5 Deal Breakers That Can Blindside Home Buyers

 

Purchasing a home can be a complex endeavor for even the most well-prepared home buyer.  You’ve diligently saved for your down payment, followed the market, researched agents and now you are ready to make an offer on your dream home.  Don’t let these 5 “Deal Breakers” come between you and your new home.

 

    1. Big Purchases on Credit. It is tempting to buy the furniture for your new home or a new car for the garage before the sale closes. Take care if you are making these purchases on credit. Large purchases on credit can have a major impact on your credit profile which effects your mortgage application. It’s a better plan to wait until after closing or pay cash for these transactions or you may be putting that furniture in a different living room than you originally picked them out for.

 

    1. Overpaying. Before your bank will approve your mortgage they will appraise the home you are purchasing.  If they feel you are overpaying they are likely to decline your mortgage application. If you find yourself in this situation consult with your agent on renegotiating your offer to be more in line with the bank’s appraised value.

 

    1. Purchasing too close to Foreclosure. If you are making an offer on a house which is facing foreclosure be sure to have a closing date set before the foreclosure date. Have your agent work with the lender to structure closing before the house goes back to the bank and into foreclosure.

 

    1. IRS liens. You’ve heard the old saying “Death and Taxes”.  Back taxes and liens can derail your attempts to get financing for a mortgage so be sure to have your books in order before filing your loan application.

 

    1. Comprehensive Loss Underwriting Exchange (CLUE). CLUE is a database of insurance claims for both people and property.  Your home insurance rates are determined by the information about you and the property you plan to purchase which is contained in this report. Past claims for water damage, falling trees and even dog bites from present and past owners can multiply your insurance rates. Consult your agent about the CLUE report for your future home as soon as possible once your home purchase offer is accepted.

 

    When purchasing a home there will be challenges which you can plan for and the unexpected hurdles.  By educating yourself as a consumer and choosing a well trained real estate agent you can avoid many of the pitfalls of 21st century home ownership.

     

    What about you? Tell us if you have had any “deal breaker” experiences.

    Posted on October 4, 2019 at 12:00 pm
    Fort Collins | Category: Blog, For Buyers | Tagged , , , , , ,

    The Impact of Staging Your Home

    For more than 20 years, the benefits of staging a home have been well documented. Numerous studies show that staging helps sell a home faster and for a higher price. According to the National Association of REALTORS®, 88 percent of home buyers start their search online, forming impressions within three seconds of viewing a listing. When a home is well staged, it photographs well and makes the kind of the first impression that encourages buyers to take the next step.

    Studies also indicate that buyers decide if they’re interested within the first 30 seconds of entering a home. Not only does home staging help to remove potential red flags that can turn buyers off, but it also helps them begin to imagine living there. Homes that are professionally staged look more “move-in ready” and that makes them far more appealing to potential buyers.

    According to the Village Voice, staged homes sell in one-third less time than non-staged homes. Staged homes can also command higher prices than non-staged homes. Data compiled by the U.S. Department of Housing and Urban Development indicate that staged homes sell for approximately 17 percent more than non-staged homes.

    A measurable difference in time and money

    In a study conducted by the Real Estate Staging Association in 2007, a group of vacant homes that had remained unsold for an average of 131 days were taken off the market, staged, and relisted. The newly staged properties sold, on average, in just 42 days, – which is approximately 68 percent less time on the market.

    The study was repeated in 2011, in a more challenging market, and the numbers were even more dramatic. Vacant homes that were previously on the market for an average of 156 days as unstaged properties, when listed again as staged properties, sold after an average of 42 days—an average of 73 percent less time on the market.

    Small investments, big potential returns

    Staging is a powerful advantage when selling your home, but that’s not the only reason to do it. Staging uncovers problems that need to be addressed, repairs that need to be made, and upgrades that should be undertaken. For a relatively small investment of time and money, you can reap big returns. Staged properties are more inviting, and that inspires the kind of peace-of-mind that gets buyers to sign on the dotted line. In the age of social media, a well-staged home is a home that stands out, gets shared, and sticks in people’s minds.

