Colorado Springs Real Estate and Community News

Sept. 27, 2019

What Does LTV Mean When Buying a House?

LTV otherwise known as loan to value ratio, is one of the factors that many lenders use to determine the risk of a loan. It tells how much your borrowing compared to the value of the asset. The higher it is, the more risk the lenders taking on by letting you borrow money and this might translate into higher interest rates, fees, or costs for the loan itself.What Does LTV Mean When Buying a House?

LTV indicates what percentage of the purchase you are financing with an asset secured loan. It's how much protection the lender has on the value of the property. Lenders will use this loan to value ratio to determine the risk of a loan, however, it is not the only factor. A high LTV signifies more risk because if the borrower defaults on the loan, the lender may not get enough money by repossessing and reselling the asset to cover the remaining loan amount. The condition of the property, credit score, and credit history also play a huge factor in the lender's risk upon allowing you to borrow money. [Source]

How to determine the loan to value ratio:

To calculate the loan to value ratio, divide the loan about by the value of the asset. For instance, if the home is priced at $350,000 and a borrower puts down $300,000, the loan to value ratio is 85.71%. This may or may not be enough depending on the type of loan you choose. FHA, conventional or traditional loans, and VA may have different requirements for the loan to value ratio percentage. Most conventional loans need that loan to value ratio lower than 80%. The more a borrower puts down, the less risky they become. Borrowers also will receive a lower interest rate the more money they put down.

This can be a difficult thing to accomplish for first-time homebuyers. There are a lot of options for coming up with the down payment for first-time borrowers but for those who are repeat buyers, chances are they should have enough in the equity of their first home to put a substantial down payment on their next. If you have good credit and good credit history, this can mitigate some of the risks a lender takes on with a high loan-to-value ratio loan.

Related: 5 Ways to Get Free or Easy Money for a Down Payment

So how does it affect loan terms?

The loan-to-value ratio will have the greatest impact on your mortgage. If your LTV is higher than 80% you may be required to pay additional private mortgage insurance, which can cost between .3% and 1.5% of the total loan. That could be an extra $50 or $300 added to your monthly mortgage payment. This private mortgage insurance will stay on until the property reaches a loan to value ratio lower than 80% or in some cases, 78% come or you can refinance and request to be removed in the future.

If you owe more on your home than it is currently worth that means your loans LTV exceeds 100%, also called negative equity. It can be extremely tough to sell a home unless you have enough cash to pay the difference. In this case, short sales are usually a better option.

For more information on LTV and to find out if the home you are looking at is within the right LTV for your situation give us a call.

Posted in Buying a Home
Sept. 25, 2019

5 Home Upgrades That Will Attract First Time Homebuyers

Whether you are attracting a repeat buyer or a first-time homebuyer, there are always features and accents in a home that will attract the majority of buyers. But today, many first-time homebuyers are looking for these five upgrades. If it's been a while since you've updated your home, before listing, consider making these five upgrades to really attract a wealth of homebuyers.

#1. A home office.5 Home Upgrades That Will Attract First Time Homebuyers

Many millennial's and first-time homebuyers are looking for that extra space in the house for an office space. Whether people work from home or not, having a dedicated office space in a house means there is a quiet place to check email, work on projects, or just keep files.

#2. Energy-saving appliances.

If your furnace, water heater, or any of your kitchen appliances date back to the stone age (ha ha) it's time to upgrade. Homebuyers and homeowners don't want to be spending a fortune each month on energy costs so finding appliances such as a tankless water heater, high-efficiency furnace or heat pump, and high-efficiency kitchen appliances will definitely draw in the majority of first-time buyers.

#3. Smart home technology.

This could mean a Nest thermostat, which is programmable and saves energy, a Ring doorbell or security system, security cameras or motion lights, and blinds, appliances, and HVAC systems that can be controlled from your smartphone. Other simple things such as GFCI outlets that include USB chargers are also popular.

#4. Open floor plan.

