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Coldwell Banker – Reality Check August 2013: More homeowners in a position to sell their home as prices rise and “underwater” mortgages decline

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Rising home prices over the past couple of years are reducing the number of homeowners who are “underwater” in their mortgage, bringing more potential sellers off the sidelines to take advantage of the robust housing market.

That’s good news for hundreds of thousands of homeowners across the country, but the trend also provides relief for many frustrated buyers who have been fighting over the limited inventory of homes on the market.

Being “underwater” or “upside down” on a mortgage means that homeowners owe more on their loans than their properties are worth – often referred to as having “negative equity.” The result is that these homeowners can find it extremely difficult to sell their property, especially if they’re trying to buy another home.

Underwater mortgages grew during the recession and the housing downturn. According to CoreLogic, which tracks underwater mortgages nationwide, more than one out of every four homeowners nationwide owed more on their home than it was worth in 2010.

But that trend is changing quickly, and homeowners who thought they were underwater might be surprised to learn they no longer are.

“The impressive home price gains of 2012 and the beginning of 2013 have had a big impact on the distribution of residential home equity,” said Dr. Mark Fleming, chief economist for CoreLogic. “During the past year, 1.7 million borrowers have regained positive equity.”

Dr. Fleming called the decline in underwater mortgages “a virtuous circle” in a recent Associated Press article. “The fact that house prices have increased so dramatically … has unlocked a lot of that pent-up supply,” he said.

According to CoreLogic, at the end of March, 19.8 percent of the nation’s mortgaged homes were underwater, down from 23.7 percent a year earlier and 25 percent during the same period of 2011.

The improvement has been seen in every region of the country, although it varies by location. While some states and cities are doing much better than average, others that experienced the strongest price increases and sharpest drop-off during the recession have a higher percentage of underwater mortgages.

Colorado as a whole is much better than the national average with just 14.2 percent of homeowners having negative equity. That’s down sharply from 20.7 percent just a year ago.

How do we compare with the rest of the country? Here are some findings:

  • Nevada had the highest percentage of mortgaged properties in negative equity during the first quarter of the year at 45.4 percent, followed by Florida (38.1 percent), Michigan (32 percent), Arizona (31.3 percent) and Georgia (30.5 percent).
  • On the other end of the spectrum, Montana had the highest percent of homeowners with positive equity at 94.4 percent, followed by North Dakota (94.1 percent), Alaska (93.9 percent), Texas (92.8 percent), and Wyoming (92.6 percent).
  • Of the largest 25 metropolitan areas, Tampa-St. Petersburg-Clearwater, Florida had the highest percentage of mortgaged properties in negative equity at 41.1 percent, followed by the Miami area (40.7 percent), Atlanta (34.5 percent), Chicago (34.2 percent) and the Warren-Troy-Farmington Hills, Michigan metro area (33.6 percent).

The inventory of homes for sale across the country has fallen over the past year. According to the National Association of Realtors®, there was a 5.2-month supply of existing, single-family homes for sale in May, compared to 6.4 months a year earlier. And inventory is even lower in many of our Colorado communities.

So if you’ve been thinking about selling your home, this may be a good time to make your move and take advantage of this strong seller’s market. Your home may have more equity than you think. I’m ready to answer any questions you may have about selling your home and the best ways to get the most for your property. Give me a call and we’ll get started today.

©2013 Coldwell Banker Real Estate LLC. All Rights Reserved. Coldwell Banker® is a registered trademark licensed to Coldwell Banker Real Estate LLC. An Equal Opportunity Company. Equal Housing Opportunity. Each Coldwell Banker Residential Brokerage Office Is Owned and Operated by NRT LLC. If your property is listed with a real estate broker, please disregard. It is not our intention to solicit the offerings of other real estate brokers. We are happy to work with them and cooperate fully.

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Your New Home

Things to know before you buy:

Before venturing into the territory of homebuying, there are several things you might want to consider. Below is a list of ten things every potential homebuyer should consider:

Get pre-qualified for a loan

Early in the home buying process, find out what you can afford to spend. This will help you make informed decisions about which homes to look at, which one to ultimately select and possibly what the bottom line asking price should be on selling a home you may already own.

Know your credit rating

Marginal or bad credit can make a big difference in the type of financing available to you as a homebuyer. There may be special programs out there to help you repair your credit, but it helps to know what you’re dealing with up front.

