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The Truth About Down Payments

by Cory Dudley

 

 

According to a recent survey conducted by Genworth Financial Inc. at the Annual Mortgage Bankers’ Association Secondary Market Conference, mortgage professionals say that first-time buyers still believe a 20% down payment is necessary to buy in today’s market.

Nearly 40% of mortgage industry professionals surveyed believe that a lack of knowledge about the home-buying process is keeping potential buyers on the sidelines. Saving for a down payment is often cited as a huge barrier for first-time homebuyers to make the leap into homeownership.

If homeowners believe that they need a 20% down payment to enter the market, they also believe that they will have to wait years (in some markets) to come up with the necessary funds to buy their dream homes.

The greatest source of confusion cited in the survey results centered around down payments. The results are broken down in the chart below.

 

 

Rohit Gupta, CEO of Genworth Mortgage Insurance had this to say:

 

"While first-time homebuyers continue to drive the purchase market, we believe many are staying on the sidelines due to the misconception that a 20 percent down payment is required to secure a mortgage.

There are various low down payment options available today that allow prospective homebuyers to reach their dreams of homeownership sooner. It is crucial that, as an industry, we proactively educate eligible borrowers about solutions that will enable them to buy a home when they're ready."

 

Bottom Line

Don’t let a lack of understanding of the home-buying process keep you and your family out of the housing market. Let’s get together to discuss your options!

 

 

With Mortgage Rates Up Again, Should You Buy?

by Cory Dudley

 

 

Mortgage interest rates, as reported by Freddie Mac, have increased over the last several weeks. Freddie Mac, along with Fannie Mae, the Mortgage Bankers Association and the National Association of Realtors, is calling for mortgage rates to continue to rise over the next four quarters.

This has caused some purchasers to lament the fact they may no longer be able to get a rate below 4%. However, we must realize that current rates are still at historic lows.

Here is a chart showing the average mortgage interest rate over the last several decades.

 

 

Bottom Line

Though you may have missed getting the lowest mortgage rate ever offered, you can still get a better interest rate than your older brother or sister did ten years ago, a lower rate than your parents did twenty years ago, and a better rate than your grandparents did forty years ago.

 

Millenial First-Time Buyers to Drive 2017 Home Sales

by Cory Dudley

 

 

Despite the fact that a home inventory shortage is expected to maintain going into 2017, the National Association of Realtors predicts that the much-awaited influx of young, first-time "millenial" home buyers will begin trickling in these next couple years.

In general, there are many reasons why people are waiting longer to buy a home than in years past; marrying and having children later in life, massive student debt obligations to handle, and lackluster job prospects have all taken a toll on the generation entering the market now. However, experts believe a tipping point is finally approaching in 2017 and 2018, mostly because the next wave of potential buyers are in their low 30's.

 

 

The estimated weight of the student debt load currently affection 71% of millenial aged buyers is a staggering $1.3 trillion, which obviously hugely affects their ability to buy anything - let alone the prices that we've seen continuing to increase throughout Colorado, and especially in Boulder county. As a result, the median age of a first-time home buyers is now 32, matching the all-time high which was set in 2006, according to the National Association of Realtors.
 

This new generation of buyers is very much focused on making a sound financial decision. Also important are things such as safety, privacy, and more space - both indoors and outdoors. Their top reasons for buying a home are that they are getting married or moving in with a partner, growing tired of their current living space or are planning an addition to the family. Sometimes it's all three driving forces!

 

 

In contrast to 2016, when only 33% of people planning to buy a home were first-time home buyers, next year 52% of buyers eyeing the market will be first-timers. 61% of those are under 35 years old!

We are always excited and equipped to help home buyers (first-timers or seasoned) with the entire process. Our team takes care of a client from every angle, making sure that we provide above and beyond service that's both personable and knowledgeable.

Give us a call, especially if you're thinking of buying your first home in the upcoming year!

 

Marijuana Industry's Effect on Colorado Housing Market

by Cory Dudley

 

Those of us who live in 'Colorful Colorado' have always appreciated our state's beauty, sense of adventure and the lifestyle it offers to one and all.

