Blog | Fort Collins Homes

Buying And Selling In 2021:
What You Need To Know

The housing market frenzy from 2020 is expected to carry over into the new year. If you’re navigating the market in 2021, here are insights to help guide your journey.

Low interest rates can reduce a monthly payment by as much as $100-$200, motivating many renters to transition into homeownership.

The number of buyers entering the market coupled with low interest rates is contributing to record low inventories and high prices across the country.

As a buyer, you need to be emotionally prepared for navigating a competitive market. You will likely compete with multiple offers and may have to look for a longer time period to find the right home.

Homes in many markets are selling for well above the asking price. Buyers should be prepared to make offers on several homes before having an offer accepted. Cash buyers can be at a definite advantage.

If you are a Buyer who can pay a price above the anticipated appraisal value of the home, be sure your offer includes the terms of how an appraisal shortfall will be absorbed.

Strategies that can strengthen your offer include increasing the earnest money above the amount requested by the seller, a flexible timeline that meets the sellers’ needs, and a preapproval letter from a qualified local lender or documentation to support your cash offer.

It’s okay to have a wish list as long as you’re flexible.

After a year of social distancing, buyers are looking for space that allows family members to enjoy privacy, such as home offices and outdoor space. Some buyers are
looking for in-law suites to bring the family under one roof, either now or in the future. The trend for buyers to accommodate aging relatives has grown during the pandemic.

As a seller, you may not be able to control the square footage or floor plan of your home, or provide access to outdoor space, but there’s one thing that will help to make your
home stand out: renovations.

If buyers have a choice between an updated home and one that is not, renovated homes typically have greater appeal. In spite of reduced inventory, homes needing
work can linger on the market.

An experienced agent can help you get the house you want, the most money for a home you’re selling, and help you feel secure and confident throughout the complex process of real estate.

Give me a call to discuss your next home sale or purchase!

Source news.remax.com

Reverse Mortgages: Pros and Cons

A reverse mortgage allows homeowners age 62 and older to convert part of the equity in their home into cash without having to sell their home.

These loans aren’t a cure-all for retirement money problems, though. Consider these risks and benefits.

PRO: Supplemental retirement income
Some people are house-rich and cash-poor. Assuming borrowers can manage the expenses of owning a home, the reverse mortgage provides a way to liquefy a portion of the home equity to cover financial obligations. This could be helpful in the event of an unexpected job loss, health issues or limited savings. Reverse mortgages can also be a funding source to diversify investment portfolios, although loan fees add to the upfront costs.

PRO: Pay off an existing mortgage
With enough equity in the home, a reverse mortgage can be used to pay off the current mortgage, eliminating the monthly mortgage payment, and freeing up money for other
expenses.

PRO: Proceeds are tax-free
The IRS considers proceeds from a reverse mortgage to be a loan, not income, so you won’t pay taxes on it.

CON: Loan Costs
Obtaining a reverse mortgage includes loan fees, possibly mortgage insurance premiums, and interest charges, which are not tax-deductible.

CON: It’s not a good short-term option
Upfront costs for reverse mortgages are higher than other forms of borrowing, in part due to the federal mortgage insurance premiums. Alternative short-term financing options include credit cards, personal loans, and home equity loans.

CON: A default could result in losing the home
A default occurs when the borrower fails to meet the ongoing requirements of a loan, such as not paying property taxes or homeowners insurance, or failing to
certify that the home is their principal residence. This can lead to eviction and foreclosure, if unresolved.

CON: Heirs may not be able to keep the home
With a Home Equity Conversion Mortgage (HECM), which is insured by the US Federal Government, heirs have to pay either the full loan balance or 95% of the home’s appraised value, whichever is less. They can do this by paying cash, getting financing, selling the home or turning the home over to the lender to satisfy the debt.

Is a reverse mortgage worth it?
A reverse mortgage could be a good solution if:
• There is a long-term need for additional income, and benefits such as Medicare and Social Security have already been utilized.
• The need to use the equity in the home for income now outweighs the risk that family heirs may not be able to keep the home in the future.

Give one our agents a call to discuss other options such as moving to a less-expensive home, or to locate a reverse mortgage lender!

Source: NerdWallet

New Year’s Resolutions For Your Home

While you’re making New Year’s resolutions focused on health, wealth, and family, be sure to add resolutions for your home!

1. Streamline the stuff
Go room-by-room periodically clearing anything that you don’t use, wear or love and donate it to charity. After that, think twice about what you bring in.
Stash useful (but not beautiful) items such as DVDs, remotes and those kicked-off shoes in simple woven baskets. Clear your counters of everything you don’t use
on a daily basis.