The down payment

You will probably need some sort of down payment on any property you purchase. While some loans offer a no down payment option, it makes a huge difference in your monthly mortgage payment when you are able to provide a substantial down payment on the property. For more information on down payment programs available in your area, consult with a lender to find the right program.

Closing costs and other considerations

The cost of making the purchase can include charges such as:

    1. Escrow fees
    2. Title policy fees
    3. Mortgage Insurance
    4. Fire and Homeowners Insurance
    5. County Recorder fees
    6. Loan origination fees

Points

Some loans will have “points” attached. Points are a loan origination fee that is equivalent to 1% of the loan amount. You may incur a higher interest rate if you choose a loan with no points, but there are many different combinations available. Shop around for the most competitive deal.

Types of mortgage loans

Would you prefer a fixed rate or adjustable? This will depend largely on where the interest rates are when you are shopping for your loan. If rates tend to be higher, you may opt for an adjustable rate so that you are able to take advantage of any rate drops that may occur during the life of your loan. If rates are low, you might want to lock in the best rate while you can.

Loan categories

There are two types of loan categories out there. These are Conventional Loans and Government Loans. Conventional mortgage loans are offered with either fixed or adjustable interest rates. Mortgage insurance may be required depending on the loan. Government loans include Federal Housing Administration (FHA), Veterans Administration (VA).

Low to moderate income

If you fall into one of these categories, you may qualify for special programs geared towards helping the low to moderate income homebuyer secure financing. Lenders who specialize in real estate mortgages can help you find these types of programs.

Mortgage Insurance

Conventional loans with a larger down payment may not require mortgage insurance, however, it is always required on the FHA loan. This insurance is meant to protect the lender in the event of default.

Home loan counseling

Many organizations offer classes to potential homebuyers to help prepare you for the process. Topics covered may include: realtor selection, home selection, homeowner responsibilities, saving for a down payment, and loan program information. These classes can be especially helpful

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Closing on your new home

Congratulations! You are about to close on your new home. The closing process is where you will complete the final round of paperwork needed to purchase the home. When it’s over, you’ll walk away with keys to your new home (unless there is a special provision in the sales agreement for allowing the seller more time to vacate the property). The following is information that might be helpful as you enter the final phase of the purchase process.

Homeowner’s Insurance

At the closing, you will present your Homeowner’s Insurance receipt. This will show that you have the necessary insurance on the property. You will then move on to review of the HUD-1 Settlement statement. Your closing agent will go over the settlement statement to verify that everything in the agreement is as it should be.

HUD-1 Settlement Statement

This form is required for compliance with the Real Estate Settlement Procedures Act (RESPA). Once you have signed off on the HUD-1, you will move on to closing costs. As agreed upon, the buyer and seller will provide the closing agent with certified checks to cover the cost of the closing.

Remaining Documents

At this point, you will go over any remaining documents. The agent will have both the buyer and seller review information for accuracy and obtain the appropriate signatures.

Escrow Account

An escrow account will be established for the buyer. This account will cover property taxes, homeowner’s insurance, private mortgage insurance (PMI) if required, and any interim interest.

Execution of Mortgage Documents

This is the point in the closing when the buyer will sign all documents required by the lender. These include the note and security instruments that will include either a deed of trust or mortgage. These documents show that the buyer pledges the property as security for the mortgage loan. The mortgage check is presented and a warranty deed is given to the buyer.

At the end of the process, the seller hands over the keys to the home. New homebuyers should note that it is a good practice to replace all locks in a new home to prevent those who have duplicate keys from having access to your home and belongings. In addition to keys, the seller may have items such as warranty information for appliances, garage door openers, etc. to pass on to the buyer. After this has been done, the escrow or closing agent handling the closing will complete the recording of your purchase. This includes recording the warranty deed and related security instrument.

If you have agreed to take immediate occupancy, then you are then free to enjoy your new home! In the event that you must wait, alternate arrangements will be made for you to obtain the keys to the property.

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The Energy Star Home

Looking for an energy efficient new home? The following information can help you determine whether or not the home you are buying is Energy Star qualified. These days, we look to make the most of our energy dollar. If you are a particularly energy-conscious homebuyer, you’ll be happy to find that an Energy Star qualified home is up to 15% more efficient than homes built prior to 2004’s International Residential Code (IRC).

When building new homes, builders work with qualified Home Energy Raters to determine what features are right for the homeowner. Homes up to three-stories can earn the Energy Star label. This includes single or low-rise multi-family dwellings, site-constructed homes, attached or detached homes, manufactured homes, log homes and retrofitted homes. They first need to be verified as meeting the EPA’s guidelines for energy efficiency.

