Haunted houses are for the scares and thrills that the spooky Halloween season brings. It is not, however, the curb appeal you want to have when selling a home. Remember, that curb appeal plays a huge part in if a buyer will want to buy your home or even proceed with going inside the home to get a better idea of what they are looking at. We all know that we shouldn't "judge a book by its cover," but, let's be real, houses are being judged the second that a car pulls up to the driveway. So, make sure your home looks presentable by:
Happy Halloween from the Boulder Home Zone Team
It looks like the Denver Housing Market may be starting to calm down. Whereas before, Denver stayed steady in the top three markets for homes selling quickly, now it is starting to trail behind. Denver came in one day behind the third place market, San Francisco which had 26 days on the market as an average. Until there are more homes in the mid-prices that are more affordable, however, the market will continue to lean towards a seller's market. Learn more in the Denver Business Journal below:
Is Denver housing market cooling a bit?By Ben Miller – Contributing Writer
Oct 18, 2017, 6:43am MDT Updated Oct 18, 2017, 7:14am Is Denver's housing market cooling a bit? A new study indicates that Denver's no longer a national leader in one key housing market indicator.
Denver used to be one of the nation's top three markets when it comes to homes selling quickly. Not anymore. According to the latest Re/Max National Housing Report, Denver homes are selling a tad more slowly than the three national leaders.
In the latest Re/Max report, the metro areas with the lowest Days on Market were Omaha at 23, Seattle at 25, and San Francisco at 26. Denver has barely fallen off the list of top leaders, coming in at 27 Days on Market for September. Nationally, the Days on Market for homes sold in September was 49. Days on Market is the number of days between when a home is first listed in an MLS and a sales contract is signed, Re/Max said.
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In the past, Denver was always listed at or near the top: In the previous report, Omaha and Seattle led the country at 21 days and Denver followed at 24.
But Denver still ranks near the top nationally when it comes to not having a market balanced equally between buyers and sellers. Re/Max estimates that a balanced market has a 6 months supply of housing inventory; currently the national figure is 3.6 percent.
"The markets with the lowest Months Supply of Inventory continued to be in the west with San Francisco at 1.2, Seattle at 1.5, Denver at 1.6 and San Diego at 1.8," Re/Max said.
"Plain and simple, we need more homes, particularly at the entry-level price point. Until then, it will most likely continue to be a seller's market with homes going from listed to sold quickly," said Adam Contos, Re/Max co-CEO, in a statement.
The article posted in CNBC by Kayleigh Kulp answers the question, should seniors rent or buy? Learn more below:
The big decision when you retire: Should you rent or buy?
Published 11:01 AM ET Sun, 1 Oct 2017 Updated 1 Hour AgoCNBC.com
Robyn Mancell sold her Southern California, four bedroom home four years ago when her youngest child left. She moved to a cheaper, one bedroom apartment nearby.
"There was a lot of upkeep," the 58-year-old said of her former place.
As some empty nesters and retirees decide to downsize, giving up a mortgage for a rental may be attractive, depending on where they live and their other income streams, financial and real estate experts say.
About half of seniors surveyed by Credit Sesame, a credit and loan management site, said affordability is the top reason they aren't buying homes.
Retirees 65 and over in markets like Providence, Rhode Island, Kahului and Honolulu, Hawaii, Lancaster, Pennsylvania, New Haven, Springfield, Massachussetts and Reno rent at a rate 1.2 times more than the national average, according to data compiled by realtor.com.
On the other hand, retirees own at 1.1 times the national average in markets like The Villages, Punta Gorda, Sarasota and Vero Beach, Florida, Prescott, Arizona, and Santa Fe, despite it being also cheaper to rent there, according to the realtor.com data.
A good time to transition to becoming a tenant may be when you move your retirement accounts from growth funds to safer, income generating funds, often around age 65, said William Flood, a real estate investor analyst with FitSmallBusiness.com.
"That's when buildup of real estate equity is no longer as much of a concern as how monthly carrying costs fit into a fixed budget," he said.