 

(Colorado Tourism: 'Awake' video)


Since the legalization of marijuana, the infamous "Green Rush" has drawn thousands of people from all over the nation - and from overseas - to travel to and take residence in 'Colorful Colorado.'

But how has it affected our economy, and consequently, our housing market?

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Zillow ranked their "Top Ten Hottest Housing Markets for 2016" with Denver, CO in first place, Seattle, Washington in second and Portland, Oregon trailing later in the list - all locations that are actively involved in the marijuana conversation. While some families seek legal access to medical treatment and others seek the freedom to consume what most people consider to be a relatively safe recreational drug, there's no denying one thing:

 

Colorado is definitely feeling the hustle of the marijuana industry!

 

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Our population boom has always been hugely affected by tech business, and though we still have that sector to thank for driving growth in this part of the country, the marijuana industry has stolen much of the attention since it was legalized state-wide.

This is not to say that such attention comes without a hefty price - those looking to rent or buy will have more influential considerations to weigh than the exterior sidewall color of a potential home....

Inspection Complications

Prospective home buyers are running into the results of humid 'grow room' conditions when they have inspections done. "We end up doing a mold test and it came back terrible," said Peter, owner of Pillar to Post home inspection franchise in the Boulder-Denver area. "We have done more mold tests in the last two years than we have ever done before. I can't say it is all because of marijuana, but it certainly is playing a big role." (Curbed.com)

In addition to mold factoring in, many inspectors note that there are often dangerous electrical setups created in such homes, in order to accommodate the need for more power.

Are buyers typically concerned? Surprisingly, no. In Denver's seller's market, buyers are far too caught up in the 'bidding war' they currently find themselves in. Most of them are overlooking issues that they perhaps wouldn't if the market was in their favor, in order to present a competitive offer to sellers. Ultimately, buyers are taking houses 'as-is' left and right.

Population Booms

Speaking of that competition, where is it all coming from? First-time buyers are experiencing a fierce market, where cash offers are prevalent and it isn't uncommon to be offer number 29 after attending an open house mere hours ago. Millenials are also moving into Colorado in greater numbers than ever before, looking for fresh job opportunities and a the type of lifestyle that appeals to them - legalized marijuana included.

Where there are more people shopping, inventory becomes scarce. The industry is creating new jobs that have never been in the state before, which in turn brings people from all over to live and work here.

High Home Prices

Not only did the industry increase land prices for grow opportunities, but since the launch of legal marijuana, Colorado's housing prices have risen by 7.3%. Low inventory and high demand has created a red-hot seller's market that has stuck around throughout the 1st Quarter of the year.

Renter Concerns

In and around Denver specifically, residents are being forced to pay an increase in rent or move elsewhere. And for those who rent and partake in legal marijuana, restrictions could be greater and come with consequences that a homeowner need not consider. Many landlords forbid the use and/or cultivation or marijuana on the premises. Some are also asking for increased fees to cover the liability associated with such an allowance. Federally funded and multi-family HUD properties restrict the cultivation and consumption of cannabis outright.

 

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But it's not all doom and gloom! The marijuana industry has contributed to some amazing things taking place in Colorado.....

 

Here are the facts:

 

  • More than 1/3 of the total industrial space absorbed between 2009 and 2014 went to legal pot growing operations (Jessica Ostermick, Director of Reseearch at CBRE) This brought the vacancy rate down to 4.3%!

 

  • Legal Colorado pot sales jumped by more than 42% last year, bringing the state to new heights. And the marijuana industry itself is expected to experience 700% job growth within the next five years, according to ArcView Market Research

 

  • Colorado collected more than $135 million in taxes and license fees related to legal cannabis sales last year - $35 million of which will go toward school construction projects and other youth and substance-abuse programs (The Post)

 

  • Surveys of potential summertime visitors who were exposed to Colorado's tourism ads revealed that the marijuana laws influenced their vacation decisions 49% of the time, meaning more money coming into the state!

 

  • Home values have gone up since marijuana was legalized in Colorado, and you simply cannot argue the numbers - it's a great thing for current and soon-to-be sellers!

 

 

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Whether you are for or against the existence and presence of the marijuana industry in Colorado, it's certainly attracted a lot of attention, people, money and change to our state - and encouraged others around the nation to do the same.

