This is one of those articles that you simply have to pass along, written by Luke Miller, an assistant Professor of Business at Fort Lewis College and co-director of Economic Analysis and Business Research at Fort Lewis College:
When should I buy a house? That is a question on many people's minds these days. Some markets have seen home prices cut in half (or more) over the last two years, whereas, other markets, such as Durango's, have seen home prices correct 'only' 15 percent from the peak. My answer to this question may surprise readers familiar with my column. As I still believe home prices in Durango will continue downward until 2010, it might be worth coming off the sidelines this year to purchase a home. I say this not because I believe Durango will buck the national housing trend, but because monetary policy set at the Federal Reserve level has created a rare opportunity for borrowers.Specifically, mortgages are in the 5 percent range, and possibly will be lower before this year is out. Additionally, I further believe the Federal Reserve is setting the nation up for significant inflation once we recover from this recession.Historically low mortgage rates today, combined with the potential for hyperinflation (and much higher mortgage rates) within the next couple of years, could point to home ownership sooner than later.Let me further explain my logic with a simple example. Assume a $400,000 home today, with the borrower financing 80 percent of it, or $320,000. At 5 percent mortgage rates, the monthly payment would be $1,718. Now, assume home prices fall an additional 20 percent in Durango over the next two years, but mortgage rates spike to 7 percent (still below the long-run historical average of 8 percent). This home would be selling for $320,000, with the borrower financing $256,000. The monthly mortgage payment would be $1,703. In other words, the monthly carrying cost of the home remains relatively constant with the downward move in home prices and the upward move in mortgage rates.If people believe they will call Durango home for some time, found a house they loved and qualified for a 5 percent mortgage rate, then purchasing today would not necessarily be considered a bad decision.In fact, it could be argued the monthly mortgage payment on this home will remain in a tight range over the next several years with a tug of war between home prices and mortgage rates.With no one capable of perfectly timing the market and homes a historical inflation hedge, home ownership should be considered for the right type of buyer.Let me wrap up by saying I am not unconditionally recommending home ownership. Given economic uncertainties, increased unemployment levels and the financial commitment of a mortgage, the decision to purchase a home should not be taken lightly.Further, it should be noted anyone that 'must' sell the home he or she purchases today within the next several years, will more than likely incur a loss.However, if you are confident you will be in your home for more than five years, then seriously consider that home with a view or close to downtown and great Durango schools.
Wednesday, March 18, 2009
Friday, March 13, 2009
Some Links About Durango To Let You Know More About Our Wonderful Town Part 1
So, I was having a bit of writer's cramp today, so I thought that I would be practical and give you some of my favorite links to websites about Durango, that are both fun and useful.
1.) www.durangoherald.com - A link to our local paper. It will give you a pulse to what is happening in Durango.
2.) www.fortlewis.edu - A link to our local college and all of the "goings on there".
3.) www.durangogov.org- A link to everything that deals with the city.
4.) www.durango.com - Another site devoted to linking you into everything Durango.
5.) www.buzztown.com - Here is a directory of everything local, with the opportunity to read what others have said, and to leave your own feedback.
6.) www.durangotrain.com - A link to our beloved Durango and Silverton and Narrow Gauge Railroad. For young and old, this is one of those things that you simply must check out.
7.) www.strater.com- A link to our historic Strater Hotel. Just check out the site, and you will so curious that you will have to come for a visit.
8.) www.rochesterhotel.com - another one of those places that is unique to Durango. Check it out!
9.) www.durangomountainresort.com - Everything you ever wanted to know about Durango Mountain Resort (or at least a good start).
10.) www.durangodowntown.com- Another place to go if you are looking for as much information about Durango as you can find.
Check back soon for Part 2
1.) www.durangoherald.com - A link to our local paper. It will give you a pulse to what is happening in Durango.
2.) www.fortlewis.edu - A link to our local college and all of the "goings on there".
