Make it Happen–Own Your Own Home in 2017!

 So one of your New Year’s resolutions is to cut out the landlord and pay yourself rent in 2017. That’s a bold move, and an admirable one. By joining the ranks of homeowners, you’re taking a vital step to secure your financial future. For example, did you know that the difference in net worth between renters and homeowners is staggering? According to a recent Forbes article, the National Association of Realtors'(NAR) Chief Economist Lawrence Yun predicts that in 2016, the net worth gap between homeowners and renters will widen to 45x. That’s because while renters simply write a (sizable) check to their landlord each month, homeowners are earning equity each year their house appreciates. If you’re going to take the homeowner plunge, here are some important tips about buying a house in Denver Metro’s sizzling hot seller’s market.

Not sure what your budget can buy? Drive around and look at homes under contract. That’s the reality of what you can buy for your price point.

Don’t wait for a dip in prices. The whole city is waiting for that. And if it comes, it doesn’t decrease competition, it increases it. Instead, focus on your finances and be realistic about what you can afford.

Prequalify. In this seller’s multiple-offers market, most sellers will consider offers that are accompanied by a pre-qualifying letter. Using a strong local lender can also improve your chances, advises local mortgage broker Matt Carrell of Cherry Creek Mortgage Company. “If the sellers are eager for a quick close, their broker knows that large, national chains are less likely to close within 30 days than a strong local lender,” says Carrell. Ask your realtor for a list of lenders with a good track record, and talk to several lenders so you get accurate information.

First time Buyer? Look into FHA financing. Take advantage of Federal mortgages policies, advises Carrell. “If you’re a first time buyer, this is a definite advantage. You can put down as little as 3.5%. This is a great advantage to buyers with lower credit scores, such as students who are paying off student loans, or millennials who are still building up a credit history.”

Consider a fixed-rate mortgage. “Mortgage rates are already rising, and market volatility could lead to larger highs and lows than we’ve seen lately,” says Carrell. “Even if you lock in at an 1/8 of a point higher, at least you’ll be set if rates continue to rise. The last twenty years, the average was 8.3, so at today’s rates you’re still doing very well.”

More questions? Contact Link Real Estate Group–we’re here to help you become a homeowner in 2017!

 

Ask Nancy: New Loan Wrinkles for Self-Employed

You don’t have to tell the self-employed that there are extra costs that go with the benefits. In addition to the long hours and extra responsibility, getting a home loan has always added special challenges. Now that we are into the new Dodd-Frank era of federal oversight, some of the changes warrant an early heads-up.

The 2010 legislation that went into effect on January 10 created the Consumer Financial Protection Bureau, which tightened the rules lenders follow in order to discourage them issuing loans that buyers couldn’t repay. What does this mean? That lenders will require more paperwork to support the income claimed on loan applications.

If you are your own boss and getting a loan is on your horizon, take heart! Just because it may be more difficult to apply for home loan doesn’t mean it’s impossible.

The new lending rules describe eight specific factors that lenders should verify and document before advancing home loans. They include the borrower’s assets, credit history, employment status and other debt obligations. Lenders who fail to do so adequately may be legally liable if a borrower proves unable to repay.

The general rule is that borrowers must provide at least two years’ worth of personal tax returns. Since self-employed people getting a loan often have perfectly valid reasons for fluctuating annual incomes, it’s vital to talk with a broker and lender as early as possible to establish the taxable income level needed to qualify for a loan.

That talk should cover other areas. For instance, self-employed people have greater flexibility than most when it comes to reporting deductible expenses, which can result in lower net incomes. One way to counter that problem is to demonstrate that the expenses incurred will improve their business in the long term. Another approach is to show that similar expenses are not likely to re-occur.

If you are self-employed—and plan on getting a loan—planning is key. Get your ducks in a row now so the loan process doesn’t derail you later. It’s never too early to call me as an early resource before we get to move on to the fun stuff–finding your dream home!

What is a Lease Option, and is it Right for You?

What is a lease option?//www.nancyrealestateonline.com

What is a Lease Option, and is it right for you?

A lease option, also known as Lease with the Option to Purchase, is a type of contract between an owner and a tenant, in which the renter has the option of purchasing the property after a certain amount of time.

The Tenant and Landlord sign a lease for the home at a price they agree on, and simultaneously prepare the lease option. In Colorado, an attorney must draw up the lease option addendum, and Colorado-approved real estate forms must be used for the purchase.

Is this a beneficial way to buy or sell property? It certainly can be, as shown below.

Top Five Reasons to Think About Lease Options:

From the Buyer/Tenant’s Perspective:

  1. This may be an alternative to qualifying for a conventional mortgage – you can get into a house now, and not wait for 2-3 years or longer.
  2. A Percentage of your rental payment usually goes towards purchase – you don’t get that with a regular lease.
  3. You will know the house before you buy it – no surprises!
  4. You will need to offer a down payment that is not refundable – be aware that if you can’t buy, you forfeit your down payment.
  5. Seller/Landlord is responsible for all maintenance issues until you buy the home – you usually pay for the utilities.

From the Seller/Landlord’s Perspective:

Offering a lease option to a Buyer/Tenant may be a good move for you – you really can’t lose!

  1. If a Buyer/Tenant pays upfront earnest money and does not exercise the option to buy the house – you get to keep all the down payment.
  2. You keep all the tax benefits and write-offs until the home is sold.
  3. You agree on a selling price when you sign the lease option. If the market goes down, you win, but if the market goes up, you may lose that gain. You do receive rental money each month.  That amount should cover your mortgage costs.
  4. You have a Tenant/Buyer in your home that will take really good care of your home.

A lease option alternative will be more complex than a traditional purchase or property rental, but this may your best real estate alternative.  Let me know how I can help!

Nancy Page Cooper

Link Real Estate

 

Denver Metro Assistance Loan Offers FREE MONEY to Qualified Buyers!

Hello Homebuyers,

While most things that sound too good to be true usually are, here’s the exception–a 4% loan towards a home purchase that you do not need to pay back.

A Denver loan program eases the way for low and middle-income home buyers, by offering a 4% loan to qualified buyers. YOU DO NOT NEED TO PAY THIS LOAN BACK. Honest!

I’ve listed the pertinent points below:

Program: Denver Metro Mortgage Assistance Program (I call it the Denver MMA for short)

Qualifying Guidelines:
For households of 1-2 persons, income must be $91,100 or less
For households of 3+ persons, income must be $130,000 or less
Minimum FICO credit score of 640
Maximum debt-to-income ratio of 45%

Must complete HUD-approved homebuyer education.

Property must be located in one of the following areas: (Denver, Arvada, Aurora, Bennett, Boulder, Brighton, Broomfield, Castle Rock, Centennial, Commerce City, Dacono, Edgewater, Englewood, Firestone, Golden, Lakewood, Littleton, Parker, Sheridan, Thornton, Westminster, or Wheat Ridge can be purchased through this program; the home must be within the incorporated city limits of the participating city. In addition, Arapahoe County, Jefferson County and Boulder County are program participants for properties within unincorporated areas.)

Time of Loan: Available currently, with no projected end date

Amount of Assistance Available: Qualified borrowers will be granted 4% of their loan amount. Funds to be used at closing.

If you have questions, please contact me!