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Why You Need to Know the Neighborhood Before You Buy a Home

You’ve been searching for your perfect dream home, and you’ve found one that fits all your criteria. It has the right number of bedrooms in just the right sizes, the full bath you’ve always dreamed of, and even a finished basement. However, location really is important, and if you don’t know the neighborhood, you may end up regretting your decision. Here are five questions to ask yourself before you make an offer.

What’s the Crime Rate?

Just because a neighborhood might seem nice on the outside, this doesn’t mean that crime isn’t growing. After all, many once upscale neighborhoods across the country are now riddled with crime. Make use of online crime maps, contact the city’s police department, and ask some of the people in the area. Store clerks can even be very helpful in this regard as they spend several hours per day interacting with the locals.

know the neighborhood 300x211 Why You Need to Know the Neighborhood Before You Buy a HomeHow Are the Schools?

Once you’ve determined the crime rate, the next big question comes down to the school systems. Some areas will allow you to choose from a number of different schools within a particular zone; other areas may require you to send your child to a particular elementary, middle, or high school based solely on your address. Learn more about the school system in your district, and if you aren’t pleased, find out about tuition for sending your child to another public school, or perhaps even a private school, instead.

Is There Public Transportation?

While public transportation may not be all that important to you right now, there may come a time when you depend on it to help you get around, even for a few days at a time. Find out whether you will have access to a bus, shuttle, train, or other public transportation system that can get you to your most important destinations. Work, shopping, and even doctors’ appointments should all be important considerations.

Are There Kids in the Area?

If you have kids, then you’ll likely want to live in an area where there are other families with kids, too. This makes it easier for friends to spend time with one another without having to depend on mom, dad, or another caregiver to drive them to and from. With a little research, you can find out if there are other families in the area who have kids the same ages as yours. It’s just part of getting to know the neighborhood.

What’s the Demographic?

Finally, while it’s not important to everyone, you can’t really get to know the neighborhood unless you understand the overall demographic. Will you be the wealthy family on the block, or will you feel like you’re struggling to keep up with those around you? Are most of the other families elderly couples, couples with young children, or even young singles? These things can help you better understand your area.
Getting to know the neighborhood is an important step in your homebuying journey. A home may seem perfect inside and out, but things like crime, schools, and even the demographic are also very influential. Do your research before you buy, and your new house will truly feel like a home.

Credit Unions vs. Banks: Things to Know When Getting a Loan

When it comes to taking out a mortgage, you probably already know that it’s best to explore all your options. Banks are great places to start, especially if you have a long-term relationship with the bank where you keep your checking and savings accounts. Credit unions aren’t banks, even though the offer many of the same services and benefits. Here’s what you need to know about credit unions vs. banks when it comes to getting a mortgage.

What Makes a Credit Union Different?

The number one biggest difference when it comes to credit unions vs. banks is the money they make. Banks are for-profit institutions that exist to make money on fees and interest. Bank executives, such as CEOs, make millions of dollars each year in this manner. Credit unions, on the other hand, are not-for-profit institutions. Another key difference comes in the way your funds are insured. While the FDIC ensures your funds up to $250,000, funds in credit unions are insured up to the same amount by a group called the NCUA, or the National Credit Union Administration.

Where Does the Money Go?

Since credit unions aren’t for-profit institutions, you may find yourself wondering where all the money from interest and fees goes. With banks, dividends are divided between a relatively small group of executives, shareholders, and others. With credit unions, things are a bit different. Each member of the credit union is also a member, per se, so dividends are divided among each member. While this doesn’t usually equal a large amount of money, it certainly does help members feel as if their contributions matter – and they’re being rewarded for their memberships.

2017 HVAC prices 300x200 Credit Unions vs. Banks: Things to Know When Getting a LoanFees and Interest in Credit Unions vs. Banks

Of course, if you’re interested in getting a major home loan, interest rates are likely one of your biggest considerations. Here’s where a credit union may fall a little short. Because credit unions tend to focus on personal interactions and building relationships with their customers over time, many of these institutions have less stringent credit requirements for mortgages. Unfortunately, this also means you’ll pay higher interest rates – even if they aren’t much higher than those offered by your bank. If you have less-than-perfect credit, though, you might find that your credit union offers better rates than your bank.