    What’s more, the investment in staging can bring a higher price. According to the National Association of REALTORS, the average staging investment is between one percent and three percent of the home’s asking price, and typically generates a return of eight to ten percent.

    In short, less time on the market and higher selling prices make the small cost of staging your home a wise investment.

    Interested in learning more? Contact your real estate agent for information about the value of staging and referrals for professional home stagers.

    Posted on September 30, 2019 at 10:49 am
    Fort Collins | Category: Buyers & Sellers, For Buyers, For Sellers | Tagged , , , ,

    Benefits, Risks and Things to Consider Before You Add an Accessory Dwelling Unit to Your Home

     

    Have you ever rented the unit in someone’s basement? Maybe your spouse’s mother moved into your “Mother-In-Law Unit” above your garage? Or have you ever traveled and stayed in a pool house for your stay? Commonly referred to as “Mother-In-Law” units, homeowners use these as a way to fill the space in their home and gain residual income, either from vacationers or long-term tenants.

    The official terms for these units are Additional Dwelling Units (ADU) or Detached Additional Dwelling Units (DADU’s), and are defined as extra spaces in homes and on properties where someone can live completely independent of the main house.

    These units can be almost anywhere on the property, but they are usually located in the basement, in the backyard, or above the garage. They have their own bathroom and kitchen facilities, and sometimes they share laundry with the main house.

    Thinking of adding a unit to your home? Here are some benefits and risks, as well as important aspects to consider before you build:

     

    Benefits

    Homeowners can maximize their investment by renting out the extra space to long-term tenants for short-term vacationers. These tenants can help pay off debt or create an extra stream of income to pay for other needs or wants.

    Depending on several factors, including the size of the unit, the market in the area, and other factors, each homeowner should decide which option they are more comfortable with. These decisions should be made before they list the unit for rent to best market to the right audience.

     

    Risks

    An obvious risk is that when you open your space to a stranger, there’s a possibility that things might end poorly. Either the tenants could turn out to be untrustworthy, or unreliable, leading to a financial burden.

    To minimize the risks, it’s a good idea to use an application process to check backgrounds and employment history as a tool to get to know the potential tenant. Make sure to adhere to the National Fair Housing Laws and your local regulations.

     

    Things to Consider:

    • What are the shared spaces?
      • Would you be comfortable sharing those spaces, and potentially appliances, with a new person each weekend, or would you rather get to know the long-term tenant who would use those on a consistent basis?
      • Rooms like the kitchen can be great for those who want to get more interaction from their vacation renters. However, sharing one bathroom between the homeowners and the visitors can be uncomfortable and risky.
      • Would you be okay with a long-term renter using your laundry facilities? What kind of access would they need to the house in order to use those machines?

     

    • What is the size of the ADU/DADU?
      • Is it truly a space where someone could live, or would it be too tight to fit all the necessary appliances?
      • Does the unit adhere to your local housing codes as a livable space?

     

    • How close are the units and what noise level are you comfortable with?
      • As a long-term landlord, tenants have the right to quiet enjoyment without the landlord barging into their space or controlling their activities. If the unit is in the basement and the tenant has friends or family over, that noise could permeate into your unit in the late hours of the night. A way to prevent this is to be sure to layout quiet hours and expectations before they sign the lease or make an agreement so that you and the tenant are on the same page.
      • The same goes for the rules in the vacation rental listing. Managing expectations is the first way to create a relationship with the tenants, even those there for the weekend.

     

    • What improvements are required to make the unit livable?
      • Do you need to add a kitchen or a bathroom? What are the costs associated with those improvements and would the market-rate rental prices make up for those improvements? You might not get your money back within the year, but if you’re dedicated to making the space worth it to rent it out over the next few years, these improvements, and financial obligations are necessary.
      • If these initial investments aren’t viable for your situation, it might be a good idea to look at other options to earn rent from your home, including adding roommates with whom you’re willing to share all the common spaces.

     

    Whatever you decide, it’s important to be familiar with the rental market and regulations in both your local region and your neighborhood.