Insulation

Properly installed, effective insulation in floors, walls, and attics will ensure even temperatures throughout the house. It will also allow for less energy consumption and a more comfortable place to live.

Windows

Protective coatings and sturdy frame assemblies help to keep hot and cold temperatures from infiltrating the home. In addition, high-performance windows can help to block ultraviolet rays from damaging carpet and furnishings in the home.

Ducts and Solid Construction

Making sure that holes are sealed and cracks in the home’s structure or duct system are addressed goes a long way to reduce dust, drafts, moisture and noise. A well-sealed home improves indoor air quality and the overall comfort. It also helps reduce energy bills.

Efficient equipment

Energy-saving equipment is more durable and will require less in the way of maintenance than standard equipment. In addition to their contributions toward energy-efficiency, these items also help with environmental factors such as making the home quieter, reducing humidity, and improving the home’s comfort level.

Appliances and Lighting

An Energy Star home may be equipped with standard Energy Star products such as lighting fixtures, bulbs, ventilation fans, and appliances. More information about Energy Star appliances such as refrigerators, washing machines, and dishwashers can be found at www.energystar.gov.

Home Energy Raters

Third-party energy raters help builders to choose the most appropriate features when building new homes. These raters can inspect and conduct onsite testing to help verify that a home qualifies for this Energy Star rating.

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How to Find the Right Neighborhood

How do you tell a good neighborhood from a bad neighborhood? At a glance, they all look the same: the same winding streets, the same kids on bicycles, and the same polite neighbors. Some things you will never know until you actually live there, but you can find out a lot with a little research and some time. It will save you money, time, and hassle down the road if you know what to look for in a neighborhood and know how to find that information.

A neighborhoods location is very important for a variety of reasons. For some, being close to shopping centers and malls is a necessity, others desire a short commute to work, and many seek out easy accessibility to public transportation. Close proximity to hospitals and fire stations is usually at the top of most lists as well. To get an accurate idea of distance, don’t just look at how many miles it is but actually make the drive yourself.

It is important that a neighborhood has adequate fire and police protection, good area schools, and low crime. Often, the quality of the area schools affects the property value and desirability of homes. You should also look at how far away the schools are, and how safe the walking route is that leads to them.

More homeowners than renters in the area are a good signs as well, because when people own a home they often care more about its upkeep than renters. Also, any remodeling or renovations taking place in the neighborhood probably means that people like the area and are planning to stick around for a while. And of course, parks and bike trails in the area are beneficial for connecting the community and providing fun, healthy entertainment.

There are three main sources for information that you should check with: a real estate agent, the neighbors, and the community.

The Real Estate Agent. You can find out a wealth of information by simply asking your real estate agent. They will have information on the neighborhood, area schools, future developments, and more.

The Neighbors. Everyone is looking for different things in a neighborhood and neighbors, which is why you should take a stroll around the prospective neighborhood and strike up a conversation with the neighbors. Ask them about traffic and noise in the area and find out what they like best about the neighborhood.

The Community. Before purchasing a home in the community, try exploring the area on your own. Drive through the surrounding neighborhoods, and visit the neighborhood you are thinking of buying in at all different times of day. Have dinner in a local restaurant and talk to the servers and owners to find out what they think about the area and its residents. Finally, make a quick stop at the local police department for area crime records.

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Why Louisville, Colorado Is One of the ‘Best Places to Live’

Every year, Money Magazine selects 100 cities nationwide for their “Best Places to Live” annual listing. After being named the fifth city in 2005, Louisville, CO once again made the list, but this year it nearly topped it by taking the number three spot on the list of 100 best cities.

Originally founded in 1882 as a mining town, Louisville has grown into a modern, thriving city and is called “home” by over 19,000 residents. It maintains its historical charm by many of the downtown businesses that have been restored to reflect the original mining community. Located 25 miles from downtown Denver, Louisville is perfectly situated both far enough from the city to enjoy the beauty and relaxation of the countryside, as well as near enough to have a short commute or easy city outings.

Louisville, CO boasts a vast array of activities to accommodate both residents and visitors alike. With over 2,000 restaurants, 23 movie theaters, 54 libraries, 112 golf courses, 13 ski resorts, and 7 museums all in under a half-hour drive, it is bound to take more than a day to explore this charming city. A unique thing about this mid-sized town is that it is very easy to feel part of the community. Not only is everyone connected by the 26-mile wooded bike path that weaves through the town, but every Friday afternoon in the summertime the town gathers for the Louisville Downtown Street Fair, featuring live music and entertainment, craft booths, and delicious treats.

