Finance Archives | 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

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

Buying a Home Young is the Key to Building Wealth

Buying a Home Young is the Key to Building Wealth

Homeowners who purchase their homes before the age of 35
are better prepared for retirement at age 60, according to a
new Urban Institute study. The organization surveyed adults
who turned 60 or 61 between 2003 and 2015 for their data
set.

“Today’s older adults became homeowners at a younger age than
today’s young adults. Half the older adults in our sample bought
their first house when they were between 25 and 34 years old, and
27 percent bought their first home before age 25.”

The study goes on to show the impact of purchasing a home
at an early age. Those who purchased their first homes when
they were younger than 25 had an average of $10,000 left on
their mortgage at age 60. The 50% of buyers who purchased
in their mid-twenties and early-30s had close to $50,000
left, but traditionally had purchased more expensive homes.

Many housing experts are concerned that the
homeownership rate amongst millennials, those 18-34, is
much lower than previous generations in the same age range.
The study results gave a great reason why this generation
should consider buying instead of signing a renewal on their
lease:

“As people age into retirement, they rely more heavily on
their wealth rather than their income to support their
lifestyles. Today’s young adults are failing to build housing
wealth, the largest single source of wealth, at the same rate as
previous generations.

While people make the choice to own or rent that suits them at a
given point, maybe more young adults should take into account the
long-term consequences of renting when home ownership is an
option.”

Bottom Line
If you are one of the many young people debating whether buying
a home this year is right for you, or you know a young person who
can benefit from buying their first home, contact me to explore
available options!

Source: Keeping Current Matters

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