Category Archives: Market Conditions

The Truth About Homeowner Equity

truth homeowner equity

A recent article from a reputable news source was titled: Here’s why some homeowners still can’t sell. In the opening bullets of the article, the author claimed, “Negative equity is one of the main reasons why there are so few homes for sale.” The article then goes on to soften that stance but we want to bring better clarity to the equity situation.

A recent report from CoreLogic (which was quoted in the article) revealed that over 80% of all homes now have “significant equity,” which means the home has over 20% equity. That level of equity allows the homeowner to sell their home if they so desire. (There was no reference to significant equity in the article.)

If eight out of ten homeowners now have significant equity in their homes, it is hard to make the claim that lack of equity is “one of the main reasons why there are so few homes for sale.”

Here is a map showing the percentage of homes in each state which currently have significant equity:

The Truth About Homeowner Equity | Keeping Current Matters

Thoughts on Homeowner Equity

If you are one of many homeowners who is debating selling your home and are wondering how much equity you have accumulated, contact a local real estate professional who can help you determine if now is the time to list.

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How To Get The Most Money From The Sale Of Your Home

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Every homeowner wants to make sure they maximize their financial reward when selling their home. But how do you guarantee that you receive maximum value for your house? Here are two keys to ensure that you get the highest price possible.

1. Price it a LITTLE LOW 

This may seem counterintuitive. However, let’s look at this concept for a moment. Many homeowners think that pricing their home a little OVER market value will leave them room for negotiation. In actuality, this just dramatically lessens the demand for your house (see chart below).

How to Get the Most Money from the Sale of Your Home | Keeping Current Matters

Instead of the seller trying to ‘win’ the negotiation with one buyer, they should price it so that demand for the home is maximized. By doing this, the seller will not be fighting with a buyer over the price, but will instead have multiple buyers fighting with each other over the house.

Realtor.com gives this advice:

“Aim to price your property at or just slightly below the going rate. Today’s buyers are highly informed, so if they sense they’re getting a deal, they’re likely to bid up a property that’s slightly underpriced, especially in areas with low inventory.”

2. Use a Real Estate Professional

This, too, may seem counterintuitive. The seller may think they would make more money if they didn’t have to pay a real estate commission. With this being said, studies have shown that homes typically sell for more money when handled by a real estate professional.

A new study by Collateral Analytics, reveals that FSBOs don’t actually save any money, and in some cases may be costing themselves more, by not listing with an agent.

In the study, they analyzed home sales in a variety of markets in 2016 and the first half of 2017. The data showed that:

“FSBOs tend to sell for lower prices than comparable home sales, and in many cases below the average differential represented by the prevailing commission rate.”

The results of the study showed that the differential in selling prices for FSBOs when compared to MLS sales of similar properties is about 5.5%. Sales in 2017 suggest the average price was near 6% lower for FSBO sales of similar properties.

Final Thoughts

Price your house at or slightly below the current market value and hire a professional. This will guarantee that you maximize the price you get for your house.

5 Surprising (and Useful!) Ways to Save for a Down Payment

One of the biggest misconceptions of home buying? The 20% down payment. Here’s how to buy with a lot less down.

First-Time-Home-Buyers

Buying your first home conjures up all kinds of warm and fuzzy emotions: pride, joy, contentment. But before you get to the good stuff, you’ve got to cobble together a down payment, a daunting sum if you follow the textbook advice to squirrel away 20% of a home’s cost.

Here are five creative ways to build your down-payment nest egg faster than you may have ever imagined.

1. Crowdsource Your Dream Home

You may have heard of people using sites like Kickstarter to fund creative projects like short films and concert tours. Well, who says you can’t crowdsource your first home? Forget the traditional registry, the fine china, and the 16-speed blender. Use sites like Feather the Nest and Hatch My House to raise your down payment. Hatch My House says it’s helped Americans raise more than $2 million for down payments.

2. Ask the Seller to Help (Really!)

When sellers want to a get a deal done quickly, they might be willing to assist buyers with the closing costs. Fewer closing costs = more money you can apply toward your deposit.

“They’re called seller concessions,” says Ray Rodriguez, regional mortgage sales manager for the New York metro area at TD Bank. Talk with your real estate agent. She might help you negotiate for something like 2% of the overall sales price in concessions to help with the closing costs.

There are limits on concessions depending on the type of mortgage you get. For FHA mortgages, the cap is 6% of the sale price. For Fannie Mae-guaranteed loans, the caps vary between 3% and 9%, depending on the ratio between how much you put down and the amount you finance. Individual banks have varying caps on concessions.

No matter where they net out, concessions must be part of the purchase contract.

home saving

3. Look into Government Options

The U.S. Department of Housing and Urban Development, or HUD, offers a number of homeownership programs, including assistance with down payment and closing costs. These are typically available for people who meet particular income or location requirements. HUD has a list of links by state that direct you to the appropriate page for information about your state.