3.) www.durangogov.org- A link to everything that deals with the city.
4.) www.durango.com - Another site devoted to linking you into everything Durango.
5.) www.buzztown.com - Here is a directory of everything local, with the opportunity to read what others have said, and to leave your own feedback.
6.) www.durangotrain.com - A link to our beloved Durango and Silverton and Narrow Gauge Railroad. For young and old, this is one of those things that you simply must check out.
7.) www.strater.com- A link to our historic Strater Hotel. Just check out the site, and you will so curious that you will have to come for a visit.
8.) www.rochesterhotel.com - another one of those places that is unique to Durango. Check it out!
9.) www.durangomountainresort.com - Everything you ever wanted to know about Durango Mountain Resort (or at least a good start).
10.) www.durangodowntown.com- Another place to go if you are looking for as much information about Durango as you can find.
Check back soon for Part 2
Thursday, March 12, 2009
Thinking of Selling Your Home
Spring is almost upon us. With that comes warm weather, and an increase in homes for sale. In looking around for articles that dealt with this very idea. I came across this one from www.411homerepair.com :
Price
The most important is price. No matter how you may feel personally about your home, it is still only worth what someone else is willing to pay for your house. Try to keep into consideration that if you overprice your home, it will not sell. Buyers are taking the time to comparison shopping more so than the past. This leads to more bargaining (this will vary depending on the neighborhood). It's possible some properties may not qualify for bank financing, and some people may not be in a position to offer to carry financing. This maybe addressed on an individual basis.
Exposure If a property is well priced and not properly exposed to the buyers in the marketplace, it most likely will not sell. By properly exposing your house just does not include just those that call on newspaper ads and yard signs. Depending on variable this could account for less than less than 35 percent of all buyers.Preparing your Home for Sale Clean everything! -- When cleaning the house, pay particular attention to the kitchens and baths. This is the clincher. If you could maintain these two areas, the buyer usually feels confident the rest of the house has been maintained.
Clear out ALL clutter -- This way not only will the rooms show better and larger, but more importantly the closets will appear larger. Anything that you will be not using in the next few months packed up and put into storage. I would suggest a garage sale or large donation to a charitable cause (check your tax adviser for potential tax write-off).Use brighter light bulbs -- This may seem odd, but by switching everything to 100 watt bulbs or larger (check fixture for maximum wattage before using a higher wattage bulb). The lights will allow the rooms to appear brighter, larger, & warmer. Some rooms may benefit by the warmer color light bulbs also.Lights! -- In addition to brighter light bulbs, open all curtains, shades and blinds. Leave all lights turned on before and during the potential buyer is at your home. The additional light makes the rooms look larger and more open.Touch up and paint -- If a potential buyer sees that you have neglected simple things like peeling paint, they may assume that you have not taken care of the heating system or appliances either.Important note: The smell of fresh paint is offensive to some people. Also your potential buyer may suspect that you are covering up a problem by painting over it. Most importantly appraisers are taught to be suspicious and investigate if they smell fresh paint.A seller's secret is to use water based latex paint and mix in 3 drops of REAL vanilla extract with each gallon. With most paint brands, this will neutralize 90% of the paint smell. Check with the paint manufacture for best results.