Before signing a lease, however, consider the following:
Tenants still have responsibilities"When people are tenants they think the landlord is going to take care of everything," said Jason Shepherd, co-founder of Denver-based Atlas Real Estate Group. Yet things like plowing the driveway, mowing the lawn and changing light bulbs still may be the tenant's responsibility.
Owners can control housing costsBeing a tenant can offer less stability if the owner decides to sell the property or boosts the rent every year, Shepherd said.
When Mancell began renting her apartment, she was spending about $600 less on rent than her mortgage. But she was also subject to 10 percent annual rent increases that eventually caught up to the mortgage.
A fixed mortgage payment can be a hedge against inflation, said Alexis Hongamen, founder of FederalRetirementAdvice.com.
Consider the value of home equityIn areas that are appreciating steadily, it may be advisable to buy.
"It generally means that the neighborhood is increasing in popularity and quality, which means rents will eventually rise [also]," said Allen Shayanfekr, cofounder and CEO of Sharestates, a real estate investment company.
Shepherd said the ability to tap your equity in a home later in life can be valuable. But be aware it could take months to sell or many weeks to refinance and tap those funds, Hongamen said.
Owning outright may stretch your dollar furtherThe tax benefits of a mortgage, insurance and property tax write-off may not be as valuable, particularly if the home is owned free and clear or has a low mortgage balance, said Flood. (And tax-reform being debated in Congress could change that.)
Selling a debt-free home and using the proceeds to pay rent also doesn't make financial sense, said Michael Alexenko, a certified financial advisor and president with St. Charles, Illinois-based Royal Asset Managers.
Assuming you netted $250,000 from a home sale, you should draw about $10,000 a year (based on a 4 percent withdrawal), which may not let you to rent a home comparable to the old one, Alexenko said.
Think about renting locally and investing remotelyIf retirees are located in a major housing market where monthly mortgage payments exceed median area rent and are in a position to invest, they should consider renting a home locally and buying another somewhere else to rent out, said Steve Hovland of HomeUnion, a real estate investment planning company.
"The mortgage on an investment property will likely be cheaper than their monthly rental payments," Hovland said.
Consider your lifestyle For some, the psychological benefit of owning and the ability to decorate and change the premises is important, said Hongamen.
Others want to move around. Four in 10 older Americans rent because it gives them more flexibility, according to the Credit Sesame survey.
Mancell, who co-owns an online trading business called Girls Gone Forex, is one of them. She is planning to join a network of live-work, short-term housing for $500 a week so she can see the world.
"Saving money wasn't really the point. I just want to be free," she said. "I don't know if I'll ever buy a house."
If you have driven around Louisville lately, you might recognize what was once old town, starting to transform into what is most notably a new, modernized, town. DELO, a development that has been in the works since 2006 is bringing Louisville up to date and in line with the prestige that it has recently gotten in the housing market. With a cute Main Street, amazing walkability, good schools and an excellent location to Boulder or Denver, families have been flocking to buy these small old homes and renovate them to modern masterpieces. While some are not happy about their "old town" with open space and little traffic becoming built up and busier, DELO is certainly giving a facelift to this gem of a town.
Along with the 60 three-story townhouse that make up DELO, retail and other luxury apartments are being built in the area as well. Already Moe's Bagels, Vic's Coffee and Growler USA have opened for business. A community plaza and park area, a pedestrian underpass and commercial space are also in the works. What was once an industrial site, is now high end living. And it doesn't stop there. Public improvements such as sidewalks, roads and the plaza area will improve much of Louisville, thanks to a $4.5 million tax increment financing.
While no U.S. cities are classified in the "bubble risk" zone, neighbors such as Toronto are experiencing increasing housing prices at a dangerous rate. In other words, income and employment levels aren't matching what is being asked to buy a home in the current housing market. And with overly priced markets so close, a corrective period could be sooner than we expect. Read more in the CNBC article below:
Toronto, London and these other major housing markets are in a risky bubble, UBS says
Diana Olick | @DianaOlick
Published 12:14 PM ET Thu, 28 Sept 2017 Updated 3:51 PM ET Thu, 28 Sept 2017CNBC.com
Home prices are rising in most major cities around the world, but in some they are rising too far, too fast.