     

    Do you have an ADU or DADU on your property? How do you use it? Let us know in the comments.

    Posted on September 24, 2019 at 2:16 pm
    Fort Collins | Category: For Buyers, For Sellers | Tagged , , , , , , , , , , , ,

    What to Consider Before You Build

    If you’re short on space but don’t want to move, a home addition is an attractive way to solve your woes and turn your current home into your dream home.

    Whether you’re adding a whole new room or a more modest addition, it can turn into a major construction project; with architects and contractors to manage, construction workers traipsing through your home, hammers pounding, and sawdust everywhere. Although new additions can be a great investment, the cost per-square-foot is typically more than building a new home, and much more than buying a larger existing home.

    Before you make the leap, consider the following:

     

    Define your needs

    To determine if an addition makes sense for your situation, start by defining exactly what it is you want and need. By focusing on core needs, you won’t get carried away with a wish list that can push the project out of reach financially.

    If it’s a matter of needing more space, be specific. For example, instead of just jotting down “more kitchen space,” figure out just how much more space is going to make the difference, e.g., “150 square feet of floor space and six additional feet of counter space.”

    If the addition will be for aging parents, consult with their doctors or an age-in-place expert to define exactly what they’ll require for living conditions, both now and over the next five to ten years.

     

    Types of Additions

    Bump-out Addition

    “Bumping out” one or more walls to make a first-floor room slightly larger is something most homeowners think about at one time or another. However, when you consider the work required, and the limited amount of space created, it often ends up to be one of your more expensive approaches.

    First Floor Addition

    Adding a whole new room (or rooms) to the first floor of your home is one of the most common ways to add space to a home. You can easily create a new family room, apartment or sunroom. But this approach can also take away yard space.

    Dormer Addition

    For homes with steep rooflines, adding an upper floor dormer may be all that’s needed to transform an awkward space with limited headroom. The cost is affordable and, when done well, a dormer can also improve the curb-appeal of your house.

    Second-Story Addition

    For homes without an upper floor, adding a second story can double the size of the house without reducing surrounding yard space. But be cautious not to ruin the value of homes next to you when you do this, the second story might not be worth the drama on your block.

    Garage Addition

    Building above the garage is ideal for a space that requires more privacy, such as a rentable apartment, a teen’s bedroom, guest bedroom, guest quarters, or a family bonus room.

     

     

    Permits required

    You’ll need a building permit to construct an addition—which will require professional blueprints. Your local building department will not only want to make sure that the addition adheres to the latest building codes, but also ensure it isn’t too tall for the neighborhood or positioned too close to the property line. Some building departments will also want to ask your neighbors for their input before giving you the go-ahead.

     

    Requirements for a legal apartment

    While the idea of having a renter that provides an additional stream of revenue may be enticing, the realities of building and renting a legal add-on apartment can be sobering. Among the things you’ll need to consider:

    • Special permitting—Some communities don’t like the idea of “mother-in-law” units and therefore have regulations against it, or zone-approval requirements.
    • Separate utilities—In many cities, you can’t charge a tenant for heat, electricity, and water unless utilities are separated from the rest of the house (and separately controlled by the tenant).
    • ADU Requirements—When building an “accessory dwelling unit” (the formal name for a second dwelling located on a property where a primary residence already exists), building codes often contain special requirements regarding emergency exists, windows, ceiling height, off-street parking spaces, the location of main entrances, the number of bedrooms, and more.

    In addition, renters have special rights while landlords have added responsibilities. You’ll need to learn those rights and responsibilities and be prepared to adhere to them. Be sure to talk to your Windermere Real Estate Agent or a local Property Manager about municipal, state, and federal laws.

     

    Average costs

    The cost to construct an addition depends on a wide variety of factors, such as the quality of materials used, the laborers doing the work, the type of addition and its size, the age of your house and its current condition. For ballpark purposes, however, you can figure on spending about $200 per square foot if your home is in a more expensive real estate area, or about $100 per food in a lower-priced market.