More Scenting Secret -- Everybody has heard that vanilla scenting is a pleasing aroma when viewing a home. Many products are available, or you could merely place one drop of vanilla extract on a hot light bulb before your agent shows the house. Whatever you do, do not use a lot of air fresheners or perfumes, some people find them offensive.Do not forget the exterior of your home -- Some studies have shown that 50% of the purchase decisions are made during the first minute of look at a home. Make sure that the exterior is in good shape. This includes, paint, siding, windows, shutters, fixtures, and most important the front landscaping.Ceilings? -- Before you start showing your home, clean the ceilings, fix any cracks or imperfections, and repaint if necessary. It is a common saying that most people never look up, but when looking at a home, people are more likely to look in places that they normal do not. If a buyer sees a water stain, they will assume there is a problem with the roof, even if you tell them it was repaired.The Personal VS. Real Property Dilemma -- The distinction between personal property and real property can be the source of difficulties in a real estate transaction. A purchase contract is normally written to include all real property; that is, all aspects of the property that are fastened down or an integral part of the structure. For example, this would include light fixtures, drapery rods, attached mirrors, trees and shrubs in the ground. It would not include potted plants, free standing refrigerators, washer/dyers, microwaves, bookcases, swag lamps, etc. If there is any uncertainty whether an item is included in the sale or not, it is best to be sure that the particular item is mentioned in the purchase agreement as being included or excluded, or simply have it removed before showing the home.
Last Run Through -- Each time someone is going to look at your home make a quick run through your home and think about anything that you might have neglected, just use common sense. Showing your Home When the agent is showing your home, let the Realtor do the job you hired them to do. Greet the Realtor and client at the door, and let them into your home. Let them know that they are welcome to look around, and you will be in the other room if they have any questions. It really does not matter where you are, but try to stay out of their way.You may ask way you are letting them wonder around your home without you to show them around. If you wander around with the Realtor and buyers, you are only going to hurt yourself. Even if the Realtor does not know his or her way around. Let them go by themselves. Each additional person in a room makes the room look smaller Buyers will not discuss concerns about the house while the owner is present. By not being in the room, you allow the agent to overcome any buyer objections. Only answer questions, not offer any other information other than what is necessary. By not offering any additional information, you are probably saving pointing out something the client didn't notice. Not appear anxious and set yourself up for a low offer or make the buyer suspicious of your motivations for selling.
Again, these are just some ideas because in today's market, it has become ever important to be able to set yourself apart.
Price
The most important is price. No matter how you may feel personally about your home, it is still only worth what someone else is willing to pay for your house. Try to keep into consideration that if you overprice your home, it will not sell. Buyers are taking the time to comparison shopping more so than the past. This leads to more bargaining (this will vary depending on the neighborhood). It's possible some properties may not qualify for bank financing, and some people may not be in a position to offer to carry financing. This maybe addressed on an individual basis.
Exposure If a property is well priced and not properly exposed to the buyers in the marketplace, it most likely will not sell. By properly exposing your house just does not include just those that call on newspaper ads and yard signs. Depending on variable this could account for less than less than 35 percent of all buyers.Preparing your Home for Sale Clean everything! -- When cleaning the house, pay particular attention to the kitchens and baths. This is the clincher. If you could maintain these two areas, the buyer usually feels confident the rest of the house has been maintained.
Clear out ALL clutter -- This way not only will the rooms show better and larger, but more importantly the closets will appear larger. Anything that you will be not using in the next few months packed up and put into storage. I would suggest a garage sale or large donation to a charitable cause (check your tax adviser for potential tax write-off).Use brighter light bulbs -- This may seem odd, but by switching everything to 100 watt bulbs or larger (check fixture for maximum wattage before using a higher wattage bulb). The lights will allow the rooms to appear brighter, larger, & warmer. Some rooms may benefit by the warmer color light bulbs also.Lights! -- In addition to brighter light bulbs, open all curtains, shades and blinds. Leave all lights turned on before and during the potential buyer is at your home. The additional light makes the rooms look larger and more open.Touch up and paint -- If a potential buyer sees that you have neglected simple things like peeling paint, they may assume that you have not taken care of the heating system or appliances either.Important note: The smell of fresh paint is offensive to some people. Also your potential buyer may suspect that you are covering up a problem by painting over it. Most importantly appraisers are taught to be suspicious and investigate if they smell fresh paint.A seller's secret is to use water based latex paint and mix in 3 drops of REAL vanilla extract with each gallon. With most paint brands, this will neutralize 90% of the paint smell. Check with the paint manufacture for best results.
