your home in Denver. One of the first and most important steps is to select a real estate professional and let them guide you from the “just thinking” stages, I know it’s counter to what we have learned. As I had mentioned in a previous article. Many of us only have our experience of buying a car as the largest purchase in our life before buying a home. Buying a home is much different than a car. When you buy a car the dealer can really care less in the beginning if you have a plan, they prefer you don’t have a plan. They get you excited about the car even drive the darn thing around town,  get you excited and ready to buy it. Then they will find a way to finance you.. usually at a higher rate than if you planned ahead. Employees of the dealership work for the dealer not you, they are not obligated to have your best interests in mind.

However, real estate professionals work for YOU. You are hiring the real estate professional to work for your best interests and if you hire a Realtor (R) then they have taken an Oath to put your needs before theirs. I take this responsibility very seriously and I want my clients to have a game plan that fits their needs and goals. The sooner I can meet with you and help you determine what that the plan is the better. Whether you are a buyer or seller, the earlier I can start working with you in the process the better for you and your chances to save time and money.

When it comes to BUYING or SELLING a home, please even if you are just “thinking” about it. Call me or shoot me an e-mail. I’ll be happy to help you set up a plan of action.

Next week please tune in where we will discuss a little more in depth of some of the more popular loan programs being used in today’s market and depending on your situation why one might be better than the other.

Thank you for reading, please share this article….

Ricky Schoonover of Nostalgic Homes 720-688-5110 or Email me here

www.DenverHomesMarket.com

So, you have decided on selling your Denver home, Now What?

 

time to sell home

time to sell home!

Are you asking yourself, Am I ready to sell my house in Denver?

Last week we covered our Buyer focus in “Do you have what it Takes?”. We detailed and discussed the affordability issue in regards to buying a home in Denver. We also provided an affordability calculator to help you determine how much house you can afford based on income, debt and down payment. That edition is available in our October Blog archives. So how should you proceed if you are thinking about selling my Denver home?

This week we dive into a seller focus “So, it’s time to sell your home, Now what?”

Selling your home is an emotional process and one with serious legal and tax consequences. All of which should be considered along with the appropriate professional to guide you throughout the process. There are many things you can do in order to prepare yourself, your family and your home before you actually hit the open market.

Ten things to consider when selling your home:

  • Arm’s length transaction – Everyone knows a real estate professional like myself. I mean, we are everywhere. Do not hire your friends or family to sell your home. It’s an emotional and taxing process and friends and family are less likely to be honest with you on what steps you need to do in order to get your Denver home ready to sell and in market ready condition. There are some things only a professional who has put in the time, knows. This is a business transaction and needs to be dealt with from that perspective. If you cherish your friendship or family relationship, you’ll be better off if things get emotional or go sideways rather than having someone there that isn’t so closely attached to you and the home who can help you through the process from a professional standpoint. Hire your real estate professional early on. There are so many things we see on a day to day basis. The earlier you hire them, the faster they can help you get your house ready for market with tips and advice. If you contact me, I can help with the process of selling your home as well.

Aesthetics of the home

  • Curb Appeal – This is one of the best investments you can make and, you can most likely do this yourself. Clean up that yard! Set up some mulch or gravel  and add some potted plants at the entry. Prune away any dead or overgrown bushes that don’t flatter your lawn. Get some color out there with flowers and trees, and remove any clutter. The more appealing your home from the street view, the faster it sells.
  • Paint – I find that almost every listing I take benefits from at least an interior coat of paint. Neutral colors and white trim. It’s funny once you paint, it highlights all the other little defects you have become accustomed to. That loose door knob, that missing hardware, the scuffs and dents in the walls, etc.… it serves as a catalyst to get on to our next steps. The exterior usually doesn’t need a full painting, but trim and edges can usually use a touch up.
  • De-clutter – To help in selling your home, a great plan would be investing in having the home staged by a professional. If you are going to be living in the home while it’s being sold there are some other steps you’ll want to take before you sell your home. If you have pets, kids, or both do your best to remove any wear and tear in the home. We get accustomed to items out of place. We become “smell blind” to the natural scents of the pets and house. I guarantee you, these are all smells that buyers will pick up on. Too add to that, never put all your clutter into your garage. Your garage is one of the selling points of your home so if you need to rent a storage unit, it will be well worth the investment. I hear it all the time as the buyer’s step into the garage, “Oh, so this is why the house looks so nice” as they see no space in the garage and it’s filled to the brim with clutter. Don’t sabotage your garage, it will detract people from buying the home.
  • Clean from top to bottom – This seems like something you wouldn’t normally need to mention but I find the best thing to do is hire a professional to come in with a fresh set of eyes. Let them do a full cleaning of the home for you. You may still need to come behind after them for some personal items but you would be surprised what a fresh set of eyes can pick up on. This time, the buyer will be the fresh eyes and notice all the above mentioned so you should always go that extra mile.
  • Paperwork – This may seem like a no brainer but you would be surprised how many people throw this stuff out as they are getting ready to sell a house in Denver. Manuals to the sprinkler system, the HVAC, any appliances you have, utility bills, etc. Gather all of that information in an easy to find place. Potential buyers may have questions about what work, if any has been done, is it warranted, and most importantly is said item transferred with the sale?

The emotional side of selling

  • Family Heirlooms – Get rid of them, out of sight out of mind. Anything that you do not want to go with the sale of the home; remove them before we ever show a potential buyer. That item becomes the most important aspect of your home. To that buyer, they just love that Chandelier and they want it included in their offer. Real estate law states that anything custom to the home or “Attached” must go with the sale, unless otherwise stated. Save yourself the hassle dan replace the items with something nice and practical with no sentimental value.
  • Garage or Yard sale – I’m not sure all realtors are like me but I love to sponsor yard sales.If you contact me, I will make signs, hit social media, and run advertisements. I will be there at the yard sale helping you with setup, letting neighbors know we are close to hitting the market. I will be planning the open house and letting neighbors know when we’ll be ready to show the home. Who knows, maybe somebody stopping by the yard sale is your buyer or is friends with someone who wants to move into the area.

Reaching the finish line

  • Time to hit the market – You have put thought into hiring a professional realtor to help you sell your home so let them do their job. During showings there is a temptation to be there with the buyers. You want to show them all the wonderful things you have done with the home over the years. I highly advise against this. Prospective home buyers are usually put off by this in my experience. Home sellers are too attached to the hard work that was put into the home. It was nice when they did the work but that was ten years ago and the buyer hardly will find it to their taste anyway. Have a plan in place to get yourself, your family and your pets out of the home for showings. There may be a suitable time during the transaction where the buyer and seller walk through together, but not while the buyer is making a decision to possibly offer on the home.
  • Plan for a marathon not a sprint– Be patient, I know it’s tough. At the end of it all you have cleaned, painted, fixed, de-cluttered, landscaping… geez I’m exhausted. You did all the hard work necessary to prepare your home for sale. Both mentally detaching from the home and physical labor were needed to get your home ready for market. Many people are out of steam by now and just want the home GONE. It takes time even with the most prepared homes. When they are priced right they tend to sell for the highest price in the least amount of time.

I hope you found this week’s Real Estate Hot Topics a fun read. Please check the archives for previous posts. Next week tune in for our topic ” Mortgage loans 101, whats right for me?”

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