HUD offers help based on profession as well. If you’re a law enforcement officer, firefighter, teacher, or EMT, you may be eligible under its Good Neighbor Next Door Sales Program for a 50% discount on a house’s HUD-appraised value in “revitalization areas.” Those areas are designated by Congress for  homeownership opportunities. And if you qualify for an FHA-insured mortgage under this program, the down payment is only $100; you can even finance the closing costs.

For veterans, the VA will guarantee part of a home loan through commercial lenders. Often, there’s no down payment or private mortgage insurance required, and the program helps borrowers secure a competitive interest rate.

Some cities also offer homeownership help. “The city of Hartford has the HouseHartford Program that gives down payment assistance and closing cost assistance,” says Matthew Carbray, a certified financial planner with Ridgeline Financial Partners and Carbray Staunton Financial Planners in Avon, Conn. The program partners with lenders, real estate attorneys, and homebuyer counseling agencies and has helped 1,200 low-income families.

4. Check with Your Employer

Employer Assisted Housing (EAH) programs help connect low- to moderate-income workers with down payment assistance through their employer. In Pennsylvania, if you work for a participating EAH employer, you can apply for a loan of up to $8,000 for down payment and closing cost assistance. The loan is interest-free and borrowers have 10 years to pay it back.

Washington University in St. Louis offers forgivable loans to qualified employees who want to purchase housing in specific city neighborhoods. University employees receive the lesser of 5% of the purchase price or $6,000 toward down payment or closing costs.

Ask the human resources or benefits personnel at your employer if the company is part of an EAH program.

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5. Take Advantage of Special Lender Programs

Finally, many lenders offer programs to help people buy a home with a small down payment. “I would say that the biggest misconception [of homebuying] is that you need 20% for the down payment of a house,” says Rodriguez. “There are a lot of programs out there that need a total of 3% or 3.5% down.”

FHA mortgages, for example, can require as little as 3.5%. But bear in mind that there are both upfront and monthly mortgage insurance payments. “The mortgage insurance could add another $300 to your monthly mortgage payment,” Rodriguez says.

Some lender programs go even further. TD Bank, for example, offers a 3% down payment with no mortgage insurance program, and other banks may have similar offerings. “Check with your regional bank,” Rodriguez says. “Maybe they have their own first-time buyer program.”

Not so daunting after all, is it? There’s actually a lot of help available to many first-time buyers who want to achieve their homeownership dreams. All you need to do is a little research — and start peeking at those home listings!

Each Generation’s Favorite Renovation Projects

renovations

The average homeowner is spending more money on a greater number of home improvement projects, according to HomeAdvisor’s 2017 True Cost Survey, a study of 14 million service requests received between July 2016–17. However, the projects vary by generation, income, and geography, the study finds. Here are the top five most popular home improvement projects by generation.

outdoor play equipment

Millennials

  1. Install outdoor play equipment
  2. Install childproofing
  3. Install backyard landscaping
  4. Update sprinkler system for lawn and garden
  5. Install front yard landscaping

 

above ground pool

Generation Xers

  1. Repair outdoor play equipment
  2. Install outdoor play equipment
  3. Add or remove holiday lighting
  4. Build or install vinyl-lined swimming pool
  5. Build or install an above-ground swimming pool

 

gazebo

Baby boomers

These homeowners are the biggest spenders on remodeling projects, according to the study. They pay a lot for home maintenance to keep their property values up—particularly if they’re looking to sell and use the proceeds in retirement.

  1. Install or repair gutters
  2. Repair shed, barn, or playhouse
  3. Repair gazebo or freestanding porch
  4. Asphalt sealing
  5. Repair exterior trim

“Boomers are indulging in luxury purchases, large discretionary remodels, kitchens, bathrooms, stonework, remodeling swimming pools, hiring designers to do professional landscaping jobs,” says Brad Hunter, HomeAdvisor’s chief economist.

Source: “Home Improvement Is Hot Right Now, But Who’s Doing What?” realtor.com® (Aug. 28, 2017)

972 Welch Avenue – Berthoud, Colorado

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Welcome to your new home at 972 Welch Avenue in historic Berthoud, Colorado!

This property is impeccable with it’s sparkling clean interior and ready to move-in condition.

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You’ll enjoy it’s recent upgrades to the bathrooms, including a fully finished “daylight” basement, upstairs loft area and private patio.

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With designer touches everywhere, you can spread out in your separate dining room and breakfast bar. Kitchen features a wonderful pantry and the property has high ceilings, for a completely airy feel.

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Some luxuries that you might not expect is a walk-in closet, central air conditioning and attached car garage.