When prices reach the so-called bubble territory, that is, overvalued in relation to fundamentals like income and employment, they are at a far greater risk of correction. While it is hard to pinpoint exactly when that correction will occur, identifying the bubbles early can offer insight and protect investors.
In the last five years, bubble risk has grown significantly in several cities, according to a new report from UBS. Toronto, Stockholm, Munich, Vancouver, British Columbia, Sydney, London, Hong Kong and Amsterdam are at "bubble risk," according to its Global Real Estate Bubble Index.
Real house prices in these cities have risen nearly 50 percent since 2011. This is far higher than local economic growth and inflation rates, and incomes and rents have risen less than 10 percent in these cities during the same period.
While no U.S. cities make that highest "bubble risk" category in the index, San Francisco and Los Angeles are considered "overvalued." Prices in San Francisco are up almost 65 percent since 2011, but has "limited bubble risk, given its strong economic fundamentals amid the astonishing boom of tech companies," according to the report.
The reasons for strong price appreciation are varied. In Canadian and European markets, prices have been able to rise swiftly due to historically low mortgage rates. In European cities, while prices are higher, homeowners' annual payments are below their 10-year average. In the U.S., low mortgage rates are also helping buyers afford more homes, but the real driver of prices is very low supply of homes for sale.
U.S. homebuilders still have not recovered from the housing crisis that began in the late 2000s, and are not back to producing even the historical average of new homes, never mind all the pent-up demand. The U.S. market also lost about a million homes to investors, who turned them into lucrative rentals, removing them from the potential for-sale stock.
'Superstar' city?Of course a bubble can't be proven until it bursts, but history proves the risk to these markets when home prices are decoupled from economic fundamentals of a local market.
"A change in macroeconomic momentum, a shift in investor sentiment or a major supply increase could trigger a decline in house prices," according to UBS researchers.
And then there is the "Superstar" scenario. This theory suggests that even when prices are out of whack with fundamentals, there are certain superstars, that will dominate. This holds true for movie stars and major metropolitan cities alike. UBS researchers suggest that Hong Kong, London and San Francisco are "Superstars." High net worth investors will always flock to these cities, and as long as supply doesn't exceed demand, prices are at less risk of weakening.
The one variable in all this is a big one: interest rates. Should rates begin to rise, slowly or swiftly, investors could pull back. "Also, the current affordability crisis may trigger policy responses that could end the housing party rather abruptly," according to the report.
Housing policy in Vancouver, specifically a tax on foreign investors in real estate, was designed to cool the overheating home prices there. As a result, more investors set their sights south, to Seattle, which now leads all U.S. markets for home price appreciation.
The housing market has been seemingly unstoppable in 2017. But that all could be coming to an end. Buyers more and more are being confronted with a similar issue: Plenty of houses, but out of the average buyer's price range. What does this mean for the housing market? As discussed below, there are huge implications because of the high supply of expensive homes but the high demand for reasonably priced homes. To put things simply, the two aren't meshing up. Many people are finding themselves stuck in the rental pattern and unable to buy. Read more about this dilemma below:
Stop sugarcoating the housing market: Economist warns that buyers face increasing troubles
Diana Olick | @DianaOlickPublished 1:02 PM ET Tue, 26 Sept 2017 Updated 2:00 PM ET Tue, 26 Sept 2017
From a broad view, the U.S. housing market looks very healthy. Demand is high, employment and wages are growing, and mortgage rates are low.
But the nation's housing market is assuredly unhealthy; in fact, it is increasingly mismatched with today's buyers. While the big numbers don't lie, they don't tell the real truth about the affordability and availability of U.S. housing for the bulk of would-be buyers.
First, several reports out this week point to both continued heat in home values as well as pushback from homebuyers. Prices remain nearly 6 percent higher than they were a year ago, nationally, with some local markets seeing double-digit annual price gains. Those prices are being driven by a severe lack of supply at the low end of the market, which is where the most demand exists. That means lower-priced homes are seeing bigger price gains than higher-priced homes because of the competition.