Who Should Consider a Credit Union?

If you’re deciding whether you should choose credit unions vs. banks for your home loan, there are a few things to think about. First, if you have a good working relationship with your current bank, it only makes sense to apply for your mortgage there. This is especially true if you’ve had a checking and savings account there for many years, or if you’ve had auto and personal loans from that bank in the past. If you haven’t been with your bank long, or if you have less-than-perfect credit, you might want to consider becoming a member of a local credit union.

The differences in credit unions vs. banks are many, and in some cases, it may be better to apply for a mortgage through a credit union. Remember, though, that interest rates are typically higher – even if you have excellent credit – but you can recoup some of that in terms of dividends and lower fees.

Watch Out for These 4 Real Estate Scams

With the growth of the internet and technology, real estate scams have become prevalent in many parts of the country – including right here in Denver. Understanding what’s real and what’s attempted fraud can keep you and your bank account safe. Here are the top four real estate scams in the country today and some tips for avoiding them.

#1 – Title Fraud

Title fraud occurs when a scammer uses falsified documents to pose as the owner of a home. He or she will forge documents to transfer a property into his or her name, and then take out a mortgage on that property. Once the criminal receives the money, he or she simply leaves the owner of the home with the debt. The best way to prevent this type of fraud – or at least minimize it – is to make sure you have title insurance on your property. This way, you’re covered should the worst happen.

impact of crime on real estate values 300x200 Watch Out for These 4 Real Estate Scams#2 – Foreclosure Fraud

While it’s not as common now as it was a decade ago, foreclosure fraud does still occur. In these real estate scams, fraudsters target people who own homes, but who are behind on their payments and facing foreclosure. In most cases, the criminal will offer the homeowner what seems like a legitimate consolidation loan designed to help them avoid foreclosure in exchange for an upfront fee and exchange of the title to the property. However, the criminal keeps all the payments, remortgages the property, and pockets the upfront fee, leaving the homeowner high and dry. To avoid this, be wary of any type of loan that requires upfront payments or a title exchange.

#3 – Online Home Sales

The internet is a valuable tool for buying a home, but it’s important that you take the time to thoroughly evaluate every single situation. One of the biggest real estate scams today involves online home sales. Scammers find homes that are listed for sale and then impersonate real estate agents from the company that has the home listed. They’ll pretend to take paperwork and get loan approvals, and then they’ll take the buyer’s money. Unfortunately, when the buyers go to move in, they find the home already occupied by the real buyer. Avoiding this scam is easy enough; make sure you contact the real estate company yourself regularly.

#4 – Seminars, Courses, and Webinars

Many homeowners (and would-be homeowners) can benefit from legitimate courses, seminars, and webinars that educate them on buying and investing in real estate. While there are certainly several very good speakers and teachers out there, there are others who have only one true intention – getting you to “invest” in a surefire thing that will make you money. In the end, you may find yourself out hundreds of dollars in seminar fees, and if you actually purchase one of these so-called “investment” homes, you may find yourself the owner of a money pit, too. Always do your research on the speaker before purchasing anything.

Real estate scams aren’t as prevalent as they were during the housing market collapse, but they do still exist. The best way to protect yourself is to stay educated and understand the different ways in which fraudsters will attempt to con you out of your money.

Getting the Most out of Mortgage Quote Comparison Websites

Whether you’re buying your first home or your third, the processes involved in choosing the right mortgage can leave you feeling overwhelmed. Numerous mortgage quote comparison websites exist to help you weigh your options, but it’s important that you use them wisely to get the most out of them.