    You might be wondering how much of that money might the project return if you were to sell the home a couple years later? The answer to that question depends on the above details; but the average “recoup” rate for a family-room addition is typically more than 80 percent.

     

    The Bottom Line

    While you should certainly research the existing-home marketplace before hiring an architect to map out the plans, building an addition onto your current home can be a great way to expand your living quarters, customize your home, and remain in the same neighborhood.

    Posted on July 12, 2019 at 12:00 pm
    Fort Collins | Category: Colorado Housing, For Buyers, Home Builders | Tagged , , , , , , , ,

    The Risks and Rewards of Purchasing a Bank-Owned Home

     

    The process of purchasing a home directly from a lender can be long and arduous, but could very well be worth it in the end. If you have your sights on a particular home or are looking to find a deal on your first, working directly with the lender may be your only option. Purchasing a bank-owned home is not for the faint of heart, here are some tips for negotiating the REO process:

     

    1. Be prepared: The condition of bank-owned properties are often poor and hard to show. Past owners may have departed on bad terms, leaving the home in poor condition with foul smells, missing appliances, wires are taken from breakers, gas fireplaces gone, even bathrooms without toilets and sinks.

     

    2. Understand the costs: Maintenance or repairs may be necessary since these homes have been vacant for an unknown period of time–sometimes months or years. Keep in mind, when they were occupied the owners could have been under financial hardship, preventing them from doing regular seasonal care or repairs when needed. Remember as well that the bank is trying to sell the house immediately, so you will receive a financial break in the price rather than a willingness to negotiate on the maintenance and repair issues.

     

    3. Accept the unknown: In traditional real estate transactions, homeowners fill out Form 17 regarding important information about the history of the house. A bank-owned home is either exempt or marked with “I don’t know” throughout the document. Not having the accuracy of this 5-page disclosure form could leave you with a lot of unanswered questions on the history of the home.

     

    4. Know what is non-negotiable: The pricing on the house may not get much lower. Some of these properties can be “a dream come true” if you get them at an amazing price, or they could be your worst nightmare. Do your due diligence researching any property, and conduct all necessary inspections to safeguard yourself. Some major repairs may be negotiable, but will likely not reduce the home price.

     

    5. Make a clean offer: The higher the price you can offer, the better. Include your earnest money, keep contingencies to a minimum, and suggest a reasonable closing date. The simpler your offer is, the higher chance you have of the bank accepting your offer or countering in a reasonable time period.

     

    6. Be patient: Consult with a professional who handles bank owned home purchases to help you negotiate the pathway to homeownership. The process of purchasing a bank-owned, foreclosed or short-sale home is typically longer than a typical real estate sale.

    Posted on July 9, 2019 at 10:48 am
    Fort Collins | Category: For Buyers, Mortgage | Tagged , , , , , , ,

    Ten Qualities to Look For in Your Real Estate Agent

    Buying a home is one of the most significant financial and emotional purchases of a person’s life. That’s why it is so important to find an agent that can not only help you navigate the home search process but one who can also answer your questions and represent your needs from start to finish. Most importantly, your agent should care about your happiness and ensuring that you find the home that best fits your needs.

    Here are some qualities to consider when selecting a real estate agent:

     