Although demand for homes nationwide has been steadily decreasing during 2007, Louisville has weathered the stormy waters of the current market. Even with more people selling than buying in Louisville, homes average time on the market is a mere 60 to 90 days. The average home price in 2006 was $322,812*, and although current housing costs are up slightly due to growing interest in the area, a wide variety of tastes and prices are available throughout the community. And, a plus for all homeowners is the low cost of property taxes, which in 2006 averaged only $1,986* a year.

This modern mining town even has its own unique blend of positive and negative factors in its economy. In the last two years, the median household income jumped from an average of $79,169 to $94,385, which was met with an increase in home costs, from $295,718 in 2005 to the present average of $322,812*. Much of the economy is based in the technology sector and the area is littered with Technology firms and businesses. Louisville, CO had a city-wide job growth of nearly 7% from 2000 to 2006, while most of the cities on the list of “Best Places to Live” experienced an average job growth of 13%*. Not to worry, however, because this mid-sized town in the Colorado mountains avoids the extreme ups and downs of the job market by maintaining slow and steady growth, making it truly one of the ‘Best Places to Live’.

* CNN Money Best Places To Live – Louisville

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Tips for Mortgaging Your New Home

You’re close to finalizing the purchase of your new home. It’s getting near to closing time, and you’ve haven’t set up your mortgage yet. For most people, their houses are by far the most expensive purchases they will ever make. Sometimes the pressure that comes from deciding a proper mortgage can be taxing and draining, and if you’re not careful, you could end up paying for your bad decision, literally. In this article, we’re going to discuss several tips for mortgaging your new home that will help you get the most for your money.

If Possible, Pay Off Current Debt.

Credit card use has steadily increased throughout the the past several years, and many people are falling into the trap of having now, and paying later. The problem with credit cards is that their average interest rates are double that of interest rates for mortgaging a new home. If you can pay off some of the debt you have now, it will better serve your budget when you’re committed to paying for a house. You don’t have to pay off all your debts before you decide to purchase a home, but the more you can pay off now, the better you can use your money later.

Find a Trusted Reliable Bank.

When thinking about where you’ll be placing your mortgage, it’s important to find a reliable bank that you trust. If you’re going through a realtor, he or she will often a list of trusted banks with whom you can work. Also, it can also help to do your personal and business banking with the same branch that you have your mortgage. Often times you can get a small percentage break if they can take your mortgage payment directly out of your checking or savings account. Remember, a percentage break when we’re talking years of payments and thousands of dollars is a very important. Any discount you can get helps you in the long run.

Make Sure Your Mortgage is a Fixed Rate.

Some banks and mortgage companies might tempt you with a special start out interest rate with an extremely low percent, but be leery of accepting these offers. Fixed rates are more reliable in that you can always know what your payments are going to be, and you don’t have to worry about your payments ever spiking because of changes in the market. While fixed rates might seem higher at first, they’ll save you money long term.

Financing a new home should be an exciting experience, not a taxing one. If you follow these tips, you can be on your way to enjoying your new home!

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How to Adjust to Your New Surroundings

Congratulations, you just moved into your new home. The paper work is complete, you’ve unpacked your things, the furniture is set up, and you even have your newly established street address and phone number. Yet, somehow in the midst of all this excitement you feel a bit nervous, and maybe even lonely. In this article we’re going to discuss several tips for how you can adjust quickly to your new surroundings so you feel confident and calm.

Know the Area

It’s important that you know the area in which you live, and there’s no better way to do that than take a few hours each week and drive around your community and neighborhood. Maps are great tools, but they are no substitute for the peace of mind that comes from truly understanding how to get where you need to go. By spending time driving to your local grocery store, hospital, and school during the day, you can have confidence when you need to drive there during the night. Also, learn multiple routes to get to the places you need. Many you need to go the grocery, but you’ll be coming from work instead of your house or there might be construction on your normal route. Don’t be thrown off guard by unexpected changes. Roads and traffic are much less intimidating when you understand what to expect in most situations.

Know Your Neighbors

It’s important to make a conscious effort to meet your neighbors in the first few months of living in a new area. Where this might be uncomfortable and nerve racking at first, you must realize that you’re not expected to know people the first few months in your new home. You don’t have to be nervous because you have any expectations to meet. It’s a new day. You have the possibility of establishing close friendships nearby, or at least making connection with your neighbors who could help you in a future time of need. A few suggestions for how to get to know your neighbors include hosting a local cookout, taking part in a local event or festival, or offering to help your neighbors with simple yard work.