More Scenting Secret -- Everybody has heard that vanilla scenting is a pleasing aroma when viewing a home. Many products are available, or you could merely place one drop of vanilla extract on a hot light bulb before your agent shows the house. Whatever you do, do not use a lot of air fresheners or perfumes, some people find them offensive.Do not forget the exterior of your home -- Some studies have shown that 50% of the purchase decisions are made during the first minute of look at a home. Make sure that the exterior is in good shape. This includes, paint, siding, windows, shutters, fixtures, and most important the front landscaping.Ceilings? -- Before you start showing your home, clean the ceilings, fix any cracks or imperfections, and repaint if necessary. It is a common saying that most people never look up, but when looking at a home, people are more likely to look in places that they normal do not. If a buyer sees a water stain, they will assume there is a problem with the roof, even if you tell them it was repaired.The Personal VS. Real Property Dilemma -- The distinction between personal property and real property can be the source of difficulties in a real estate transaction. A purchase contract is normally written to include all real property; that is, all aspects of the property that are fastened down or an integral part of the structure. For example, this would include light fixtures, drapery rods, attached mirrors, trees and shrubs in the ground. It would not include potted plants, free standing refrigerators, washer/dyers, microwaves, bookcases, swag lamps, etc. If there is any uncertainty whether an item is included in the sale or not, it is best to be sure that the particular item is mentioned in the purchase agreement as being included or excluded, or simply have it removed before showing the home.
Last Run Through -- Each time someone is going to look at your home make a quick run through your home and think about anything that you might have neglected, just use common sense. Showing your Home When the agent is showing your home, let the Realtor do the job you hired them to do. Greet the Realtor and client at the door, and let them into your home. Let them know that they are welcome to look around, and you will be in the other room if they have any questions. It really does not matter where you are, but try to stay out of their way.You may ask way you are letting them wonder around your home without you to show them around. If you wander around with the Realtor and buyers, you are only going to hurt yourself. Even if the Realtor does not know his or her way around. Let them go by themselves. Each additional person in a room makes the room look smaller Buyers will not discuss concerns about the house while the owner is present. By not being in the room, you allow the agent to overcome any buyer objections. Only answer questions, not offer any other information other than what is necessary. By not offering any additional information, you are probably saving pointing out something the client didn't notice. Not appear anxious and set yourself up for a low offer or make the buyer suspicious of your motivations for selling.
Again, these are just some ideas because in today's market, it has become ever important to be able to set yourself apart.
Tuesday, March 10, 2009
So You Need Some Money For A Downpayment?
I know that a lot of times the monthly payment in buying a house is the easy part. The hard part is the downpayment.
Well, I have a solution for some of you--- the Regional Housing Authority in La Plata County.About the RHA...The RHA was created in 2004 to help families in La Plata County live in their community. We work with the local governments to create resources that will fill the gap between what families can afford and the price of houses on the market. The RHA is a multi-jurisdictional housing authority which leverages local dollars to increase available resources for housing in La Plata County. The RHA has been enabled by state statute to operate as a separate governmental entity in the State of Colorado. The RHA’s target market is people living within La Plata County that earn less than 125% of Area Median Income ($78,000 for a family of four). The agency’s programs aim to increase resources for housing by filling the gap between what a family can afford and what product is on the market.All RHA programs depend on successful partnerships with area organizations. Non-profit partnerships include: Housing Solutions for the Southwest, Habitat for Humanity, SW Center for Independence, Community Development Corporation, Colorado Housing Inc., Volunteers of America, and Mercy Housing among others. For-profit partners include builders, architects, developers, lenders, employers and real estate brokers among others.The RHA’s funding entities are: La Plata County, City of Durango, Town of Ignacio and Town of Bayfield whose partnership is formalized in an Intergovernmental Agreement. These entities agreed to collaborate, share resources, and develop a comprehensive action plan for housing projects and programs throughout the County. They also govern the RHA through a Board of Directors whose members are appointed by each entity.