At the same time, sales are falling, again, because there are too few homes on the low end, and the homes that are available are very expensive.
"It sets up a situation in which the housing market looks largely healthy from a 50,000-foot view, but on the ground, the situation is much different, especially for younger, first-time buyers and/or buyers of more modest means," wrote Svenja Gudell, chief economist at Zillow in a response to the latest home-price data. "Supply is low in general, but half of what is available to buy is priced in the top one-third of the market."
Supply on the low end is tight because during the housing crash investors large and small bought hundreds of thousands of foreclosed properties and turned them into rentals. There are currently 8 million more renter-occupied homes than there were in 2007, the peak of the housing boom, according to the U.S. Census.
Investors could take the opportunity of high prices and high demand to sell these properties, but today's high rents offer them better returns.
Low supply of homes for sale might also seem like a great opportunity for the nation's homebuilders. Yes, they went through an epic housing crash, but they have since consolidated market share and righted their balance sheets. Homebuilders are simply not building enough inexpensive houses that the market needs.
That is why sales of newly built homes, like existing homes, have been disappointing. The latest read on August new home sales from the U.S. Census surprised analysts with a 3.4 percent monthly drop, along with a rise in inventory. The homes are there, they're just not selling, and it's not hard to figure out why.
"The recent home sales data has reflected a slower pace and I continue to believe it's due to more a push back on pricing," wrote Peter Boockvar, chief market analyst with the Lindsey Group, in a response to the data release.
Just 2 percent of newly built homes sold in August were priced under $150,000, and just 14 percent priced under $200,000. Compare that with the existing home market, where more than half of homes sold in August were priced under $250,000.
Builders say they would like to build more affordable homes but cannot because the math doesn't work. The costs of land, labor, materials and regulatory compliance are just too high. In addition, younger homebuyers want to live closer to urban areas, not in the far-out exurbs, where builder costs are far lower.
"It's time we stopped sugarcoating the truth with this data — the simple fact is that we are severely underproducing housing in this country, relative both to basic demographics and currently high demand from buyers," wrote Gudell, who notes that inventory is stuck at roughly mid-1990s levels, but the country has grown by more than 60 million people since then. "Buying conditions, in theory, are great right now: Jobs and incomes are growing, and rock-bottom mortgage interest rates are helping keep financing costs low. What's missing from the equation is a lack of homes actually available to buy at a price point that's reasonable for most buyers."
The trouble is, even though the market is woefully mismatched, home prices will not come down as long as there are some buyers out there willing and able to spend more and more money for less and less house.
"We expect price pressure to remain pretty strong well into the fall," said Nela Richardson, chief economist at Redfin. "First-time buyers are struggling to find a footing in this market. The first-time buyer share is down from historical levels, but the thing is, you don't need everyone to buy a house in this market. As long as there are one or two buyers who can afford, and those buyers can be investors, then the sale will go through, and that's what we're seeing at some level."
So, what does all this mean for the economy and personal wealth? It means the renter nation will persist and fewer Americans will be able to save and grow their money in a home. It also means rents will continue to rise due to high demand, leaving more Americans with less disposable income to spend.
In other words, it's not healthy.
The CNBC article by Diana Olick, Homebuyers rush to riskier mortgages as home prices heat up, supports the fact that home prices continue to increase. Along with an increase in home prices, however, is an increase in mortgages. While they have been very favorable to the buyer, slowly, mortgages are starting to get a little less attractive. What does this mean? It could have an increase on the housing market in that the demand for these high priced homes could drop. Read more below:
Homebuyers rush to riskier mortgages as home prices heat up
Diana Olick | @DianaOlick
Published 3 Hours Ago Updated 1 Hour Ago
Home prices are heating up yet again, and that is sending more potential buyers looking for ways to afford a monthly mortgage payment.
