So you're a first time homebuyer, all set to claim your part of the American Dream as well as your $8,000 tax credit by buying a home this year. You've heard that the days of "no down payment" are gone for most people, while many of the down payment assistance programs are history. Today, most banks require a down payment; the last few years have proved that when there is no (or very low) equity behind loans, everyone's in trouble when the economy falters.
Even if you can find a lender who will let you get by without a down payment, remember the wisdom your parents passed on about why down payments are a good thing. They give you a stake in the house. Your payments are lower. You also have instant equity in case you need to borrow against your home for a good reason, like your kid's education or a medical emergency. Assuming that you have not been saving for your first home from the age of 10, how do you come up with a down payment? If you are buying a $200,000 home, you will need from $7,000 (3.5%) to $40,000 (20%) down. This means you may need to tap all available resources. Here's a few ideas:
Since it is always wise to keep plenty of money on hand to ease your transition into your new home, as noted in our last post Watch Out for Unexpected Costs in Your Affordable Home, be flexible in the type of loan you apply for. In most cases, an FHA loan, with its 3.5% minimum down payment is a great loan product for first time buyers. Once you are in the home, you can always pay down the mortgage if you want the benefit of more equity without having to make yourself cash poor upfront. For plenty of help, both in finding a great Denver home and finding the best way to get your home financed in the Denver area, check out the Bandy Home Team. We will show how the new $8,000 tax credit will work for you too. Marianne Bandy Denver Relocation Experts
If anyone has learned anything from the housing crisis of the last couple years, it should be "Buy an affordable home." So what's affordable? The cheapest house in town? Not necessarily. You want a home that is appropriate for where you are in your life. An affordable home is one that fits your income, your lifestyle, and your needs right now. Statistically, it is extremely unlikely that your first home will be the last home you buy. This means that an affordable home is one where with your current resources you will be comfortably able to make your down payment, plan for your monthly costs, and maintain your basic lifestyle. You might be willing to "tighten your belt" for a few months till you adjust to the new expenses, but you do not want to have to take a vow of poverty when signing your mortgage documents.
Once you've made the decision to buy your first home, your thoughts naturally go to all the great things you'll do to improve it, decorate it, and make it your own. While you're dreaming, cost is no object, so you see that plasma TV, the new furniture you've been wanting, the trendy window treatments, the multilevel deck. The reality is that before you order the plasma, you need to realistically assess the cash you'll need to have on hand to get started in your new home. When you move into a home, especially if you are coming from an apartment, there are many unglamorous costs that you need to figure in to make the place functional.
What are some of these other one-time costs that need to be factored into an "affordable home?"
Appraisal fees - this part of the loan approval process can run $300- 500
Keep in mind that things are usually more expensive than your estimate on paper. People tend to be optimistic when they write them down and underestimate the true costs.
At Bandy Homes, we will not only lead you to your affordable Denver home, but show you how the $8,000 first time homebuyer's credit can work to your advantage in offsetting the costs of being a new Denver homeowner. We can also explain the various first time buyer assistance programs available through Colorado and local government offices.
Marianne Bandy
A couple of weeks ago we talked about the value of having a home inspection before you agree to complete the purchase of a Denver home. The assumption was that if the inspector came up with a few issues, you could negotiate with the seller to have repairs made or knock some money off the price. What happens when the inspector finds major issues? When do you haggle and when do you run like the wind?
Inspectors basically find two types of problems with homes: the fixable and the unfixable (at least at reasonable cost). The unfixable problems include major foundation issues, location of the home in a floodplain or on a fault line, contamination of the water supply, or location under electromagnetic power lines. Some problems might not affect the livability in the short term, but finding home insurance or a buyer when you want to sell could be difficult. These are the types of inspector findings that should make you talk to your Realtor® about pulling out of the contract.
Most other things are fixable, although cost may be an issue. The inspector might find asbestos-clad pipes, unacceptable levels of radon in the basement, a serious crack in the foundation, water infiltration or mold spores, a pest infestation, roofing issue, or problems with the plumbing or other major systems. He might find that you need a more specialized inspection if he suspects a problem with the septic tank or other system he cannot see.
If the list of things you need to do is long and expensive, you need to reassess if you still want the property. You might be willing to put down $5,000 for a new furnace, but what if the house also needs a $50,000 septic tank repair and $35,000 worth of plumbing repairs? Given that housing prices in most areas are flat or declining, is it worth it make that type of investment in the home? If you are still interested, you might be able to negotiate some price reduction from the seller to have some repairs made, but the investment might still be sizeable. If the economics don't make sense to you, dial your Realtor® about voiding the contract.