Interest Rates Aren’t the Only Consideration

When it comes to finding the right mortgage, most homeowners will look primarily at interest rates. In fact, this is the number one filter when it comes to mortgage quote comparison websites. It’s true that lower interest will save you plenty of money over time, but you should never agree to a loan just because it comes with a great interest rate. There’s fine print to read, penalties to understand, and even the lender’s overall reputation and financial stability. These things can all affect you in the future, so be sure to research each lender thoroughly.

credit score 300x199 Getting the Most out of Mortgage Quote Comparison WebsitesKnow Your Credit Score and Debt-to-Income Ratio

While your credit score is a huge deciding factor when it comes to getting an accurate mortgage quote comparison, it isn’t the only thing you need to know. Your debt-to-income ratio will also play a major role in what you can qualify for, including not only the maximum mortgage amount, but also the interest rate. To qualify for a jumbo loan with a fantastic rate, you’ll need more than just good credit – you’ll need an excellent credit rating and several open credit accounts. You’ll also need a solid debt-to-income ratio. Ideally, your debt should not total more than 40% of your income.

Be Truthful

While a mortgage quote comparison website should only be used as a guideline, it’s important that you answer any questions you’re asked truthfully. While you may think that fudging a little on your annual income or your credit card debt won’t hurt anything, it may present a significant issue when it comes to applying for a loan. For example, while the website may tell you that a specific bank will loan you up to $750,000, if your income is less than what you provided, or if you have more credit card debt than you let on, you might find that number has shrunk significantly by the time your loan makes it through underwriting.

Try More than One Website

Mortgage quote comparison websites work with networks of lenders. You fill out a single application, and that information is fed to as many as 20 or 30 different lenders to help give you an idea of what you might qualify for. However, different websites have different networks, so you may want to try a few for a broader reach. You may see the same big-name lenders on every site, but the smaller lenders may be different.

All in all, getting the most out of a mortgage quote comparison website is about knowing your credit score and your debt-to-income ratio, being honest when you fill out the quote form, using more than one website to get results, and paying attention to more than just the interest rate you’re offered. When you follow these tips, you’ll have plenty of lending options available to suit your needs.

Understanding the Benefits of a One-Story Home

Today’s housing market is flooded with multi-story homes, and while they may save acreage, the truth is that they aren’t right for all families. The benefits of a one-story home are many, especially if you prefer to plan for the future. Here’s what you need to know before you make your purchase.

#1 – It’s Safer

A one-story home is undeniably safer than a two- or even three-story home simply because there are no stairs for children or the elderly to traverse. Slips and falls on staircases can be traumatic, life-changing, and in some cases even fatal, especially for the very young or the very old. What’s more, in the event of a fire, it’s easier to escape a window when the rooms are all on ground level. While there are ladders and other products designed to make escaping a second- or third-floor window safer, these aren’t always a good solution.

one story home 300x188 Understanding the Benefits of a One Story Home#2 – No Stairs to Climb

While you’re young and spry, stairs may seem like no big deal. In fact, they’ll even help you get your exercise in for the day. However, what would happen if you were to be injured, and you were suddenly unable to make the climb if only temporarily? This can be difficult for families to overcome. It’s true that you can install elevators or lifts that will carry you to the next floor, but these can grow quite costly, and they don’t make a worthwhile investment if you’ll only need them temporarily. A one-story home makes it simpler for you to get to every room, even when you’re nursing an injury.

#3 – Easier on HVAC Systems

Today’s HVAC systems are quite advanced, but they can’t make up for physics. Warm air rises while cool air sinks, and this can cause some discomfort. In the summer, you’ll need to crank up the AC to keep your upper floors cooled. In the winter, the upper part of the home will likely get too warm as you try to keep your ground floor comfortable. Though some homeowners can get around this by installing a second HVAC unit specifically for the second story to maintain their comfort, this isn’t cost-effective in most cases. A one-story home is heated and cooled evenly, which maximizes your comfort and keeps your costs down.

#4 – You’ll Make More Money if You Sell

Now that you understand all the benefits associated with a one-story home, it only makes sense that these homes tend to sell for more per square foot. They’re in higher demand, especially among families with children or households with elderly members. One-story homes also appreciate more quickly for this very reason. You can consider your home an investment, and chances are good that it’ll make you money when it comes time to sell.

As you can see, the benefits of a one-story home certainly speak for themselves. These homes are safer, more convenient, and eco-friendlier in terms of heating and cooling. You may pay a little more for a one-story home, but in the end, it’ll likely be worth the additional investment.