      1. Likable. More than likely, you will be spending a lot of time with your agent, so look for someone that you enjoy interacting with.
      2. Trustworthy. One of the best ways to find an agent who you feel you can trust is to ask friends and family for a referral. Another way to do this is to interview different agents and ask for client references.
      3. Effective listener. While your agent can’t read your mind, they should be able to make educated recommendations and offer advice by listening closely to your needs. Make sure you talk to your agent about your priorities, what types of features appeal to you, as well as any factors that could be deal breakers. This will arm your agent with everything they need to help find you the perfect home.
      4. Qualified and experienced. Make sure your agent has the qualifications and experience to meet your specific needs. For example, some agents have more experience with short sales, while others might be experts on certain neighborhoods or types of housing. Find someone who is good at what you’re looking for. Ask specific questions when you interview them so you can get a better idea of what they’re great at, and if they’ll be a good fit for your search.
      5. Knowledgeable. A great agent is someone who is out in the neighborhoods, exploring communities, visiting listings, up to date with market and industry news, and collecting all the information that you need to make an informed, confident decision about your real estate needs.
      6. Honest. Your agent should be upfront and honest with you about every aspect of your home search process – even if it involves delivering bad news. The best real estate agents are more concerned about finding the right home for their clients, not just the home that brings in the fastest commission check.
      7. Local. Every community is different and all real estate is local, so it’s important to find someone who really knows the local market and can provide you with whatever information you need to familiarize yourself with a particular area.
      8. Connected. A well-connected agent will have relationships with lenders, inspectors, appraisers, contractors, and any other service provider you might need during your home search.
      9. Straightforward. You want an agent who will work hard to help you find the best home, but you also want someone who will be straightforward with you about the process, the market reality, and what is realistic for you.
      10. Committed. Your agent should be in it for the long haul, meaning that they’re looking out for your best interests every step of the way, no matter how long the process takes. The best way to find an agent with these qualities is by asking around. In all likelihood, someone within your circle of friends or family will have experiences to share and professionals to recommend, if not, reach out and we can connect you with a qualified and reliable Windermere Real Estate Agent. Contact us here.
    Posted on June 25, 2019 at 2:26 pm
    Fort Collins | Category: Colorado Real Estate, For Buyers, For Sellers | Tagged , ,

    To Buy New or Old, That is the Question

    We are often asked, “Which is the better buy, a newer or older home?” Our answer: It all depends on your needs and personal preferences. We decided to put together a list of the six biggest differences between newer and older homes:

     

    The neighborhood

    Surprisingly, one of the biggest factors in choosing a new home isn’t the property itself, but rather the surrounding neighborhood. While new homes occasionally spring up in established communities, most are built in new developments. The settings are quite different, each with their own unique benefits.

    Older neighborhoods often feature tree-lined streets; larger property lots; a wide array of architectural styles; easy walking access to mass transportation, restaurants and local shops; and more established relationships among neighbors.

    New developments are better known for wider streets and quiet cul-de-sacs; controlled development; fewer above ground utilities; more parks; and often newer public facilities (schools, libraries, pools, etc.). There are typically more children in newer communities, as well.

    Consider your daily work commute, too. While not always true, older neighborhoods tend to be closer to major employment centers, mass transportation and multiple car routes (neighborhood arterials, highways and freeways).

     

    Design and layout

    If you like VictorianCraftsman or Cape Cod style homes, it used to be that you would have to buy an older home from the appropriate era. But with new-home builders now offering modern takes on those classic designs, that’s no longer the case. There are even modern log homes available.

    Have you given much thought to your floor plans? If you have your heart set on a family room, an entertainment kitchen, a home office and walk-in closets, you’ll likely want to buy a newer home—or plan to do some heavy remodeling of an older home. Unless they’ve already been remodeled, most older homes feature more basic layouts.

    If you have a specific home-décor style in mind, you’ll want to take that into consideration, as well. Professional designers say it’s best if the style and era of your furnishings match the style and era of your house. But if you are willing to adapt, then the options are wide open.

     

    Materials and craftsmanship

    Homes built before material and labor costs spiked in the late 1950s have a reputation for higher-grade lumber and old-world craftsmanship (hardwood floors, old-growth timber supports, ornate siding, artistic molding, etc.).

    However, newer homes have the benefit of modern materials and more advanced building codes (copper or polyurethane plumbing, better insulation, double-pane windows, modern electrical wiring, earthquake/ windstorm supports, etc.).

     

    Current condition

    The condition of a home for sale is always a top consideration for any buyer. However, age is a factor here, as well. For example, if the exterior of a newer home needs repainting, it’s a relatively easy task to determine the cost.  But if it’s a home built before the 1970s, you have to also consider the fact that the underlying paint is most likely lead based, and that the wood siding may have rot or other structural issues that need to be addressed before it can be recoated.

    On the flip side, the mechanicals in older homes (lights, heating systems, sump pump, etc.) tend to be better built and last longer.

