For all Your Real Estate Needs Contact Bev at 970-631-7111
For all Your Real Estate Needs Contact Bev at 970-631-7111
Items that are most commonly noted on Inspection Reports
Repairing common inspection issues before you list your home can provide many benefits to both you and the buyer i.e. negotiating the price and speed up the home inspection to prevent delay in closing. Some buyers get nervous and walk away from purchasing if there are too many items noted on the Inspection Report. These are common issues that we suggest repairing before the inspection is scheduled:
If you would like to set up a free consultation to talk about buying or selling a home, contact us at 970-631-7111 to schedule an appointment.
This home is mechanics dream with the 1000 SF Detached Garage that features an office, pit, 3-220v hookups, FA furnace, cabinets/shelving, concrete floor and RV Parking. The 2048 SF 4-level house features 2 car attached garage, remodeled eat-in kitchen with pantry, wood floors on main level, walk-in closets, fireplace in family room, patio door to deck and view of large private backyard. 15 x 23' recreation room in finished basement with room for pool table and/or 4th bedroom. Covenants with NO HOA, located in UNINCORPORATED WELD COUNTY.
CONTACT US at 970-631-7111 for more information on this property.
“I have terrible credit, so I can’t purchase a house.” This is a common complaint among would-be homeowners. If they don’t say it, they think it—and continue paying rent without considering whether their assumption is true.
Many people think that being 30 days late on a credit card payment puts an indelible blot on their credit history, dooming them forever in the world of credit. Others believe that they won’t be able to get a mortgage because their credit report has some bruises and blemishes, so they don’t ever apply, fearing rejection. This is what we call a “self-fulfilling prophesy.”
Let’s clarify what constitutes “bad credit” and talk about what mortgage lenders require in a prospective borrower’s credit history. Lenders almost universally use the FICO score to assess the credit risk presented by people applying for loans. It is a three-digit number between 300 (terrible) and 850 (phenomenal), generated by a computer based on information in one’s credit report. Contrary to popular belief, lenders do NOT expect perfection in those hoping to borrow money from them. For a conventional loan (one that ultimately will be sold to Fannie Mae or Freddie Mac), the minimum for loan approval is 620. That number is even lower for federally-insured FHA loans; applicants can have a score as low as 580. What does a 620 score look like? After reviewing thousands of credit reports over the years, we know that a borrower with a 620 score must have some combination of the following:
First, the lender will require that delinquent accounts be brought current, and that collection accounts and judgments be settled. This is the case regardless of credit scores. Ironically, for many borrowers, settling these accounts will raise the credit score—sometimes by a lot.
Second, know that the money will be more expensive for a lower-score borrower. Lenders use “risk-based pricing,” where they adjust the borrower’s interest rate according to a combination of FICO score and loan-to-value ratio. A borrower with a 620 score will get a rate approximately .75% higher than will someone with a 740 score. What about those unfortunate souls whose credit reports are even below 580? Is there any hope at all for them?
There is always hope, but getting out of FICO prison requires some thought—and a plan. Here is the plan:
Step 1: Know where you are now. You can do this by going to the three reporting bureaus Equifax, Experian and TransUnion directly to get a FREE copy of your credit report. Print out your report. Mark all the negative items in red.
Step 2: Number the negative items in order of severity, starting with collection accounts, liens, and judgments. Accounts that are reported as past due come next. Then, look for credit card accounts whose balances are over their limit. Finally, number credit card accounts whose balances are more than 30% of their limit.
Step 3: (This may be the hardest—but it’s necessary): Get in touch with any collection agencies listed on your credit report. Negotiate a payment to settle the accounts in full. They may refuse at first, but be persistent. Collection agencies get a commission for settling accounts. Important: Do NOT agree to an immediate “check by phone” to settle the account. Don’t give them any money before getting a written agreement for a complete settlement. Be aware that the IRS will consider that any reduction of the balance to be income, and you’ll have to pay tax on it.
Step 4: Work on settling any judgments or liens. Since these are items in the public record, you don’t have as much chance of a reduced settlement—but you don’t have anything to lose by asking the judgment creditors to give you a break.
You’ll need cash for steps 3 and 4, but you’ll have to settle those kinds of items to get a mortgage from any lender.
Step 5: Bring delinquent accounts current. This step alone can add 25 points or more to your score. If any of the delinquent accounts are revolving (credit cards) and over your credit limit, the improvement could be more dramatic.
Step 6: Work on reducing credit card balances below 30% of the credit limits. Balances on revolving accounts make up about 30% of your score. This is called “credit utilization.” You may also be able to lower that percentage by increasing your credit limit; if you owe $1,500 on a card with a $3,000 limit, getting a credit line increase to $5,000 will drop your percentage to 30% from 50%, so your score should improve.
There are some actions that won’t do you any good:
These steps may seem like a lot of work. They are. The fact is, it’s easier to get into difficulty with your credit score than to get out of it. But taking these steps—however long it may take—will provide enormous benefits.