RHA’s Action Plan
1. Fair Share ProgramsThe RHA works with local governments to require development to include a percentage of resources for affordable housing.
2. Homes FundThe RHA capitalizes an investment fund to provide mortgage assistance to families and acquire land for affordable development.
3. Land DevelopmentThrough public-private partnerships the RHA acquires land to develop affordable/attainable housing.
4. Homebuyer AssistanceThe Homebuyer Assistance Program prepares homebuyers through a 9-hour homeownership classes, one-on-one counseling and mortgage assistance.
5. Policy and EducationThe RHA assists with policy development, public education and market analysis to encourage affordable housing in La Plata County.
If you would like more information checkout their website at www.rhalpc.com
Well, I have a solution for some of you--- the Regional Housing Authority in La Plata County.About the RHA...The RHA was created in 2004 to help families in La Plata County live in their community. We work with the local governments to create resources that will fill the gap between what families can afford and the price of houses on the market. The RHA is a multi-jurisdictional housing authority which leverages local dollars to increase available resources for housing in La Plata County. The RHA has been enabled by state statute to operate as a separate governmental entity in the State of Colorado. The RHA’s target market is people living within La Plata County that earn less than 125% of Area Median Income ($78,000 for a family of four). The agency’s programs aim to increase resources for housing by filling the gap between what a family can afford and what product is on the market.All RHA programs depend on successful partnerships with area organizations. Non-profit partnerships include: Housing Solutions for the Southwest, Habitat for Humanity, SW Center for Independence, Community Development Corporation, Colorado Housing Inc., Volunteers of America, and Mercy Housing among others. For-profit partners include builders, architects, developers, lenders, employers and real estate brokers among others.The RHA’s funding entities are: La Plata County, City of Durango, Town of Ignacio and Town of Bayfield whose partnership is formalized in an Intergovernmental Agreement. These entities agreed to collaborate, share resources, and develop a comprehensive action plan for housing projects and programs throughout the County. They also govern the RHA through a Board of Directors whose members are appointed by each entity.
RHA’s Action Plan
1. Fair Share ProgramsThe RHA works with local governments to require development to include a percentage of resources for affordable housing.
2. Homes FundThe RHA capitalizes an investment fund to provide mortgage assistance to families and acquire land for affordable development.
3. Land DevelopmentThrough public-private partnerships the RHA acquires land to develop affordable/attainable housing.
4. Homebuyer AssistanceThe Homebuyer Assistance Program prepares homebuyers through a 9-hour homeownership classes, one-on-one counseling and mortgage assistance.
5. Policy and EducationThe RHA assists with policy development, public education and market analysis to encourage affordable housing in La Plata County.
If you would like more information checkout their website at www.rhalpc.com
Friday, March 6, 2009
Lately a lot of people have been questioning whether or not they should buy a house right now, with the economy the way it is. The truth is, now might be the best time. I have come up with a top ten list of reasons to buy in Durango right now.
1.) After a year of owning your own home, you actually have something to show for it, as opposed to kissing your rent money goodbye.
2.) Interest rates are low.
3.) There are some really killer deals out there. (By Durango standards anyways)
4.) When you walk out your front door, chances are you will have a really great view.
5.) Little Durango is turning into quite the hotspot among vacationers, 2nd home buyers, and "locals" alike. Great restaurants and local entertainment make it a great place to spend a few days, and this does not even take in to account all the history in Durango.
6.) We have a new regional medical center that is state of the art.
7.) Between natural gas (thank you BP), the Durango Silverton Narrow Gauge Railroad, Durango Mountain Resort, Fort Lewis College, a thriving entrepreneurial spirit, and great pace of life, Durango is a "sleepy mountain town" that is definitely thriving and alive and well.
8.) Durango is home to world class skiing, mountain biking, kayaking, and many more outdoor activities. It is just a really good place just to get outside.