Stay Connected

Where a new surrounding can be very exciting, it’s still important to stay in touch with people who live in your old neighborhood. Staying in touch through phone calls, emails, and even occasional visits can help you stay focused, grounded, and level headed. Close family and friends can give us the love, support, and encouragement when we’re down, but yet they are not afraid to inform us of when we’ve changed. By learning and understanding your new surroundings while not losing touch with your old friends and family, you have a great chance of establishing yourself in your new location, feeling calm, confident, and ready for any challenges that might come your way.

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Make and Save Money While Financing Your New Home

Setting up your mortgage can sometimes feel confusing and draining, because most people don’t want to end up paying for a mistake they made years ago. What many people don’t realize is that if done correctly, financing your new home can actually help you save and make money. In a previous article, we looked at three tips to help set up a proper mortgage. First, it is very helpful to pay off as much debt as you can before you commit to purchasing a home. The more you can pay off now, the less interest payments you’ll be making later. Next, find a bank that you trust. By doing both your personal banking and home financing in one place, you have a better chance of getting a small percentage break on your interest rate. Every discount helps when it comes to one of if not the biggest purchases of your life. Finally, fixed rates offer stable, long term savings on your new home. In this article we’re going to briefly discuss how you can build on these insights to help make you money.

Set Up a 30 Year Mortgage.

There are two common choices when it comes to the length of mortgage contracts for your new home: 15 years and 30 years. Where you might think it would be better to set up a 15 year mortgage, you can actually save more money by setting up a 30 year account. Setting up a 30 year mortgage will stretch your payments out so that your required monthly payment is roughly half that of a 15 year mortgage. Saving money comes into the picture when you take that extra money that you save on your initial payment, and you pay on top of your premium. By having a low payment, but paying extra on the premium, you put more money towards directly paying off the house. If you do this consistently and correctly, you’ll actually be able to pay off your house in roughly 15 years, while paying less money to the bank for interest.

Save and Invest Access Money.

Besides taking some of the money you save on a 30 year fixed rate and paying down on your premium, you can save and invest that money. Many banks and brokerage firms offer return rates of long-term investments of 6-12% percent. Where this might not seem so significant now, if you can save and invest for 15 years, not only will you pay off your mortgage, but you’ll have money in the bank on top of that to do with as you choose.

Mortgaging a new home can be stressful and confusing, but if you follow these tips, you’re on your way to making your money work for you!

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Clean and Clear: Tips for Selling Your Home

The time has come to sell your home. You’ve hired a realtor, and you’re about to place the ‘For Sale’ in your front yard. What you might not realize is that there are many steps you can take to both increase the value of your house and decrease the time it takes to sell it. Spending a few hundred dollars on repairs and cleaning supplies could possibly add thousands of dollars on the value of your house. If you are unsure of what areas need to be cleaned, don’t hesitate to ask your realtor or close friends. Sometimes, when you’ve lived in a place so long you miss the small needed corrections that potential buyers would notice. In simple terms, people are interested in homes that are clean and clear. Listed below are many simple, yet helpful tips that you can use to help sell your home.

Clean

  • Be sure to clean the carpets, especially worn down places and places with possible odors.
  • Wash all windows and doors. Clean all the house appliances.Remove grease spatters and polish all fixtures throughout the house.
  • Organize all the closets.
  • Replace old or stained tiles in the kitchen and bathrooms. Purchase new rugs and mats for the bathrooms.
  • Remove all smudges off door knobs and light switches
  • Be sure to mow the lawn regularly, and mulch where needed (especially the front yard).
  • Repair any leaks, cracks, or rattles that you hear throughout the house.
  • Tighten loose fixtures. Repair any cracks that might be in the molding.

Clear

  • Have a yard or garage sale to help remove unwanted clothes, furniture, appliances, etc.
  • Replace light bulbs with higher wattage bulbs to make rooms seem brighter and bigger.
  • Paint rooms that have dark or dull colors with light colors, such as white or off-white.
  • Remove any unneeded furniture from every room.
  • Take down pictures that you might keep on your refrigerator.
  • Organize even rarely used spaces in the house (like the garage, attic, or basement).
  • Make sure that shelves don’t have too much piled on them.
  • You should be able to see the baseboard in each room.
  • Make sure that all curtains are open and window shades are up.
  • Remove old or broken screens from windows and doors.

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