The number of adjustable-rate mortgage originations jumped just over 40 percent from the first quarter of this year to the second, according to analysis by Inside Mortgage Finance. ARMs offer lower interest rates than fixed-rate loans, and today's ARMs usually have a fixed period of at least five years. That means the rate can change after five years. Still ARMs are considered riskier than the classic 30-year fixed mortgage.
The average contract interest rate on 30-year-fixed mortgages with conforming balances was 4.11 percent last week, according to the Mortgage Bankers Association. Compare that with the rate on a five-year ARM, which was 3.38 percent. The rate on an adjustable-rate loan, by definition, will change after the fixed period, moving higher or lower, depending on the broader market rate.
ARM demand usually rises from the first quarter to the second quarter, because spring is the busiest season for homebuying, and it's when families dominate the market, searching for bigger, higher-priced homes. Still, the jump in ARMs in the spring of 2016 was 15 percent compared with this year's 40 percent jump. This makes the case that buyers this year are struggling with affordability and opting for a lower-rate product.
While mortgage rates remain very low, historically speaking, they have been inching up. The vast majority of homebuyers favored the safety of the 30-year-fixed rate mortgage since the housing crash, but weakening affordability is now changing that.
Home prices have been rising steadily for the past three years, and while it looked like the gains were flattening recently, they appear to be heating up again. Prices nationally jumped 6.9 percent in August compared with August of 2016, the biggest gain in three years. The annual gain in July was 6.7 percent, according to CoreLogic.
"One thing that's helped to fuel demand, and certainly home price growth, as much as the lean inventory of for-sale homes is that mortgage rates have really cooperated," said Frank Nothaft, chief economist at CoreLogic.
Home prices have been rising far faster than inflation, but Nothaft predicts the gains will actually ease next year, if, as he expects, mortgage rates rise. That will be the tipping point, he said, although others argue that tight supply of homes for sale, especially on the low end, will keep prices lofty despite higher mortgage rates.
Already, close to half of the nation's top 50 housing markets are overvalued, in relation to income and employment growth.
"Prices are being driven up by very tight market conditions," noted Matthew Pointon, property economist at Capital Economics. "On a per capita basis, the number of existing homes for sale is at a record low, and buyers are therefore having to up their offers to secure a home."
Pointon said home prices should actually be rising by more than 10 percent, given the tight supply, but tight mortgage lending standards are restricting that growth.
"Cautious appraisals are preventing desperate buyers from bidding too much for a home, as are strict debt-to-income ratios," he said.
While ARM loans are often blamed for the epic housing crash in the late 2000s, the current ARMs are nothing like those of the past. Products like negative amortization loans, which offered very low rates up front but then tacked that initial savings amount onto the loan itself, no longer exist.
Loans must now be fully documented and underwritten to the full length of the loan in order to make sure borrowers can pay even if the rate goes up. Lenders must also make it very clear to borrowers that their rate is only fixed for a certain term, and that it will likely go up after that term, given the current trajectory of rates overall. That, again, was not the case in the past.
The housing market in Colorado has boomed in the past year and so have the million dollar homes. Today, you can buy stunning homes in and around the metro area. Louisville, Castle Pines, Cherry Creek and even Arvada are homes to multi million dollar beauties. Check out these elaborate homes in the Denver Business Journal article, What Can You Buy in Colorado's Housing Market if Cost Was No Object, below:
What you can buy in Colorado's housing market if cost is no object (Photos)
By Caitlin Hendee – Associate Editor, Denver Business Journal
Aug 7, 2017, 14:49pm When money isn't a factor, the options for homes are almost limitless.
For example, for the $1 million to $3 million range, you can scoop up anything from a designer home in Westminster; to a private, gated house in Arvada, complete with Koi pond and smart home technology; to a custom home right next to downtown Louisville.
Or, for that $5 million mark, you can have a home in Littleton with an elevator or a golf community home nestled in Castle Pines or a Greenwood Village estate complete with guest house and basketball court.
For truly limitless budgets, such as $10 million or more, homes run the gamut: from a $10.5 million penthouse in Cherry Creek, to sprawling ranches in Telluride and Kremmling, and everything in between.