9.) We are 3 1/2 hours from Albuquerque and 6 hours from Denver by automobile, but we do have a regional airport, so you can commute anywhere and still be home, without having to drive a very far.1
10.) Once you have been to Durango, CO you will never forget it, and as such if can you will buy a home here.
I know I am biased...but I really like living here.
1.) After a year of owning your own home, you actually have something to show for it, as opposed to kissing your rent money goodbye.
2.) Interest rates are low.
3.) There are some really killer deals out there. (By Durango standards anyways)
4.) When you walk out your front door, chances are you will have a really great view.
5.) Little Durango is turning into quite the hotspot among vacationers, 2nd home buyers, and "locals" alike. Great restaurants and local entertainment make it a great place to spend a few days, and this does not even take in to account all the history in Durango.
6.) We have a new regional medical center that is state of the art.
7.) Between natural gas (thank you BP), the Durango Silverton Narrow Gauge Railroad, Durango Mountain Resort, Fort Lewis College, a thriving entrepreneurial spirit, and great pace of life, Durango is a "sleepy mountain town" that is definitely thriving and alive and well.
8.) Durango is home to world class skiing, mountain biking, kayaking, and many more outdoor activities. It is just a really good place just to get outside.
9.) We are 3 1/2 hours from Albuquerque and 6 hours from Denver by automobile, but we do have a regional airport, so you can commute anywhere and still be home, without having to drive a very far.1
10.) Once you have been to Durango, CO you will never forget it, and as such if can you will buy a home here.
I know I am biased...but I really like living here.
Wednesday, March 4, 2009
Why is it so Hard to Get a Home Loan?
Here is a question that has been asked, even here in Durango, CO, why is it so hard to get a home loan? This answer comes from a great article in the Realty Times written by Bob Foust, the chief executive at C21 Discovery, top selling real estate teams in southern California :
Why Is It So Difficult To Get A Home Loan? Answers To A Popular Home Buyer Question
by Bob Foust
It seems like every day someone is asking about why it is so hard to get a real estate loan. Just two years ago anyone, and I mean anyone, could get a loan to buy a house or condo. Well, the times have changed and rules from the lenders have changed right along with the times.
Think for a second of home loan guidelines being similar to the old pendulum clocks. Just a couple years ago the pendulum was to the left, and it was probably too easy to get qualified. But now the pendulum has swung all the way to the right, and it is very difficult to get qualified. Often, the lending industry swings its requirements from one extreme to the other without stopping at a sensible middle ground. For now we will not explore the cause of this change, only the new requirements. Keep in mind though that these will change over time as well, hopefully to a more moderated middle ground but only time will tell.
For those looking to get qualified in this tough market, please note the criteria below:
Fico Scores These must be better than average (600+), and when the credit report is run there must be no Bankruptcy (BK), and likely no "collections" of accounts will be allowed.
Down Payments Buyers must have some money to put down, no longer will the lenders approve 100% financing, most likely the lenders will require 10-20% down (except FHA which allows only 3% (3.5% in 2009)).
Ample Income All income will need to be verified with pay stubs two year period and IRS and State tax filings for 2-3 years. Then they will calculate your debt-to-income ratios (looking to see that you can really make the payments). Each lender has different ratios they will pass or disqualify with. As a general rule, these days they are wanting to see much smaller debt-to-income ratios. In other words, the banks want to see borrowers with more income and less outstanding debt obligations.
Stated Income This (with no verification) is no longer available, meaning quite a hardship on the self-employed, but lenders are very risk averse now. The only exception is if buyers have a very hefty down payment like over 30%.
Proof of Funds A few months worth of recent bank account statements will be required to show that money is really available for closing costs and down payments.
Reserve Funds Many lenders require that the borrower have reserve cash on hand to cover two to six months worth of payments.