Open floor plans or the lack thereof are not deal breakers but having an open gathering space definitely appeals to many first-time buyers. Emphasize an area where homeowners can gather with their friends and family such as a large kitchen island rather than a wall separating the kitchen from the dining room or family room.

#5. Neutral colors.

This doesn't necessarily mean beiges, tans, and whites any longer. Soft grays, even blues can add a neutral appeal to just about any room. Keep things either cool or warm without going crazy with accent colors.

If you're planning on selling your home choose any one or all of these upgrades to appeal to a wide range of buyers, especially first-time buyers that have their heart set on a modern, or even brand-new home. Trust me, if you can compete with those new construction properties out there, you'll win them over with some established features such as mature landscaping or fenced yards.

 

Find Out How Much Your Home is Worth

 

MORE GOOD STUFF:

5 Questions to Ask Before Selling Your Home

8 Buzzwords that Annoy home buyers

Should We Sell Now, Rent, Then Buy When Prices Drop?

6 Home Design Rules It's Okay to Break

 

 

Posted in Selling Your Home
Sept. 20, 2019

What Exactly Are Closing Costs?

Buying and selling real estate cost more than simply the exchange of how much the property cost and how much the seller receives. There are a lot of parties involved when it comes to selling and buying and transferring real estate and all of those costs are called "closing costs".What Exactly Are Closing Costs?

When you first have an accepted offer you open escrow, meaning your earnest money deposit goes into a separate escrow account handled by an escrow or title company and then went all of the documents are completed, everything checks out, everything is signed, then you close escrow, also called the closing and therefore incurs closing costs.

There are a lot of different fees included in closing costs such as courier fees, title search fees, escrow fees, commissions and more. They may include but are not limited to:

  • Deed transfer tax
  • Recording fees
  • Title insurance, title search, and premiums
  • Settlement fees
  • Loan application and origination fees
  • Points for the loan
  • Appraisal fees
  • Potential surveys
  • Home inspection (this may or may not be included in closing costs but may be paid directly to the inspector)
  • Homeowner association fees or prorated fees
  • Pay off of existing liens
  • Brokerage commissions
  • Potential attorneys fees
  • Mortgage payoff penalties if applicable

all of these fees may or may not be included in your closing costs to depending on the type of transaction. For VA loans, sellers pay the majority of the closing costs. In USDA loans, sellers may or may not agree to pay for closing costs but in most cases, for traditional, conventional, and FHA loans, both the buyer and the seller have their own closing cost fees.

Many times, these fees can be built into the purchase price of a home. For instance, if the home is listed at $300,000, a real estate agent may build in closing costs to the offer. They would submit an offer to the seller for $310,000. The extra $10,000 would cover closing costs and basically the buyer would finance their closing costs in with the home. However, the home must appraise for the inflated amount. If the home can appraise for $310,000, chances are the seller will accept the offer. If the appraisal does not come in at the requested amount, the buyer will then either need to come up with the difference or ask the seller to pay the difference.

  • The seller, buyer, or sometimes both will pay a transfer tax, recording fees, settlement fees, and potentially any attorneys fees.
  • The buyer will typically pay for any prorated building or homeowner association fees, surveys, the appraisal, home inspection, loan application and origination fees, and points. The buyer may also pay for a title search and title insurance.
  • The seller will typically pay for any existing liens, real estate brokerage commissions such as buyers agent commissions and listing agent commissions, and their mortgage payoff penalty if it applies.

These closing costs will either be built into the purchase price of the home and finalized upon closing, when buyer and seller sign the final documents, or buyer and seller will need to bring money to the closing table. This can be in the form of a cashiers check, money order, or sometimes even a personal check.

If you have more questions on closing costs, who pays what, and any unusual fees you might see on your closing statement, feel free to leave us a comment below or contact our office and speak to an agent directly.

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Sept. 18, 2019

Should We Sell Now, Rent, Then Buy When Prices Drop?

Should We Sell Now, Rent, Then Buy When Prices Drop?

I've gotten this question several times before and actually just heard it on the radio today in a financial advice segment so I thought I would address it. 

"Should I sell my house now while the market is good, rent for a while and buy when the market crashes?"