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We think the crown jewel is the extended front porch!

welcome to berthoud

Low maintenance living at it’s best, not to mention the opportunity to live in historic downtown Berthoud!

 

176 Sand Cherry Street – Brighton, CO

Welcome to 176 Sand Cherry Street in Brighton, Colorado!  A lovely 3 bedroom and 4 bath home in over 3500 square feet!

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This home boasts fwo full size master bedrooms- one on main, one on the upper level- both w/large walk-in closets & luxurious 5-piece master en suites.

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Each level has own laundry rooms!

Open & vaulted kitchen, dining, family room area. Granite counters, upgraded stainless appliance package, dbl ovens, large island, walk-in pantry.

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Wood floors on entire main level.

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Some features to mention are upgraded lighting & plumbing fixtures, doors & trim. The home has a high efficiency furnace, electronic air cleaner, water softener.

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An added bonus is the custom deck with lighted hot tub.  (MLS#827282, asking #399,900)

 

7 Key Things That Help You Qualify For A Mortgage

A SHARED ARTICLE WRITTEN BY MICHELE LERNER

mortgage-refinancing

In an environment where lenders are highly regulated and risk-averse, borrowers are rightfully a little nervous when they apply for a mortgage. But with the right preparation, qualifying for a home loan can be a rewarding experience in your journey toward homeownership.

“In a lot of ways, lenders have gone back to the basics, looking at fundamental personal finance criteria to decide who qualifies for a loan,” says Rick Sharga, chief marketing officer of Ten-X, an online real estate marketplace in Irvine, California.

At the same time, Sharga says lenders have been more risk-averse than ever since the housing bust.

A.W. Pickel, III, Midwest division president of AmCap Mortgage in Kansas City, Missouri, recommends finding a loan officer you can trust and sticking with that person during your entire homebuying process.

“A good loan officer is like a pilot flying you and your loan from Kansas City to Hawaii,” Pickel says. “There are several ways to get there and several things that can happen on the way. A good loan officer has seen the turbulence and knows where the smooth air is.”

7 steps toward a loan approval

The back-to-basics approach by lenders means that borrowers can take steps that increase their chances of a mortgage approval.

Improving your credit, reducing your debt and gathering your documentation are among the many things you can do long before a loan application to increase the likelihood of getting a “yes” from a lender.

1. Maintain a high credit score. The average FICO score for an approved borrower is around 720 for a conventional loan and close to 700 for an FHA-insured loan, says Sharga. He says borrowers should find out their FICO score before applying for a loan, make sure their credit report is correct and take steps to improve their score if necessary. Pickel says he recently reviewed a loan file with a high debt-to-income ratio of 49 percent but a credit score over 800, which resulted in a loan approval.

Keep a vigilant eye on your credit profile while you wait for your loan to close, too.

“Once the application process has begun, borrowers shouldn’t do anything that might negatively impact their credit rating — no new accounts, no late or missed payments,” says Sharga.

2. Save for a bigger down payment. One way to minimize risk for a lender is to make a higher-than-minimum down payment. “The average down payment today is around 10 percent; historically the standard has been 20 percent,” says Sharga. “Anything above that lowers the loan-to-value ratio, which is viewed positively.”

3. Choose the right loan. If you have less money for a down payment but have good credit, you may qualify for a conventional loan with private mortgage insurance and a down payment requirement of 3 to 5 percent.

You may want to look for a lender who issues FHA loans, which are often available to borrowers with less cash or a lower credit score and require a down payment of 3.5 percent. Keep in mind these loans require a monthly mortgage insurance payment in addition to principal and interest, Sharga says.

4. Manage your debt. Lenders are reluctant to issue loans that fall outside qualified mortgage rules established by the Consumer Finance Protection Bureau (CFPB), says Sharga. These loans have a strict cap of a 43 percent debt-to-income ratio, which is the percentage of your gross monthly income that goes toward the minimum payment on all your debt, including your mortgage.

Paying off credit card balances or at least reducing debt before applying for a home loan is helpful.

5. Buy within your means. “Be realistic with your monthly income,” Pickel says. “Buy a house with a monthly payment you can afford. Buying a house that needs the income from two or three future raises will only cause stress.”

It matters that you can afford your payments and have remaining income after those payments are made, he says.

6. Demonstrate stability. Lenders look for signs of personal and financial stability, such as whether you’ve saved three to six months’ worth of expenses in the bank, whether you have a steady employment record and how often you’ve moved over the past few years, Sharga says. Your good credit score and a pattern of saving money are both indicators of financial strength.

7. Respond fast to lender requests. The CFPB’s ability-to-repay rule requires lenders to verify whether a borrower has the means to handle loan payments, says Sharga. This requires you to have all your financial records in order, including pay stubs, bank records, tax returns and more. Sharga says incomplete documentation is a common reason for loans being declined.