And the “prize” of home ownership may be closer than you think.
Please, as always, reach out to me with any questions or issues. I'm always here to help.
Interest rates are constantly on the move. The rate on a 30-year fixed rate mortgage has moved lower since mid-December. This may create an opportunity to save money by refinancing. Here’s how to decide whether a refinance is beneficial.
Get a lower rate
This may seem obvious, but there is always the question of how much should you be able to lower your rate to benefit? Refinancing always involves certain costs, such as title, escrow and appraisal fees, and those fees can negate the benefits from a lower rate.
If you are considering a rate-and-term refinance - a loan whose sole purpose is to improve your rate,you should first consider how long you are likely to own the property. You should be able to recover the cost of the refinance and derive net savings from the lower rate.
To get an approximate idea of your savings, determine first what the cost of the new loan will be. The correct term is non-recurring closing costs. These are the one-time fees and expenses incurred in your refinance. Among these are title and escrow fees, appraisal, and lender underwriting and processing fees. There will be other costs involved, such as prorated interest and funding of a new impound account for taxes and insurance, but this is money that you would have paid even without the refinance.
Once you know the cost of your loan, calculate your monthly savings. To do this, multiply your current loan balance by the amount you expect to lower your rate. If your balance is $300,000 today and you can lower your rate by .625%, you would reduce your interest charges by $1,875 per year (300,000 x .625 = 1,875).
Next, divide the cost of the loan by your annual savings. This will tell you how long it will take to recover the cost of your loan. If your non-recurring closing costs are $3,750, you will recover your cost, or break even, in two years (3,750 / 1,875 = 2). From that time forward, you will be accruing net savings.
You may be able to get a rebate from your lender by selecting a higher interest rate. This rebate is the basis of a no-cost refinance. Keep in mind that you have that higher rate over the term of your loan, so it may not give you the maximum savings if you plan to have the home for a long time.
To get the most benefit from a rate-and-term refinance, consider making the same payment as when your rate was higher. Doing this will shorten the term of your loan and avoid the fritter factor, where the monthly savings from the lower rate are simply absorbed into the household budget, never to be seen again.
Get rid of mortgage insurance
If you bought your home with a loan larger than 80% of its purchase price, you are probably paying mortgage insurance, typically referred to as PMI or simply MI. Lenders require this insurance to limit their exposure on a loan they consider to be risky. If you have a conventional loan with MI, you can ask the lender to remove it once you can prove that your loan is 80% of your property value or less. You do this with an appraisal, which costs about $500. You might choose this approach if you already have a rate close to the market rates available today.
With MI and a rate higher than the market rate, you may improve your position with a refinance. Use the calculation we mentioned earlier, but include the monthly MI premium in your numbers.
Many people bought their homes using a government-insured FHA loan. Those homeowners may not be able to get rid of MI; it will be in place for the life of the loan. If your property has risen in value, a refinance could save you some money even if your new loan is more than 80% of your home's value. Replacing your FHA loan and its non-cancellable MI with a conventional loan whose MI can be removed can set you up for larger savings later, when your property has gone up in value and you can remove the mortgage insurance.
Getting cash out
If you have a lot of equity in your home, a refinance can convert some of it into cash. Many people refinance to consolidate and pay off consumer debt, such as credit cards. While the rate of a mortgage will almost certainly be much lower than any credit card, there are some caveats to keep in mind before committing to a cash-out refinance for this purpose.
If you are carrying high credit card balances, you are likely paying double-digit interest on them. Paying them off with a cash-out refinance will drop your payments dramatically. A $20,000 credit card balance will require a monthly minimum of about $600. The monthly payment on that portion of a mortgage is less than a huge amount to save, right?
Not so fast. While you would be paying a lower rate, part of the reason for the reduction in your payment is the fact that you are stretching the repayment over 30 years. The total interest you'd pay on that 30-year loan would be over $16,000. If you decide to consolidate consumer debt with a mortgage refinance, consider making a higher monthly payment to reduce the interest expense. In this case, increasing the payment on your mortgage by
You should also take a hard look at your spending habits if you are considering a cash-out refinance for this reason. If you pay off all your credit cards with a mortgage, then accrue large balances again, you will not be improving your financial position. Use the refinance to get back on an even keel financially, and pay your credit cards off in full each month.
Todays low rates create some opportunities to save. The knowledge you now have can help you to make the most of them.
© 2017 IRES Information source: Information and Real Estate Services, LLC. Provided for limited non-commercial use only under IRES Rules. @copy; Copyright IRES. All rights reserved. Information deemed to be reliable but not guaranteed. The data relating to real estate for sale on this website comes from IRES and the Broker Reciprocity Program.sm. Real estate listings held by brokerage firms other than MB/West Realty are marked with the BR logo and detailed information about them includes the name of the listing brokers. Listing broker has attempted to offer accurate data, but buyers are advised to confirm all items. listing information is provided exclusively for consumers' personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Information last updated on 2017-08-23 22:35:22.
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