Of course, this is assuming that the market is going to crash but are we really in a housing bubble? Before the subprime mortgage bust in 2007 and 2008, homes were rapidly increasing in value and there were multiple bids, escalation clauses, and people were buying homes they really couldn't afford. I'll never forget helping a couple that worst going from a $500 a month rent to a $2500 a month mortgage. I strongly urged against it but their mortgage person said they could totally do it and they would've sold their firstborn child to get into this house. I highly doubt that they are still in that home today but we certainly don't want people buying homes they can't afford, however, the federal government has done a lot to prevent these predatory lending practices. Verifying employment, income, and debt is becoming stricter and mortgage lender certainly don't want you bailing on a mortgage a year or two after obtaining it. The last thing banks want is real estate on their books. They prefer you to stay in the home and that means doing everything possible to verify your income and make sure you can actually afford the home you want.

That being said, are we headed for another housing market crash? The housing market is very similar to the stock market. It has its ups and downs, crashes and rises, but it eventually continues to go upward. The housing market is very similar. Over the years we may have crashes but as long as you hang on to the investment it will automatically increase. If you're buying penny stocks, that is high risk and there is much more of a chance of losing your money or your house if you buy and sell rapidly. If you purchased a home in the 1990s, chances are it has probably tripled in value. If you sold now and waited to buy, you may or may not get a better deal. Sticking the money in a bank or in a high interest-earning account might give you a little bit more, but of course, there is no guarantee on the housing market. We can't really predict housing market crashes. We may see a dip here or there in the next couple of years, but chances are it will come back with a vengeance within 2 to 10 years.

So it's really a risk. The housing market may drop a little in the future but most analysts and economists don't see a drastic drop as we did 12 years ago. Chances are, homes will continue to increase so buying now, especially if you don't have to change your mortgage payment too much, might be ideal. It really comes down to when you need to buy or sell. If you need to buy a home, now is the best time. If you need to sell for whatever reason, now is the best time.

Call our office to find out what's available in your real estate market today throughout Colorado Springs or feel free to give us some information on your home and we can tell you what it's currently worth.

More Great Tips:

5 Questions to Ask Before Selling Your Home

I Just Bought a House and in One Month Have a New Mortgage Company

How to Know We're in a Sellers Market

The One Real Estate Tip We Should Stop Believing

 

 

Posted in Selling Your Home
Sept. 10, 2019

6 Home Design Rules It's Okay to Break

Who says you have to color within the lines? Some of the most amazing home designs and trends I've seen have followed no rules and have absolutely hit it out of the park. So here are six home design rules that are okay to break.

6 Home Design Rules It's Okay to Break

#1. Furniture always has a specific place in each room.

Interior decorators say that you need to pull furniture away from the walls, create sitting areas, and have specific seating places or furniture placements for each room but that doesn't always make sense for every room. Don't be afraid to break tradition in order to be as practical as possible for your lifestyle. Measure the length and height of each wall and work around your architectural features for a design that works for your lifestyle and the furniture you already have.

#2. Keep the room looking uniform.

Everything must have balance, feng shui, and be traditional… Not! Maybe you want to mix a little mid-century modern with a vintage piece that's been in your family for years? Don't be afraid to put more modern design extra traditional pieces especially if you're showcasing those favorite pieces. Interior designers say that they plan to buy more furniture from artists and craftsmen rather than big-name furniture designers in order to create a unique look for each room.

#3. Every home needs specific rooms.

Not every home needs a specific dining room, formal living room, or family room, so don't be afraid to break out of the mold of all traditional rooms in every home. Work with your family, your furniture, and what fits your lifestyle.

#4. Always add an accent splash of color.

You've heard the old saying to keep everything neutral and use pillows or accent pieces for that pop of color and while neutral walls may be the best for a house that's on the market, if you don't love it, don't stick with the norm. Painting an accent wall or even an entire room may be the easiest way to change a space.

6 Home Design Rules It's Okay to Break

#5. All fixtures and finishes should match.