 

 

If You're Single and Looking to Buy, Read This First!

by Cory Dudley

Single women have officially beaten out single men as a percentage of  home buyers overall. But as far as must-haves and must-knows, what might a single person need to consider? Before you take the plunge, here are some things to think about....

Know your budget, inside and out!

Being able to buy a home on your own is an impressive feat, and a very smart move toward establishing a strong and sound financial future. But make sure that you find a home that is well within your budget - if you lose your job or experience a major health issue, it is your income and yours alone that you will depend on to keep you afloat.

Who's going to clean the gutters?

While this could be appealing to certain individuals with a knack for the 'hands-on' approach, the rest of us may feel differently. As the only person with a set of keys, you're also the one solely responsible for regular (and irregular) maintenance! For individuals who aren't keen on climbing the ladder to check out that crumbling shingle or hate mowing the lawn, condominiums and town homes offer a far less daunting package.

Basically, don't buy a house that you don't feel comfortable managing on your own.

Look Forward

You've fallen for that adorable, one bedroom condo because of it's character and great location, and a week later you meet someone special at your local coffee shop. Suddenly your 'cozy charmer' seems pretty cramped! Keep in mind that someday you may add a significant other to your team, and possibly even children or additional pets. Though it may suit you for the time being, it's important to consider your potential future plans when making such an investment. Even if it means choosing a place with a spare bedroom is a smart choice - as long as it's still within your budget.

And on that note...

Always Consider Resale Value

Yes, this is a wonderful long-term investment, but there are so many reasons that single home buyers may need to change their living situation, such as relocating for a new job or a lifestyle change. It's vital that you consider resale value when looking for a home. Find something that fits you, but could also fit the next person to come along!

Choose the Right Neighborhood

Don't settle down somewhere that doesn't fit your hobbies, goals, lifestyle.. For the most part, a single man or woman often wants to be close to where the action is! You're looking for quality restaurants that offer a killer happy hour, access to rowdy sporting events, a booming nightlife nearby and shopping... However, you may also want to consider that you'll be living on your own. You want somewhere you'll feel safe and secure while relaxing at home, and not worried about if you leave for the weekend. Make sure there is low crime rate where you choose to settle down.

 

Click here if you want help falling in love with your dream house!

 

 

Housing Market to 'Spring Forward' This Year

by Cory Dudley

Housing Market To “Spring Forward” This Year | Keeping Current Matters

Just like our clocks this weekend in the majority of the country, the housing market will soon “spring forward!” Similar to tension in a spring, the lack of inventory available for sale in the market right now is what is holding back the market.

Many potential sellers believe that waiting until Spring is in their best interest, and traditionally they would have been right.

Buyer demand has seasonality to it, which usually falls off in the winter months, especially in areas of the country impacted by arctic temperatures and conditions.

That hasn’t happened this year.

Demand for housing has remained strong as mortgage rates have remained near historic lows.

The National Association of Realtors (NAR) recently reported that the top 10 dates sellers listed their homes in 2015 all fell in April, May or June.

Those who act quickly and list now could benefit greatly from additional exposure to buyers prior to a flood of more competition coming to market in the next few months.

Bottom Line

If you are planning on selling your home in 2016 and want a 'Sold' sign in your card, call us!

Thinking of Selling? Why Now May Be The Time

by Cory Dudley

 

Thinking of Selling? Why Now May Be The Time | Keeping Current Matters

It is common knowledge that a large number of homes sell during the spring-buying season. For that reason, many homeowners hold off on putting their home on the market until then. The question is whether or not that will be a good strategy this year.

The other listings that do come out in the spring will represent increased competition to any seller. Do a greater number of homes actually come to the market in the spring, as compared to the rest of the year? The National Association of Realtors (NAR) recently revealed which months most people listed their home in for 2015. Here is a graphic showing the results:

2015 Popular Selling Months | Keeping Current Matters

The three months in the second quarter of the year (represented in red) are consistently the most popular months for sellers to list their homes on the market. Last year, the number of homes available for sale in January was 1,860,000.

That number spiked to 2,280,000 by May!