Non-Occupants If the property is not going to be the home of the borrower (like a rental) then most lenders will increase the interest rate on the loan.
Limited Holdings Restrictions are also placed on many borrower that this property will not increase their rental holdings to more than 4 units. Lenders are very suspect of investors that might be over leveraging themselves.
Obviously, only very qualified people can meet the above criteria, and that is just what the lenders want in a time of uncertainty and massive losses. For the time being they can’t justify making any more high-risk loans. Hopefully, knowing what is needed in advance to get approved, buyers will understand that it is critical to prepare early and get their ducks in a row before starting the home buying process. For those lucky enough to be qualified in today’s market, a wide range of opportunity awaits them.
It should be noted that this is applicable even in Durango and La Plata County. If you are thinking about getting a loan, you need to know this information.
Why Is It So Difficult To Get A Home Loan? Answers To A Popular Home Buyer Question
by Bob Foust
It seems like every day someone is asking about why it is so hard to get a real estate loan. Just two years ago anyone, and I mean anyone, could get a loan to buy a house or condo. Well, the times have changed and rules from the lenders have changed right along with the times.
Think for a second of home loan guidelines being similar to the old pendulum clocks. Just a couple years ago the pendulum was to the left, and it was probably too easy to get qualified. But now the pendulum has swung all the way to the right, and it is very difficult to get qualified. Often, the lending industry swings its requirements from one extreme to the other without stopping at a sensible middle ground. For now we will not explore the cause of this change, only the new requirements. Keep in mind though that these will change over time as well, hopefully to a more moderated middle ground but only time will tell.
For those looking to get qualified in this tough market, please note the criteria below:
Fico Scores These must be better than average (600+), and when the credit report is run there must be no Bankruptcy (BK), and likely no "collections" of accounts will be allowed.
Down Payments Buyers must have some money to put down, no longer will the lenders approve 100% financing, most likely the lenders will require 10-20% down (except FHA which allows only 3% (3.5% in 2009)).
Ample Income All income will need to be verified with pay stubs two year period and IRS and State tax filings for 2-3 years. Then they will calculate your debt-to-income ratios (looking to see that you can really make the payments). Each lender has different ratios they will pass or disqualify with. As a general rule, these days they are wanting to see much smaller debt-to-income ratios. In other words, the banks want to see borrowers with more income and less outstanding debt obligations.
Stated Income This (with no verification) is no longer available, meaning quite a hardship on the self-employed, but lenders are very risk averse now. The only exception is if buyers have a very hefty down payment like over 30%.
Proof of Funds A few months worth of recent bank account statements will be required to show that money is really available for closing costs and down payments.
Reserve Funds Many lenders require that the borrower have reserve cash on hand to cover two to six months worth of payments.
Non-Occupants If the property is not going to be the home of the borrower (like a rental) then most lenders will increase the interest rate on the loan.
Limited Holdings Restrictions are also placed on many borrower that this property will not increase their rental holdings to more than 4 units. Lenders are very suspect of investors that might be over leveraging themselves.
Obviously, only very qualified people can meet the above criteria, and that is just what the lenders want in a time of uncertainty and massive losses. For the time being they can’t justify making any more high-risk loans. Hopefully, knowing what is needed in advance to get approved, buyers will understand that it is critical to prepare early and get their ducks in a row before starting the home buying process. For those lucky enough to be qualified in today’s market, a wide range of opportunity awaits them.
It should be noted that this is applicable even in Durango and La Plata County. If you are thinking about getting a loan, you need to know this information.
Tuesday, March 3, 2009
Why Use a Realtor?
I have heard it said many times "Why Use a Realtor?", they don't do anything and they get paid a lot of money. Well not to be defending that, but here is a short list of reasons to consider using a Realtor:
1. Your REALTOR® can help you determine your buying power -- that is, your financial reserves plus your borrowing capacity. If you give a REALTOR® some basic information about your available savings, income and current debt, he or she can refer you to lenders best qualified to help you. Most lenders -- banks and mortgage companies -- offer limited choices.