In the case of a Denver foreclosure or bank-owned property, you likely won't be able to do much, if any, negotiating on the price for repair costs, but the total cost including repairs might still make the home a good value. FHA has a special loan available that can include costs for repairs up to $35,000, as long as the home will appraise. You need to purchase this type of home with your eyes open. Never skip the home inspection! Many foreclosed homes that have been vacant for a while have hidden damage that only a trained inspector can properly assess. In Denver, a common issue is broken water pipes that go undetected until the water is turned back on.
At Bandy Homes, we can help you assess the facts. We have helpful Denver buyer reports available and, of course, will be by your side to work through any transaction issues when you purchase your metro Denver home.
Marianne Bandy
With the rise of discount real estate firms and Internet listing services, homeowners who seek to sell their home often wonder if it's worth it to sign up with a Realtor®. Especially at a time when many sellers know they will have to accept less, they are hesitant to promise part of their profits to an agent who does what they think they can do themselves.
Being a Realtor® is not rocket science; our work is definitely more in the "perspiration", not "inspiration" category. Certainly, a savvy would-be seller can learn a lot about how to sell a home, implement the many good online suggestions for getting the home buyer-ready, and even get some information about comparable home values. When they list their home, they may even attract some potential buyers who think they will get a better price because no agent is involved.
Though about 12% of real estate sales these days are FSBO (For Sale By Owner), most people stick with a Realtor.® From experience, I as a Realtor® can sort through the often contradictory Internet tips to tell sellers what they really need to do to their home to make it sell. (Replace that bathroom tile, skip the Jacuzzi! ) I can fine tune the area data to price a home right and then promote it in a variety of online and traditional sites. This exposure is part of a larger marketing plan I set up for every client.
Where my experience really comes into play is in dealing with buyers and their agents. I know how to field questions about your home and the neighborhood in a way that is honest, tactful, and in compliance with federal consumer and housing laws. When buyers, often well educated by the Internet and primed to expect a low price by the media, start negotiating, I am experienced in bringing the transaction to a mutually satisfactory close with the right buyer. Needless to say, when other factors, like short sale or pre-foreclosure situations are involved, I am trained to be a long distance runner in pursuit of elusive loan mitigation officers - a time-consuming adventure most FSBO sellers are unprepared to handle. As a matter of fact, I am CDPE-certified, so if you are trying to avoid Denver foreclosure yourself, I can help.
For best results in selling your home, avoid the temptation to go FSBO. Hook up with an experienced agent. If you want to see how Bandy Homes would market your home, check out the credentials of our Denver home sales team. I am ready to help you buy or sell a home in the Denver metro area.
Marianne Bandy
Is your mortgage payment too high? If your answer is "yes," you may be eligible for help from Washington. President Obama's new program, Making Home Affordable, is ready to help over nine million Americans who need to refinance their homes or have their loans modified.
It is easy to find out if you qualify for this program. The government's new website www.Makinghomeaffordable.gov was set up in mid-March to help people learn if the housing plans will rescue them from a high interest rate or an excessive payment. The plan is unique because it establishes clear standards for who qualifies and who does not.
The refinancing part of the program might apply to you if you are up to date on your payments but cannot refinance because the value of your home has fallen. These days, lenders want to make sure there is equity in the home before they will issue loans. (When your home is refinanced, you are actually getting a new loan.) The federal program will help you if you meet the following criteria:
The loan modification part of the program is aimed at you if you are having trouble making your payment, either because your interest has increased or your income has decreased. You can qualify whether you are behind or not yet delinquent on your payments. This program might help you if meet these requirements:
On the website, you will be asked a few simple questions to see if you may qualify for either of the programs. If you do, you are then told to contact your lender to complete the application. The site even lists all the documents you should have ready when you place the call to the bank or loan servicer, such as mortgage documents and payment books for your first and second mortgages, account balances and monthly payments on credit cards, student loans, and other debts, tax returns, recent paystubs for members of your household, information about savings accounts or other assets, and especially in the case of a mortgage modification request, a letter describing what happened that now makes it hard for you to pay your mortgage.
The website has helpful payment calculators to show what your new payment might be and a list of frequently asked questions to make the program even clearer. It is intended to put your mind at ease if 
you want to stay in your home but are having trouble with the current payment.
What if you do not qualify for the program but still need help? This is where a Realtor like myself who is a Certified Distressed Property Expert can offer you other helpful solutions to avoid foreclosure in Denver. Contact me today at Bandy Homes for a caring and confidential analysis of your situation.
Marianne Bandy
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