What Everyone Needs to Know about the Mansion Tax

New York City Mayor Bill de Blasio proposed what he called a “mansion tax” that would apply to homes worth $2 million or more in late January. This mansion tax, equal to 2.5% of the purchase value of the home, would be used to fund affordable housing throughout the city.

Only in NYC – For Now

Right now, only people buying homes or condos in New York City will be subject to the localized mansion tax. Mayor Bill de Blasio has proposed this tax before to help reform NYC’s real estate development tax abatement, and while the state’s real estate board wasn’t necessarily opposed to the tax, it simply failed to gain momentum, so it was shifted to the back burner. Now, per Alicia Glen, who is the city’s mayor for housing and economic development, says the administration hopes to reach out to a variety of interest groups that may put the mansion tax on the fast track.

A Response to the Changing Political Climate

Per Alicia Glen, the mansion tax will benefit New York City even as the federal government makes changes to the affordable and public housing climate. Recently, the Trump administration reversed Obama’s decision to substantially reduce the FHA annual mortgage insurance premium. This means that new, lower-income borrowers will have significantly higher monthly mortgage payments, which puts a damper on that market. Across the country, FHA refinance applications dropped by 25%, and new FHA applications dropped by 6%. Mayor de Blasio hopes that the mansion tax will help the city provide more affordable housing options.

mansion tax 300x169 What Everyone Needs to Know about the Mansion Tax

What about the Downside of the Mansion Tax?

John H. Banks III, President of the Board in New York City, says that the city has one of the highest transaction taxes in the country as it stands. The addition of the mansion tax would add another 2.5% to those costs, and Banks feels that this will suppress sales throughout the city, ultimately causing a significant drop in the city’s tax revenue. In fact, some brokers, including Leonard Steinberg from Compass, have described the enactment of such a tax as “reckless”. In response, Glen noted that only 8.5% of all residential transactions in all five of NYC’s boroughs exceeded the proposed $2 million threshold.

What Does This Mean for the Rest of the Country?

Right now, the mansion tax will only apply to those buying homes inside NYC, and all eyes are on Mayor de Blasio and how the proposal will play out in that city. Whether the proposal becomes reality remains to be seen, but if it does, there’s a good chance that city officials across the country – including those in Denver – may start considering proposals of their own to help increase the sales of non-luxury properties, which could ultimately benefit these cities’ housing markets.

The mansion tax isn’t a law just yet, but it certainly has a strong backing, and there’s a good chance that people buying luxury homes in NYC might be paying an additional 2.5% tax very soon. Whether it’ll help improve the housing situation in NYC or essentially tank the city’s overall tax revenue remains to be seen.

Figuring Your Annual Home Maintenance Budget

Buying a home is exciting, and it frees you from many of the burdens associated with renting. However, as a homeowner, you’ll need to make sure you create an annual home maintenance budget so you can avoid expensive repairs by keeping things in good working order all year round. Here are two rules for doing just that.

2017 HVAC prices 300x200 Figuring Your Annual Home Maintenance BudgetThe 1% Rule

One of the most popular rules regarding your annual home maintenance budget involves setting aside 1% of your home’s purchase price each year for regular maintenance, including things like annual HVAC servicing and roof inspections. This means that if you spent $400,000 on your home, you’ll set aside $4000 each year for maintenance and repairs. You won’t spend all $4000 each year, but you should still set it aside – preferably in an interest-bearing savings account. Replacing a roof on a $400,000 home may cost $10,000 or more, and you’ll be glad you budgeted ahead of time.

The Square Foot Rule

Another option involves saving $1 for every square foot of your home. If your luxury home is 2500 square feet, you should budget $2500 annually for maintenance. It certainly seems to make sense. After all, the more space you have, the more you’ll need to spend to maintain it. However, this doesn’t account for things like labor and materials, which can be quite expensive depending on the company you select. Like the 1% rule, though, the odds that you’ll spend all $2500 each year are slim, so your funds can continue to accrue when no repairs are necessary.