Trendy brushed nickel, aged patina, and all one color hardware is not always what makes a room pop. Embrace mixed metal and do things that make you feel comfortable. Perhaps you found lighting structures from a vintage or rehab store that work perfectly in the hall or a room but you don't have enough for the entire house. Go with what makes you feel comfortable and something you fall in love with and that doesn't necessarily mean it has to match.

#6. Don't mix patterns.

This is a habit that may be hard to break because a lot of people feel that mixing patterns might look too busy. But when paired with complementary colors or similar styles, mixed patterns can actually result in a more dynamic look. For instance, mismatched pillows and plates can be a simple way to add charm and style to a room even though nothing matches.

Bottom line, go with what you love, pieces you feel attached to, and colors and styles that bring you happiness. As Marie Kondo says, what sparks joy for you? Will probably spark joy for someone else as well.

 

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Posted in Home Improvement
Sept. 4, 2019

5 Questions to Ask Before Selling Your Home

5 Questions to Ask Before Selling Your Home

Now the kids are back in school is actually a great time to consider selling your home. Once the stress of back to school has settled and the dust has cleared, you might consider selling if you haven't tried to do it already throughout the summer or in the spring. Here are five questions to ask yourself before listing and selling your property.

#1. What is the balance on my primary mortgage and are there any other loans that need to be paid off?

You have to determine how much you need to pay off your existing mortgage and any liens or second mortgages you might have. Then consider any other payments that you'll want to cover such as paying off car loans, credit card debt or student loans. Check on the pay off balance of your existing loan to make sure that you're not underwater once you sell.

#2. What are you trying to accomplish by selling?

Do you need to move? Do you need to downsize or increase the size of your home? Are you in a financially better place or are you financially strapped and need to sell? Understanding why you need to sell can help put you in a better position overall.

#3. How much work is needed to make the home sellable?

Chances are a few of those eyesores you've been ignoring for years will need to be addressed before listing the property. Is it just a leaky faucet or something more serious with the plumbing? You'll need to attend to all small repairs and issues as well as stage your home in preparation for the listing. You might consider having an inspection done prior to listing the home so that you've covered all of your bases and won't be surprised when buyers uncover something.

Read More: The 5 BEST Home Staging Tips

#4. Is at the right market and time to sell the house?

Timing in the market is everything and while April, May, and June maybe some of the peak seasons to list a property, people are buying and selling year-round. If you need to sell, you need to sell and the same goes with buyers, so don't be too concerned about the time of year. However, the market will play a huge factor in how quickly the home will sell and at what price. Talk to your agent about whether we are in a buyers market or a seller's market and how to advertise appropriately.

#5. What are your future plans?

You need to know where you're going before you sell your property. Are you buying a new home? Are you considering renting? Are you moving to a new location, city, or even state? Should you purchase a new home first or wait until your current home was under contract? Having a plan moving forward will put you in a better position overall and help with the stress of the move.

More: Tips to Close on a Home FAST

If you think you're ready to sell and would like to find out how much your Colorado Springs home is currently worth please contact one of our agents or click on the above link.

Posted in Selling Your Home
Sept. 2, 2019

I Just Bought a House and in One Month Have a New Mortgage Company

A common question about a month or two after a homebuyer has finalized the payment on a property is who do I send the mortgage payment to? It seems like many lenders start out with one mortgage company and then in a month or two there's a new mortgage company that you have to send your payment to. It can be very confusing to buyers. If a new lender or mortgage company took over your mortgage what can you do and how do you know it's legitimate?I Just Bought a House and in One Month Have a New Mortgage Company

There are so many scams out there nowadays that it seems anyone could say that they are a mortgage company and get you to send your mortgage payment to them instead of where it needs to go. And this has caused a lot of problems. The actual mortgage company has called wondering why they haven't received a mortgage payment when a homeowner says they have been sending it religiously. So how can you protect yourself and what's really going on here?

It's quite common for mortgages to be bought and sold on the market. You may get a letter in the mail from a mortgage servicer stating that your mortgage has been sold. They may do this to raise capital, one company is closing, they're switching their focus, or that was the plan all along and you may not have realized it. So what can you do?

