Category Archives: Mortgages

CoS: State of the Market / Terms of Sale

Conventional is dominating the market in volume of sales month to date, accounting for 46% of sales. Here is the distribution of those sales (and cash, VA and FHA) across the market for the month in $50K incremements.

CoS: Top 10 Subareas July 2021

Here are the top 10 subareas month to date. Meridian Ranch continues its reign at the top!

Here’s how to read this chart:

Meridian Ranch has 29 sales month to date at an average closed price of $515K, a median of $512K, an average closed to list price of 103.72% (selling for 3.72% above list price), an average of 6.17 days on the market, a median of 4 days on the market, an average seller’s concessions of $244 and a median seller’s concessions of $0.

Seller’s concessions are often referred to as closing costs. I dislike this reference because it lends itself to confusion; I like the more accurate description of “seller’s contribution (concession) to the buyer’s closing costs

Is Cash King?

Cash has the (significant) advantage of no appraisal but does it command the discount many feel it does? Let’s look at the data.

Below is a breakout of the purchase types of the sales YTD in the PPAR region. You can see there have been app 9,856 sales, 1646 of which have been cash. These on the average are paying 3.66% above list price. Contrast that with the 3.87% for conventional, 3.84% for FHA and 3.42% for VA and it’s immediately apparent that cash isn’t currently commanding the discount it has a reputation for.

From the inbox: I see lenders advertising lower than 620 VA loans. Is this for real?

Short answer: yesno. Read the fine print.

Longer answer: the VA actually has no minimum credit score for insuring the loans of qualifying servicemembers. However, most lenders will require a minimum credit score.

There are lenders that offer loans to qualifying servicemembers with lower credit scores. There is always a cost, though. It’s usually in the form of a higher interest rate and higher loan costs.

That said, this can still be a good decision. There is something to be said about locking in housing costs vs renting, for example. But you have to run the numbers and do a cost benefit analysis.

From the inbox: Should I roll debt into my mortgage?

I’m in a coding bootcamp but wanted to take a moment over lunch here to answer this question that I’m seeing pop up via email, PM and I’m also hearing more ads on the radio offering this.

I think this is a marketing tactic related to the rising interest rates and home prices (as companies try to generate additional revenue).

This is not legal or financial advice but I believe the short answer is: it depends.

The longer answer is it depends on your circumstances. While rolling high interest debt into your lower rate mortgage may sound good , there are a number of variables to consider, two of which are:

  1. If you take the surplus of income and turn it around into paying down your home mortgage, that could be a good thing.
  2. Doing so raises the value at which you have to sell your home (in a peaking market, this may cause trouble for you, if you have to sell).

What do I mean by the first option?  If one has credit card debt of $25K that’s costing $450 in interest monthly, you may be able to roll that into a mortgage refi. But consider that may raise your mortgage payment. If it does so by $125, that leaves you $325. If you are disciplined and build an emergency fund with that or invest it or turn it back around into paying down the principal of the home, I could see this being a good option.

However!!! (emphasis intentional), know that it raises the amount you need to sell your home at by that corresponding value plus some (if you use a percentage based commission agent to sell, for example). If you are looking to stay in your home long term, that may still be a good option. But – and here’s the bottom line of this post – please understand it’s putting you in a position where you must have continued market appreciation to sell (unless you have a lot of equity). 

And if you have a short horizon on home ownership, or are looking to sell soon, this could put you in a bad spot.

From the inbox: how much should I budget for home maintenance?

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photo from OpenClipArt.org

Ooh. This is a good one. The general rule of thumb is one percent of the purchase price of your home, annually. Jeff Brown, from Main St, has quite a good breakdown on what this means for you as a homeowner.

For a home price of $200,000, that’s $2,000 annually it’s recommended you plan for. You may not always spend that much but I do recommend you save it…because there will be times you do.

Last year, I had to replace my roof ($1K deductible) and repair some damage from a washer that failed ($15 part, $1K deductible).

Knock on wood and I really shouldn’t say this but this year we have been fortunate (so far) and not had any major home maintenance issues.

 

Mortgage Debt Forgiveness Act extended for 2015

If you owe more than your home is worth, there may be more options than you know.  One such option is a short sale, in which the bank agrees to allow you to sell the home for less than the mortgage balance owed.

If the home is your primary residence, you may also be exempt from paying taxes on the forgiven debt.

What does this mean?  If the lender forgives $10K in debt, the IRS may treat this as income, meaning you could owe taxes.  This Act – the Mortgage Debt Forgiveness Act – is meant to exempt you from those taxes (provided you meet the conditions, etc.).

Questions?  If you’re in Colorado, I’d love to help.  If you’re in one of our sister states, let me know and I will connect you with the local agent!

This is not legal advice.  Always consult a CPA, Attorney and local Realtor as needed!

From the inbox: Can I really buy a home for $780 up front on a VA loan?

I get variations of this question a lot! The short answer is, “Yes, in Colorado Springs and with a VA loan, it is possible (other areas, please consult your local Realtors!).”

Longer answer: there are three costs to a home buyer generally in the purchase process.

1. Earnest money: this is “good faith” money a buyer puts up to compensate the seller if they (the buyer) breaches contract for a non-protected reason.  I’ve had a lot of success w/$500 earnest money in town.  When that hasn’t worked, we try $750 or $1,000. Note: coordinate with your lender but you can often get this money back at closing.

2. Inspection costs: a home inspection costs about $280 in Colorado Springs. This is a sunk cost; even if you choose not to continue with the purchase, this isn’t reimbursable in the normal course of a purchase.

3. Appraisal: there is an appraisal cost that some lenders will charge upfront, others charge as part of the loan costs.

In sum, it is entirely possible to buy a home for an upfront cost of $780-$1280, depending on the lender and the earnest money required…and that earnest money can often come back to you.

Questions, please give me a call! If you’re looking to buy or sell in Colorado Springs or Denver, I’d be honored to earn your business.

Facebook.com/robthompsonrealtor

From the inbox: are you joking about $780 up front to buy a home?

Short answer: I have fun with but rarely joke when it comes to real estate (this is serious business!).  Nope, not joking, you can often get into a home for as little as $780 in Colorado Springs.

Longer answer: there are three costs to a home buyer generally in the purchase process.

1. Earnest money: this is “good faith” money a buyer puts up to compensate the seller if they (the buyer) breaches contract for a non-protected reason.  I’ve had a lot of success w/$500 earnest money in town.  Note: coordinate with your lender but you can often get this money back at closing.

2. Inspection costs: a home inspection costs about $280. This is a sunk cost; even if you choose not to continue with the purchase, this isn’t reimbursable in the normal course of a purchase.

3. Appraisal: there is an appraisal cost that some lenders will charge upfront, others charge as part of the loan costs.

In sum, it is entirely possible to buy a home for an upfront cost of $780-1180, depending on the lender and the earnest money required…and that earnest money can often come back to you.

Questions, please give me a call! If you’re looking to buy or sell in Colorado Springs or Denver, I’d be honored to earn your business.

Facebook.com/robthompsonrealtor