Other Annual Home Maintenance Budget Considerations

Of course, neither of these rules can account for all the possible variables that may affect your home maintenance budget. The most common variables include:

  • Location. If your home is in a flood area, at the bottom of a hill or mountain, or in some other area that may create an environmental problem, then your home will likely need more care and maintenance. This means you should budget accordingly.
  • Weather. Freezing temperatures, snow, and ice can take a toll on a home, as can things like high wind. Consider the climate carefully, look at the positioning of your home, and adjust your annual home maintenance budget to suit.
  • Age. A newer home will require far less maintenance than an older one, and a home that has been well-maintained will require fewer repairs.
  • Condition. Careful maintenance can keep a home in pristine condition, even if it’s 100 years old or more. Consider the overall condition of your home when you’re creating your budget. If it’s been a long time since major components like the roof or HVAC system have been replaced, consider budgeting a little more each year.

As you can see, creating a home maintenance budget doesn’t have to be a difficult task. Consider all of the factors that may affect your home – including its location, the climate, and the home’s age and condition – and then choose either the 1% or the square foot rule as your baseline.

Why Aren’t Millennials Buying Homes?

Statistically, millennials (typically speaking, people under the age of 35) are the demographic least likely to purchase a home as of 2016. There are many different reasons why the number of millennials buying homes is so low, and some of them may surprise you.

#1 – Student Loans Hold Them Back

The number one thing that lowers the number of millennials buying homes is the size of student loans. In fact, they account for the largest debt in the country, and many young people struggle to keep their heads above water as they try to repay them. Fortunately, the federal government has addressed the issue and implemented the IBR plan, which stands for income-based repayment. Young adults can make small monthly payments, and if a balance remains after 20 years, it will simply be forgiven.

#2 – They Haven’t Found “The One”

Another reason that millennials give for their hesitancy to buy a home is their single marital statuses. Many millennials feel as if trying to buy a house on their own, without a second income, is asking for trouble – and they may be right. Single-income families (and even single-person households) do tend to struggle in today’s tough economic times. For this reason, millennials will often wait until they have married to even consider buying a home.

denver skyline 300x169 Why Arent Millennials Buying Homes?#3 – Millennials Love City Life

The vast majority of millennials across the country live in large cities rather than suburbs or rural areas. Unfortunately, home prices in most cities are skyrocketing, which puts them out of reach for a generation still struggling to pay off their student loan debt. Millennials buying homes typically buy those located in in suburbs of these cities, and some regret their purchases due in part to their daily commutes. As such, millennials will often continue to rent in larger cities across the country.

#4 – They Move Around a Lot

Millennials are often referred to as the “mobile generation” for several reasons. First and foremost, they are known to change jobs frequently to put their college educations to better use – or to get better pay. In fact, many will even move all the way across the country in pursuit of a career opportunity that fits. Pensions and unions alike are becoming scarcer with every passing year, so job loyalty is quite low. Millennials who move often don’t want to be tied to one area by home ownership.

#5 – They’re Waiting for an Incentive

Back in 2008, a significant recession caused millions of homeowners to experience the heartbreak of foreclosure. Shortly thereafter, though, the IRS offered first-time buyers a hefty tax credit to help get the economy moving again. During this time, many millennials bought their first homes. Those tax credits ended in 2011, so the number of millennials purchasing homes each year started to decline. Now that the federal government is expected to raise interest rates, the rate at which millennials buy homes may fall even more.

While statistics show that the number of millennials buying homes in 2017 isn’t likely to go up much, this demographic has very good reasons to keep renting. Between student loans, trouble finding the right job, and a lack of incentives, many find that continuing to rent – at least until they’ve settled down – just makes sense.

Ready to Buy a Home? 5 Questions to Ask Yourself

Most people are excited about homeownership, but not everyone is actually ready to buy a home. Before you make the plunge, review these five signs and make certain that you have what it takes – both financially and mentally – to buy your very first home.

#1 – Are You Planning to Stay?

Most people make the decision to buy a home because mortgage payments are lesser than rent, or because they’ll get far more square footage and luxury in their own homes for the same price. However, it’s important to remember that homeownership comes with other costs, such as insurance, mortgage fees, repairs, and maintenance. Unless you’re planning on staying for at least five years, you aren’t going to break even and start reaping the benefits of those lower payments.

luxhome 300x200 Ready to Buy a Home? 5 Questions to Ask Yourself#2 – Are You Preapproved?