     

    Outdoor space

    One of the great things about older homes is that they usually come with mature tress and bushes already in place. Buyers of new homes may have to wait years for ornamental trees, fruit trees, roses, ferns, cacti and other long-term vegetation to fill in a yard, create shade, provide privacy, and develop into an inviting outdoor space. However, maybe you’re one of the many homeowners who prefer the wide-open, low-maintenance benefits of a lightly planted yard.

     

    Car considerations

    Like it or not, most of us are extremely dependent on our cars for daily transportation. And here again, you’ll find a big difference between newer and older homes. Newer homes almost always feature ample off-street parking: usually a two-care garage and a wide driveway. An older home, depending on just how old it is, may not offer a garage—and if it does, there’s often only enough space for one car. For people who don’t feel comfortable leaving their car on the street, this alone can be a determining factor.

     

    Finalizing your decision

    While the differences between older and newer homes are striking, there’s certainly no right or wrong answer. It is a matter of personal taste, and what is available in your desired area. To quickly determine which direction your taste trends, use the information above to make a list of your most desired features, then categorize those according to the type of house in which they’re most likely to be found. The results can often be telling.

    If you have questions about newer versus older homes, or are looking for an agent in your area we have professionals that can help you. Contact us here.

    Posted on June 20, 2019 at 9:00 am
    Fort Collins | Category: Blog, For Buyers | Tagged , , , , , , ,

    Five Things to Consider When Downsizing

    Downsizing is on the minds of many homeowners today. Some are ready to retire, others want to live more simply, and many want to save money and say goodbye to home maintenance. If you can relate to any of those sentiments, ask yourself these five questions:

     

    Have you done the math?

    The financial savings that can be generated by downsizing can be significant – especially as they add up over time. When doing the math, make sure the move will save money, rather than spend unnecessarily.

     

    Have you researched elder-care options?

    Many homeowners hold on to their current home longer than they should because their parents / parents-in-law may need to come live with them in the future. While a noble gesture, there are many excellent elder care living options available today. Often, all it takes is a tour of those facilities to realize that your loved one may actually be happier, and far better served, in a place devoted to their care and happiness.

     

    Have you considered off-site storage?

    You don’t need to immediately discard a big chunk of your belongings in order to downsize. In fact, trying to do so in one fell swoop only creates needless stress. Most people find it works much better to move some of their belongings into off-site storage for six months. During that time, you can gradually incorporate some of those items into your new living arrangement, and slowly figure out what to do with the others.

     

    How do you feel about sharing costs and decision-making?

    Townhomes and condominiums are popular downsizing options. But both require that you share the decision-making and expenses associated with any maintenance and improvement projects with your neighbors and potentially an HOA. If you’re a people-person and agree that two heads are better than one, and you like the idea of sharing the cost/responsibility for expensive repairs, you’ll enjoy condo living. If not, this may not be the best option for you.

     

    Have you consulted with a real estate agent?

    Many homeowners don’t think to consult with a real estate agent until they’ve made the decision to downsize. This leads to guesstimating about some of the most important factors. The truth is, your real estate agent is someone you want to talk with very early in the decision-making process.

    Posted on June 19, 2019 at 11:00 am
    Fort Collins | Category: Blog, For Buyers, For Sellers, Living | Tagged , , ,

    The Housing Market in 2019

    Posted in Market News by Matthew Gardner, Chief Economist, Windermere Real Estate 

    The last time we saw a balanced market was late 1990s, meaning many sellers and buyers have never seen a normal housing market.  Windermere Real Estate’s Chief Economist Matthew Gardner looks at more longer-term averages, what does he see for the future of the housing market?

     

    Posted on June 14, 2019 at 10:00 am
    Fort Collins | Category: Blog, Colorado Housing, For Buyers, For Sellers, Market News | Tagged , , , ,

    Renting vs Buying: Which is better for you?

    The debate about whether it makes more financial sense to rent or buy has been raging for decades. Advocates of buying argue that when you pay rent you’re paying for someone else’s mortgage. When you buy, you are making an investment, which can significantly increase in value every year you live in the home.