To get an idea of how far your money goes in Colorado's summer market, the DBJ rounded up homes currently on the market in 30 Colorado cities and communities based on people who have limitless budgets.
Many homes are priced between $1 million to $5 million in the metro. Some mountain town estates carry price-tags of $3 million, $10 million and sometimes more than $20 million.
> Click the image above to view photos of homes for people with a limitless budget. (Editor's note: Homes in each city/community have three photos or more included in the gallery).
We have talked about apps to help sellers sell their homes faster, but what about good apps to make the home buying process easier? Below are some apps that might help you.
Get Zillow on the app. This app will help you access information about any home you are looking for. It will also provide you with an interactive map and home value estimate. Make searching for your dream home easier and get it at your fingertips.
Redfin is the app to use when you know you have narrowed down the homes you are interested in. Redfin predicts how fast the home might sell, which saves you the heartache of potentially being too late.
Realtor.com is great when searching for homes based on the area. You will be able to find homes in the school district and neighborhood you are looking for.
Know that the city and neighborhood you are looking to buy in is safe. Dwellr arms you with statistics posted by the U.S. Census Bureau on demographics and more.If you are interested in the businesses and attractions near your location, try AroundMe. This will give you a better sense of what life would look like in the day to day.
GreatSchools is an app that will help you learn more about the schools in the area. This is a huge resource for young families looking to move.
Let's make home buying a little less stressful and a little more fun. Doorsteps Swipe is like Tinder. See pictures of homes you like and swipe right. Not doing it for you? Swipe left and move on. It's not the app to base your buying decision on, but it is a great app to start the process of looking and figuring out what kinds of homes you like.
WalkScore is an app to use if being able to walk to amenities is a must. This is especially helpful in large cities or in communities with restaurants and more. It will also offer you Bike Scores as well.
Trulia categorizes homes based on features. If a new kitchen is important to you, you can click to look at houses that fit that criteria.
HomeSnap isn't just a tool for sellers, but for buyers as well. Take a photo of a home you are interested and you will get all of the details about that home right at your fingertips.
Buying your first home can be overwhelming. There are a lot of factors that go into play that make the process nerve-racking and exciting at the same time. So, how should you prepare?David Weliver at Money Under 30 gives us some steps to take to make the first time homebuying processes easier. Read below or click Buying Your First Home? Make Sure You're Financially Prepared With These Steps to learn more.
Buying Your First Home? Make Sure You’re Financially Prepared With These Steps
By David Weliver • June 27, 2017
Getting ready to buy your first house can be daunting. Credit scores, down payments, and mortgages are all on your mind. Here’s a guide to help you get ready to make one of the biggest purchases of your life.
Buying your first home can be one of the most exhilarating — and stressful — moments of your life. But armed with the right information, you can shop for a house, apply for a mortgage, and close the deal with confidence.
Step 1: Determine how much house you can afford
The first thing to do before buying a home is to make sure it’s the right time to do so. Generally speaking, owning a home pays off financially if you will live in it for at least five years. Otherwise, there’s nothing wrong with renting. Your actual numbers may vary, but you can play with scenarios using our rent vs buy calculator.
You might disagree, but I don’t believe you should treat your home as an investment. Yes, hopefully it will appreciate over time. But you should buy it because you want a home, not an investment.
That means you should never stretch to buy your primary residence thinking you can take cash out or flip it for a quick profit in a few years. Only buy a house that you can afford today!
Although it may not always be feasible if you live in an expensive real estate market, try to keep your total housing payment under 30 percent of your gross monthly income. When you spend much more than that on your mortgage, you risk becoming “house poor” — you might live in a beautiful home but find it difficult to save or even cover other monthly expenses.
Step 2: Prepare your finances for the mortgage process
The last thing you want to do is find your dream home only to discover you’re not financially qualified to buy it. To guarantee you’re financially ready to buy your first home, you’ll need good credit, cash to close, and a verifiable income.