2.)Your REALTOR® has many resources to assist you in your home search. Sometimes the property you are seeking is available but not actively advertised in the market, and it will take some investigation by your agent to find all available properties.
3.)Your REALTOR® can assist you in the selection process by providing objective information about each property. Agents who are REALTORS® have access to a variety of informational resources. REALTORS® can provide local community information on utilities, zoning. schools, etc. There are two things you'll want to know. First, will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell?
4.)Your REALTOR® can help you negotiate. There are myriad negotiating factors, including but not limited to price, financing, terms, date of possession and often the inclusion or exclusion of repairs and furnishings or equipment. The purchase agreement should provide a period of time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Your agent can advise you as to which investigations and inspections are recommended or required.
5.)Your REALTOR® provides due diligence during the evaluation of the property. Depending on the area and property, this could include inspections for termites, dry rot, asbestos, faulty structure, roof condition, septic tank and well tests, just to name a few. Your REALTOR® can assist you in finding qualified responsible professionals to do most of these investigations and provide you with written reports. You will also want to see a preliminary report on the title of the property. Title indicates ownership of property and can be mired in confusing status of past owners or rights of access. The title to most properties will have some limitations; for example, easements (access rights) for utilities. Your REALTOR®, title company or attorney can help you resolve issues that might cause problems at a later date.
6.)Your REALTOR® can help you in understanding different financing options and in identifying qualified lenders.
7.)Your REALTOR® can guide you through the closing process and make sure everything flows together smoothly.
8.)When selling your home, your REALTOR® can give you up-to-date information on what is happening in the marketplace and the price, financing, terms and condition of competing properties. These are key factors in getting your property sold at the best price, quickly and with minimum hassle.Your REALTOR® markets your property to other real estate agents and the public. Often, your REALTOR® can recommend repairs or cosmetic work that will significantly enhance the salability of your property. Your REALTOR® markets your property to other real estate agents and the public. In many markets across the country, over 50% of real estate sales are cooperative sales; that is, a real estate agent other than yours brings in the buyer. Your REALTOR® acts as the marketing coordinator, disbursing information about your property to other real estate agents through a Multiple Listing Service or other cooperative marketing networks, open houses for agents, etc. The REALTOR® Code of Ethics requires REALTORS® to utilize these cooperative relationships when they benefit their clients.
9.)Your REALTOR® will know when, where and how to advertise your property. There is a misconception that advertising sells real estate. The NATIONAL ASSOCIATION OF REALTORS® studies show that 82% of real estate sales are the result of agent contacts through previous clients, referrals, friends, family and personal contacts. When a property is marketed with the help of your REALTOR®, you do not have to allow strangers into your home. Your REALTOR® will generally prescreen and accompany qualified prospects through your property.
10.)Your REALTOR® can help you objectively evaluate every buyer's proposal without compromising your marketing position. This initial agreement is only the beginning of a process of appraisals, inspections and financing -- a lot of possible pitfalls. Your REALTOR® can help you write a legally binding, win-win agreement that will be more likely to make it through the process.
11.)Your REALTOR® can help you objectively evaluate every buyer's proposal without compromising your marketing position. This initial agreement is only the beginning of a process of appraisals, inspections and financing -- a lot of possible pitfalls. Your REALTOR® can help you write a legally binding, win-win agreement that will be more likely to make it through the process.
12.)Your REALTOR® can help close the sale of your home. Between the initial sales agreement and closing (or settlement), questions may arise. For example, unexpected repairs are required to obtain financing or a cloud in the title is discovered. The required paperwork alone is overwhelming for most sellers. Your REALTOR® is the best person to objectively help you resolve these issues and move the transaction to closing (or settlement).
I hope that this little note will at least paint myself and other Realtors in a better light. Durango and its market are no exception.
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