Pay attention to all notices in the mail.

Many people don't pay enough attention to their mail. If you skim letters or notices thinking it's an advertisement, you may miss this notice. If you have any type of debt including mortgages, credit cards, or student loans, your loan servicer may typically communicate only through the mail and if you miss that letter you could be damaging your finances.

Check your credit report often.

Yes, it is possible to miss something in the mail so it's important to check your credit report on a regular basis. This will show your current and past debt and who holds all of it. If you notice a discrepancy, contact them right away.

Confirm with your original lender.

When you get a notice in the mail that your mortgage has been sold call your original mortgage company to verify this.

Maintain records. 

Make sure that you keep all records from the original mortgage company and any follow-up companies and you can certainly talk with your mortgage advisor, lender, or maybe even your real estate agent for clarification.

Your mortgage can be sold at any time without your consent even though it may not change your terms or your price but make sure that you are sending your mortgage amounts to the right company.

 

MORE:

 

3 Ways to Save Money on Closing Costs

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Posted in Buying a Home
Aug. 30, 2019

3 Ways to Save Money on Closing Costs

3 Ways to Save Money on Closing Costs

Everyone wants to save money and buying a home is probably one of the most expensive things you can do even though most of the fees are wrapped up in the mortgage payment. However, closing costs, appraisals, inspections, and down payments are almost always out-of-pocket so how can you save money on your mortgage closing costs? Here are three simple ways to save money on closing costs the next time you buy a home.

Negotiate with the seller.

Closing costs include several different fees and services that you don't have to necessarily pay for all of them. Seller credits are away for the seller to pay for some of these closing costs. If you're purchasing a home with a VA loan, closing costs are automatically paid by the seller. Some USDA loans are the same. But, it never hurts to ask the seller to cover some of the costs.

More Tips For Saving For Your First Home

Close near the end of the month.

When you borrow money, you pay interest based on how long you have had the money at the end of the month. By closing or the end of the month, you only borrow the money for the last few days. Prorated interest is based on the borrower having money for three or four days instead of a full two or three weeks. If you close on the second or third of the month, your interest will be prorated for nearly a full month.

More Can I "Fall" Out of Escrow?

Shop around for the best loan.

Just like you are shopping for a house, you don't want to neglect shopping for the right mortgage. You can request that mortgage lenders use lower-cost providers to reduce origination fees and you can always negotiate to have these fees removed, waived, or reduced.

Then again, you could go with a zero closing cost mortgage or no closing cost loan. There are other options when it comes to paying practically nothing for zero interest but you will pay more for these loans in general and potentially have a higher interest rate.

For more information on zero down home loans, low closing costs, or how to negotiate, contact my office today.

Posted in Buying a Home
Aug. 27, 2019

20 Things You May Not Like About Homeowner Associations

20 things you may not like about HOA

Purchasing a home in a homeowners association means that you need to play by their rules and that like not be something you want to adhere to so it's important to understand those rules and bylaws before finalizing the sale. Typically, if you're considering a home in an association you can ask for the CC & R's ahead of time, often before even making an offer. These are the conditions, covenants, and restrictions of the Association that all homeowners or condo unit owners must adhere to. Here are 20 things you might not like about living in a homeowners association.

#1. Pet restrictions.

HOAs may restrict the type of pet you are allowed, the number of pets, and weight restrictions.

#2. The garage door must be left open.

This is an unusual one but there are some homeowners association that require garages to be left open, even if you're not there to prevent people from living in the garage.

#3. Curb appeal and plant restrictions.

Some homeowners associations restrict the type of plants they allow for the front yard. Hedges may only be a certain height, and you must keep your yard looking consistent with the rest of the lots.

#4. Parking restrictions.

Some associations restrict what can sit in your driveway. You may not be able to have a boat in the driveway, and RV, or even other vehicles. You must utilize the garage so this is an important thing to understand.

#5. Trash limits.

Many associations require homeowners to store their trash cans, recycle, and/or compost out of the way when it's not trash pickup.