“If the loan officer asks for it, then bring it,” says Pickel. “Sometimes people don’t want to say they can’t find something or they don’t want to look for it, but it really helps to have all the information that the loan officer requests. This will help expedite the process.”

While it should go without saying, honesty is an essential component of a loan approval.

“No one likes surprises, especially loan underwriters,” says Pickel. “Tell the truth, even if it hurts. It will help even if it means that you don’t qualify today.”

Michele Lerner has been writing about real estate, personal finance and business topics for more than two decades and contributes articles about mortgages at MoneyGeek.com. Her work has appeared in The Washington Post and online at Fox Business News, Forbes BrandVoices, NewHomeSource.com, MSN.com, and Yahoo.com.

Garry’s Thoughts

If you are renting now you are very familiar with the high cost of rental rates in this sizzling real estate market.  This article will help with laying the ground work for qualifying for a mortgage to purchasing your own home plus the mortgage payment will most likely be less than what you are paying in rent right now.

Millions of Owners Are Missing Out on Savings

Nearly 4.5 million borrowers are eligible to refinance and could lock in savings on their monthly mortgage payments but have not taken advantage, according to a new report from Black Knight Financial Services.

The average borrower stands to save $260 a month. Nearly 700,000 borrowers could save $400 or more per month, the report shows.

“The recent pause in the upward movement of interest rates continues to encourage late-to-the-game borrowers to refinance,” says Lynn Fisher, the Mortgage Banker Association’s vice president of research and economics.

But many owners are not refinancing, despite the potential savings.

“Our data doesn’t tell us about motivation,” says Ben Graboske, senior vice president of data and analytics at Black Knight Financial Services. “It leaves us to surmise that the reason is apathy, lack of awareness, and education.”

Some homeowners may still be underwater on their home loans, owing more than what the home is currently worth. Other owners may have a low credit score that is blocking them from taking advantage of lower rates.

Still, owners likely will have more time to take advantage. “I don’t think this will be the last opportunity [to refinance into a low rate], but I don’t have a crystal ball,” says Graboske. “There are enough pressures in the market—lenders getting more efficient—that we’re going to have competitive rates around for awhile.”

Source: “Reason to Refinance: 4 Million Homeowners Are Leaving $1 Billion on the Table,” CNBC (June 22, 2017)

Garry Thoughts

Whether you are a first time home buyer or a seasoned homeowner these suggestions make sense and we can all hear this information from time  to time.

Americans Want to Hear More on Affordability

“In many ways, housing is an invisible crisis,” says Jonathan Reckford, CEO of Habitat for Humanity International. “There are still too many families without access to safe, secure, and affordable housing. This survey highlights the value all of us place on a decent place to call home and underscores the critical need to increase access to affordable housing.”

According to the survey, nine out of 10 Americans say owning a home is one of their greatest achievements in life. Also, 68 percent of U.S. renters say owning a home is one of their chief goals, according to the survey. PSB, on behalf of Habitat for Humanity, surveyed 1,000 people in the U.S. and Canada to gauge their perceptions of and challenges to affordable housing.

Ninety-one percent of American homeowners credited owning a home with making them more responsible, and 44 percent said it helped them build a nest egg. Forty-one percent say homeownership has given them stability.

But homeownership remains out of reach for many. Nine out of 10 Americans and Canadians say it’s important to find solutions to the lack of affordable housing. At 59 percent, concerns regarding U.S. affordability in particular easily topped other housing issues like safety (16%) and quality (11%).

One major barrier to homeownership cited among survey respondents: the high costs of rent. Eighty-four percent of survey respondents said the high cost of rent was preventing them from buying, followed by 75 percent who said obtaining a mortgage was proving to be a big barrier.

Many of the survey respondents said they’ve struggled to pay housing costs at some point in their life. Among U.S. respondents, 27 percent of respondents said they struggled to pay housing costs in their 20s; 22 percent in their 30s; 11 percent in their 40s; and 9 percent in their 50s.

Source: “Nine Out of 10 Americans and Canadians Call for Affordable Housing Solutions,” Habitat for Humanity (June 20, 2017)

Shared from DAILY REAL ESTATE NEWS

Garry’s Thoughts

It seems hard to believe in our market here in Colorado and how housing prices have been increasing over the past 3 years but here is a short list of areas in the country where housing prices are actually dropping.

August saw a second consecutive drop in average sale price

September 9, 2016 – According to the latest data from REcolorado, the provider of REcolorado.com, a home search site for Colorado home buyers, sellers and renters, August saw a second consecutive drop in average sale price, while continued demand kept sales inventory levels steady.

The pace at which sellers brought new homes to the market continued to slow as the busy summer selling season wrapped up. In August, 7,140 new homes came on the market, down five percent as compared to last month, but up four percent year over year.