What does this mean to you?

With the national job situation improving, and mortgage interest rates projected to rise later in the year, buyers are not waiting until the spring. They are out looking for a home right now. If you are looking to sell this year, waiting until the spring to list your home means you will have the greatest competition for a buyer.

Bottom Line

It may make sense to beat the rush of housing inventory that will enter the market in the spring and list your home today.


Where Are Interest Rates Headed This Year?

by Cory Dudley

Where Are Interest Rates Headed This Year? | Keeping Current Matters

With interest rates still below 4%, many buyers may be on the fence as to whether to act now and purchase a new home, or wait until next year.

If you look at what the four major reporting agencies are predicting for 2016, it may make the decision for you. The chart below averages the predictions by quarter.

Mortgage Rate Projections | Keeping Current Matters

With the exception of Fannie Mae, the experts agree that interest rates will increase by three-quarters of a percentage point, costing you more to pay back your loan.

Bottom Line

Even a small increase in interest rates can put a dent in your family’s wealth.


Are You Wondering What It Takes To Buy Your First Home?

by Cory Dudley

Are You Wondering What It Takes To Buy Your First Home? | Keeping Current Matters

There are many people sitting on the sidelines trying to decide if they should purchase a home or sign a rental lease. Some might wonder if it makes sense to purchase a house before they are married and have a family. Others may think they are too young. And still others might think their current income would never enable them to qualify for a mortgage.

We want to share what the typical first time homebuyer actually looks like based on the National Association of REALTORS most recent Profile of Home Buyers & Sellers. Here are some interesting revelations on the first time buyer:

First-Time Homebuyer Statistics | Keeping Current Matters

Bottom Line

You may not be much different than many people who have already purchased their first home. Meet with a local real estate professional today who can help determine if your dream home is within your grasp.


Obstacles to Homeownership: Perceived or Real?

by Cory Dudley

Obstacles to Homeownership: Perceived or Real? | Keeping Current Matters

Yesterday, we discussed the belief Americans have in homeownership and their desire to partake in this piece of the American Dream. We also discussed some of the obstacles preventing them from attaining that goal. However, studies have shown that many of the obstacles mentioned are perceived, not real.

A recent study by Fannie Mae, What Do Consumers Know About The Mortgage Qualification Criteria?, revealed that many consumers are either unsure or misinformed regarding the minimum requirements necessary to obtain a mortgage. Let’s break down three such challenges.

Down Payment

Perceptions

Many renters have mentioned that the lack of an adequate down payment is preventing them from moving forward with the purchase of a home. According to the Fannie Mae report:

  • 40% of all renters don’t know what down payment is required
  • 15% think you need at least 20% down
  • An additional 4% think you need at least 10% down

The Reality

There are programs offered by Fannie Mae, Freddie Mac and FHA that require as little as 3-3.5% down. VA and USDA loans offer 0% down programs. According to the National Association of Realtors, the typical down payment for a first time buyer is 6%.

Credit Score

Perceptions

Many renters have mentioned that the lack of an adequate credit score is preventing them from moving forward with the purchase of a home. According to the Fannie Mae report:

  • 54% of all renters don’t know what credit score is required
  • 5% think you need at least a 740 credit score

The Reality

Many mortgages are granted to purchasers with a credit score of less than 700. According to Ellie Mae, the average credit score on a closed FHA purchase is 687 and the average credit score on all loans is 722.

Back End Debt-to-Income Ratio (DTI)

Perceptions

Many renters have mentioned that they carry too much debt which is preventing them from moving forward with the purchase of a home. According to the Fannie Mae report:

  • 59% of all renters don’t know what DTI is acceptable
  • 25% think you need at under 25%
  • 7% think you need under 39%

The Reality

Lenders like to see a back-end ratio that does not exceed 36%. Fannie Mae’s maximum total DTI ratio is 36% of the borrower’s stable monthly income. The maximum can be exceeded up to 45% based on credit score and other requirements.

Bottom Line

Don't let a lack of knowledge or misinformation keep your family from buying a home this year. Meet with a local real estate professional who can evaluate your ability to buy now!


Displaying blog entries 1-10 of 64

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