    Supporters of renting say that the extra costs associated with owning a home, such as interest payments, taxes, maintenance, can add up. They add that there’s no guarantee that those expenses will be recouped when the house is sold. Instead of investing in a home, you may be better off investing your savings in stocks, bonds, and other financial securities that hold less risk.

    Matthew Gardner, our Chief Economist, forecasts, that we will not break 5% for 30-year fixed Mortgage rates for 2019, and likely won’t break it next year.

    This means that getting a mortgage is relatively cheap, raising the question, ‘Is it really worth it to keep renting?’

    Even if interest rates stay low, whether to rent or buy has a lot to do with each person’s specific situation. Here are a few considerations to make as you decide.

     

    What’s the real estate situation in your city?

    Industry groups put out reports every quarter stating the average national sales price for a home, and the average monthly payment for a U.S. rental. These reports are typically based on an average of all the cities in the U.S. But what really matters is what the numbers show when you dig into them on a local level.

    Investigate the local sales and rental markets, and you’ll see there are some cities that fall well below that average, and some that rise far above it. When comparing housing costs, be sure to base your evaluation on what’s happening in your city and neighborhood, not the nationwide averages.

     

    How long do you expect to live there?

    If you don’t plan to be living in the same place for at least five years, renting is probably your best bet financially. But if you think you’re ready to settle down for as long as 7 to 10 years, chances are very good that any home you purchase will appreciate during that time even if the economy runs into some bumps along the way.

     

    What’s the mortgage rate?

    One of the other key factors to consider is the cost of your loan (the interest you’ll pay the lender). Fortunately, our Chief Economist, Matthew Gardner, does not expect interest rates to hit or break 5 percent, meaning money is relatively cheap.

    Your mortgage rate will depend on how much money you have saved, your credit score, and other factors, so make sure to talk to a loan officer before you start looking for a home. Being pre-approved for a mortgage narrows down your price range and helps strengthen your offer when it comes time to compete for your new home.

     

    Can you pay a bit more?

    It can be advantageous to work a lower monthly payment to the bank so that you can pay a little more than the payment.

    For example, if you can afford to pay a little extra towards your mortgage bill each month, say $300 more per month, on a 30-year, $300,000 loan, can knock eight years off the life of the loan and reduce your final bill by more than $63,000. That’s savings you would never see if you rented.

     

    Will you need to make repairs or improvements?

    Buying a fixer-upper may seem like a great way to get a deal on a house, but if the money you spend on the repairs is too great, your profit could be diminished when it comes time to sell. The same is true for remodeling and improvement projects.

    Additionally, you can work with your Mortgage lender for a repair loan. This can help you get that lot you want, and help you pay for the repairs.

    But ultimately, if you can only afford a home that demands major improvements, and you don’t have the skills to do much of the work yourself, it’s probably better to rent.

     

    Do you have other ways to invest?

    Many see a home purchase as an easy way to invest—a place where they can generate savings through home equity. But others say you can make more money renting an apartment and investing your savings in stocks, bonds, and other financial securities.

    This is where a financial advisor might come in. They’ll be able to break down what you need to do in order to get the best return on your investments. They’ll also be able to see the big picture when it comes to your money.

     

    Can you rent part of the house?

    Speaking of a diverse portfolio, let your investment work for you. If you buy a house that includes a rental (extra bedroom, mother-in-law unit, etc.), you could be the landlord instead of paying the landlord. With that rental income, you could pay off the mortgage faster and contribute more to your savings. But, of course, you need to be willing to share your home with a tenant and take on the responsibilities of being a landlord or working with a professional property manager to help you with those duties.

     

    Making your decision

    To make your decision about whether to rent or buy easier, input the key financial facts regarding your situation into this Realtor.com Rent vs. Buy Calculator:  For help making sense of the results and analyzing other factors, contact an experienced Windermere Real Estate agent by clicking here.

    Posted on June 13, 2019 at 11:15 am
    Fort Collins | Category: Blog, Colorado Housing, For Buyers, For Sellers | Tagged , , , , , , , , , ,