Check your credit
Hopefully this isn’t a a surprise, but getting a mortgage requires a good credit score. It’s a good time to check your credit reports for errors and possibly invest in a few months of a daily credit score monitoring service.
A fast way to improve your score by a few points is to pay down credit card balances and stop using them for two months before you apply for a mortgage. Also, you’ll want to avoid applying for credit (for example, a new credit card or car loan) until after you’ve closed on your new home.
If you’re buying a home with a spouse or other co-buyer, your mortgage lender will likely consider both buyers’ credit scores in the application process. That’s not to say you’re necessarily doomed if one person’s credit isn’t as good, but don’t count on things going off without a hitch just because one buyer has a stellar score.
Finally, remember that improving your credit score significantly can take at least six months, so get started if you need to!
Save cash for a down payment and other expenses
In addition to making sure your credit score is in order, you’ll also want to consider the cash you’ll need to make buying your first home a reality. Of course there’s your down payment — typically between 3.5 and 20 percent of the purchase price.
As you save money for your down payment, avoid the temptation to invest in the volatile stock market with money you hope to use in the next year or two. While you might be tempted to try to earn a greater return on your money than an online saving account paying one percent, the greatest risk is not having your money available when you’re ready to buy a house.
As you save, don’t underestimate how much money you’ll need — you might be surprised at how much cash you’ll need for closing.
Get your documentation in order
Finally, if you’re close to putting an offer on a home, begin to collect documents that you’ll need to verify your finances on the mortgage application: paystubs, W-2’s, bank statements and, if you have freelance or self-employment income, copies of your last two tax returns.
Step 3: Go shopping for a mortgage
Too often, home buyers leave mortgage shopping to the last minute and watch their dream home go to another bidder who had financing in order. Mortgage pre-approval is a free and non-binding process that presents you as a serious, qualified buyer when buying your first home.
Comparing two mortgages can be confusing. There are fixed-rates and adjustable rates, or ARMs, which are priced very differently. You can take out a mortgage for 30 years or as little as five years (interest rates are typically higher the longer the term of the loan).
Most buyers should look at fixed-rate mortgages and, indeed, the 30-year fixed rate mortgage is the most common kind of loan, by far. Still, it doesn’t hurt to become familiar with how mortgage rates work and the different kinds of loans that are available.
You may also want to run some scenarios through a mortgage calculator to see how different terms and rates will affect your monthly payment.
To make matters worse, mortgage lenders charge fees that aren’t necessarily reflected in the interest rate. There can be fees for appraising the home, checking your credit, and preparing documentation.
In some cases, you may be offered the option to pay “points” at closing that will reduce your interest rate. Points are essentially prepaid interest. This can be a tricky decision, but it can make sense if 1) you can afford to put down the extra cash and 2) expect to carry the mortgage for many, many years.
It can be a good habit to compare mortgage rates online regularly.
Private mortgage insurance (PMI)
If you put less than 20 percent down, your lender will likely charge you a monthly premium for what’s called private mortgage insurance, or PMI. Private mortgage insurance protects the bank in the event you default on your loan and the value of your home declines significantly.
Where to get mortgage rates and pre-approval
The only wrong way to get a mortgage is to walk into your local bank, ask for a loan officer and accept whatever rate she gives you without ever shopping around.
You can compare rates with any number of leading online mortgage lenders or find a local mortgage broker who will shop your application to multiple lenders on your behalf.
I often also recommend using the site, LendingTree to quickly get four or five competing mortgage rates from different banks. These rates will be more accurate than the ones you see in advertisements and websites because banks provide real rates based upon your credit profile and the location and value of the home you want to buy. Learn more about getting mortgage quotes and pre-approval from LendingTree.
Buying your first home is exciting, but there’s a lot to think about before you start looking. Start by getting all your finances in order, and using online tools to compare mortgage rates, and manage your credit score.
I am a real estate professional, serving Boulder and Denver, Colorado. My extensive knowledge of the market, coupled with my commitment to provide extraordinary service, has resulted in hundreds of successful transactions. Let me help you buy or sell your home.