#6. Holiday decorations.

You may be restricted on the type of holiday decorations or Christmas lights you are allowed.

#7. Required home improvement workdays.

Some associations won't allow homeowners to carry out home improvement projects on the weekend and this might even include painting, clearing out gutters, or pressure washing your driveway.

#8. Restrictions on paint color.

Many associations require homeowners to get their paint choice approved from the Association before painting your entire house the color of your choice.

#9. No outbuildings.

Some developments restrict how many outbuildings, sheds, barns, or even garden sheds are allowed on the property.

#10. No street parking.

Even if you have a party, some associations restrict street parking.

#11. No deviation from the rest of the homes.

Many HOAs restrict any decorations, home improvements, or exterior alterations that differ from each house. They may require all homes to look alike.

#12. No signs.

And this includes real estate signs as well.

#13. No rentals.

Some associations restrict how many homeowners are allowed to rent out their property. Some may not allow any rentals at all.

#14. No outdoor recreational equipment.

Some associations restrict trampolines, swimming pools, hot tubs, or even visible bikes to be seen from the road.

#15. No smoking.

Some associations have rules about smoking including recreational marijuana and cigarettes.

#16. No open window blinds.

It's rare but I have seen a homeowner association community that does not allow the residents to open their street-facing blinds inside their home because it may disrupt the beauty of the community.

#17. No car washing.

Some associations could have rules restricting homeowners from washing or even waxing their own cars in their driveways.

#18. Parking restrictions.

You may have rules and restrictions on where you can park, when you can park, and even what type of vehicles to Park.

#19. You may have to pay for delinquent accounts.

Those that have not paid their dues may get off Scott free while the other homeowners pay the difference.

#20. Special assessment fees.

Associations may tack on a special assessment fee to homeowner dues if there's something major that needs to be purchased and there are not enough reserves.

The point is, verify that these rules exist, ask questions, and make sure the Association is healthy in its reserve.

READ MORE: 

What to Know About HOA Rules

Keeping your Pets in Mind When Buying

Posted in Buying a Home
Aug. 22, 2019

The One Real Estate Tip We Should Stop Believing

There is a lot of advice out there and a lot of that is dated, some we should update and some we should completely forget. This one tip that a lot of real estate agents and brokers have touted for years probably isn't the best advice. So what is it?

Buy the worst house in the best neighborhood.The One Real Estate Tip We Should Stop Believing

Should we be buying the worst house in the best neighborhood? The short answer is no. Everyone once the deal but this common piece of advice is not for everyone. This used to be the mantra that many real estate agents touted making it the back door entry to a ritzy or high established area. You might think you're getting a good deal or a bargain property and on the flip side, getting in good with the neighbors or in a good school district. This might be an incentive to buy a home in an otherwise good neighborhood. But data says that this is not necessarily the way to go.

Zillow has promoted this type of thinking for decades. But recent studies show that the bottom 10% of houses would need to perform better than the more expensive homes in their neighborhood. Faster appreciation would indicate that buying the cheapest house in the best neighborhood is a strategy that pays off but in the long run, it doesn't. Only rarely does the bottom 10% outperformed the top 90% of homes in a certain area.

Read More: The Top 5 Buyer Mistakes

When you compare price your neighborhoods to other neighborhoods in a large metro area, the pricier areas tend to underperform as a whole. Buying the worst house in the best neighborhood can actually backfire on you. The more affluent a neighborhood is, the worse the home in its bottom 10% tend to perform. Hence, the better the neighborhood, the bigger the myth.

So what should you be looking for?

It's just slightly different than this old advice, look to buy the cheapest house in the hottest neighborhood.

Homes in hotter neighborhoods tend to appreciate in value more than those that are simply in an affluent neighborhood. If you do this, you can enjoy both higher home value and a neighborhood with many of the same features that you once had to travel for. [Source]

So, look for the least expensive home in the hottest neighborhood for the best value and the best appreciation.

Read More: Rates are Low, Should Home Buyers Be Worried?

Start your search today

 

Posted in Buying a Home