2. Make it safe and sound
Check your house for radon. Test kits cost as little as $20 at your local hardware store. And, make sure carbon monoxide and fire detectors are installed on every floor with a bedroom. Clean dryer lint from the vents and ducts behind the dryer, and change HVAC furnace filters regularly. Check your house for adequate bathroom and attic vents to the outside to prevent mold. If your home was built or last remodeled before 1978, consider testing for lead paint and asbestos flooring.

3. Shrink your bills
Start by cutting your energy usage in your home:

• Switch off lights when you leave a room.

• Adjust the temperature settings on the air conditioner and furnace for times when you are not at home.

• Install LED bulbs and low-flow showerheads.

• Dry some of your clothes outside.

• Run the dishwasher or washing machine when they are full.

• Set your home computer to revert to sleep mode when not in use.

• Water your yard less and consider drought-tolerant landscaping.

• Give composting a try.

• Find a community resource for recycling.

• Seal and insulate ductwork for heating and cooling systems.

4. Get ready to entertain
Add some plants to bring in new energy and help clean the air. Freshen a room by picking a new accent color that shows up with new pillows or rugs and updates your look. Orient your furniture in conversation groups instead of facing the television.

5. Get your finances right
While you create your yearly budget, remember to allocate funds for improvement and annual maintenance of your house, and emergencies that may arise.

Now, get ready to breathe a little easier in your own home!

Source: hgtv.com, lifehack.org

Millennials Underestimate Down Payment Needs

The pandemic is motivating more Millennials to feel like they’re finally ready to buy a home. But do they have the savings to do it?

Seventy-four percent of Millennials — ages 25 to 40 — recently surveyed say they are interested in purchasing a home in the next 12 months. However, 88% say they have significantly less savings than would be needed to buy a $300,000 home with a 20% down payment, or $60,000.

Fourteen percent of Millennials surveyed admit they have nothing saved for the purchase of a home.

Certainly, lower down payment programs exist. Whether these programs will be helpful for buyers whose savings are so limited is determined on a case by case basis. Down payments between 0% and 5% are possible with a home purchase, but these mortgage programs tend to cost more in the form of higher interest rates, and mortgage insurance premiums.

Forty percent of the Millennials surveyed say they set aside 10% or less of their income for a down payment. What’s more, 40% of respondents believe that $10,000 or less is enough to buy a home.

Seventy-six percent of Millennials in the study are looking for a detached home rather than a condo or townhome. Nineteen percent have their eye set on a home with more than 2,000 square feet, while 53% feel a home with 1001 – 2000 square feet will fit their needs.

If Millennial buyers are considering a down payment of 0%-5%, they may have a challenge finding homes for sale that are spacious enough to meet their demands with the amount of funds they have saved.

Those Millennials who hope to buy a home of their own may be able to save more as they move back in with their families. Young adults especially have moved in with family members as a result of the pandemic.

Call me for more information about opportunities to buy a home with a low down payment!

Source: Point2.com

Can You Get a Mortgage If You’re Self-Employed?

Whether you’ve owned your business for many years or started a new one, know that self-employed people can and do get mortgages.

Typically, lenders ask for documentation that includes a minimum of two years of personal and business tax returns, recent bank statements, year-to-date profit and
loss statements, and documentation of other assets which prove financial stability. Lenders also consider details about the length of time you have been self-employed
and how long you’ve done the type of work you are doing.

Lenders may review legal documents that established the business entity as an S-Corp, LLC, or Partnership. The financial strength of the business, demand for its
products and services, and future outlook will all be considered in the approval process.

Exceptions to the two year rule for self employment do exist.

There is a difference between a borrower who is self-employed for one year who has worked in the same field for many years, compared to the borrower who is self-employed for one year in a new line of work.

For example:
• If you were a W2 employee in the same field of work for five to seven years, earning $50,000, and opened your own business less than two years ago, you may not need a two year self-employment history because you’re in the same field and earning similar or more income.

• If you are a self-employed borrower in a new line of work, you may need to wait until you can provide two years of income stability even if you have the current income to qualify and are making more than you were prior to opening your new business. In this example, you may have adequate income but lack a long-term history in your new line of work.

Bottom Line: Work with an experienced loan officer who is skilled in helping self-employed borrowers. They can look at your overall situation, review mortgage options, and advise you regarding the timeframe needed to satisfy underwriting guidelines and obtain a loan approval.

Contact me for recommendations of lenders who are experienced working with self-employed borrowers!

Source: Mortgage Market Guide