These days, preapproval is an important step when you’re ready to buy a home. It’ll help you understand what you qualify for, which can help you (along with your real estate agent) make the right choices about the homes you see. This process can take some time, so make sure you’re prepared by getting it done early. Check with your personal bank, or if you wish, ask your real estate agent for options.

#3 – Is the Timing Right?

Take a look at your current situation. Are you stuck in a lease for another eight months? Do you need to find a place to live within the next 30 days? If you answered yes to either of these questions, then you may not be ready to buy a home. Ideally, you want to be ready to buy, but able to wait it out for the best deals. Right now, it’s still a buyer’s market, so take advantage of that.

#4 – Do You Have Money in Savings?

Aside from a down payment of as much as 20% of your new home’s purchase price, you should have a nest egg set aside for things like home maintenance, emergencies, and more. If you do not feel comfortable with the amount of money you have in savings, then the time is not right to buy a home. Wait until you are completely financially stable. Ideally, you should have enough money in savings to pay your mortgage for three to six months in the event you lose your income, too.

#5 – Are You Prepared for Bumps along the Way?

Television programming makes the homebuying process look incredibly simple. One day, a family is looking at a home; the next, they’re settled in and having the times of their lives. Unfortunately, this is rarely how it works. There will be some bumps along the way. You may have a problem during your inspection, or underwriters may find an issue with your mortgage application. If you feel prepared to handle these things, you’re ready to buy a home.

Whether or not you’re ready to buy a home depends on many things, but the five factors listed above will play an important role. Make sure you’re planning to live in your home for at least five years, you’ve obtained preapproval, the timing works for you, you have money in savings, and you’re prepared for a few things to go wrong. This will make the process as painless as possible and help you find the right home for your needs.

Pro Advice for First-Time Home Buyers

If you’re like most first-time home buyers, you’ve probably heard plenty of advice. Save your down payment. Find the best real estate agent. Learn about your local market. All of this advice is excellent, but there are some things that the real estate industry in general doesn’t tell you. Below, you’ll find some pro advice for first-time home buyers that will make the process much simpler and help you buy the luxury home of your dreams.

first time home buyers 300x202 Pro Advice for First Time Home Buyers#1 – Make a Wish List

You might know that you need four bedrooms, an office, a finished basement, and two full bathrooms. Have you taken the time to think about the other things you really want? For example, do you want an open-concept living room, kitchen, and dining area, or do you want a kitchen that’s out of view when you entertain?  Do you want a traditional home with a white picket fence, or do you want something more architecturally unique? Buying a home isn’t like buying a pair of shoes. You can’t return it later if it doesn’t quite fit. Make yourself a wish list and make certain that the homes you consider meet the criteria.

#2 – Don’t Surpass Your Budget

Even when it comes to buying a luxury home, it’s important to set a budget that includes not only the price of the home or your monthly mortgage costs, but also the costs involved in buying insurance, home security, and other things that come along with homeownership. There may come a time when you’re very tempted to surpass the budget you’ve set for yourself. In cases like these, don’t make quick decisions. Do the math and make sure that you’re not only capable, but also willing to make the extra investment.

#3 – Don’t Rely on Just the Listings

First-time home buyers will often pick up the newspaper or rely on internet ads to help them find prospective homes. While this might work for the average buyer, things are different when it comes to buying a luxury home. Owners will often forego listing their homes using traditional means, mainly because they are wealthy and affluent individuals who want to protect their privacy. Find a real estate agent who specializes in luxury homes if you want to see all of the available options.

#4 – Trust Your Gut

Finally, if you’re one of the people who believes that buying a home is all about crunching numbers and getting the most square footage for your dollar, take a step back and look at the bigger picture. First-time home buyers often get so wrapped up in making sure they’re making a wise investment that they forget to consider their own wants and needs. If something doesn’t feel right, take the time to examine it further. If it feels like a great investment, go for it – but only after you’ve taken the proper precautions.

First-time home buyers can find plenty of advice these days, whether they ask their friends or they ask Google. However, the pro tips listed above – making a wish list, sticking to a budget, and trusting your instincts – will help you make sure that you make the best possible decision when it comes to buying your very first luxury home.