Why Winter May Be the Right Time to Buy Your New Home

Daughter and Father near the Fireplace

It may be turning cold outside but fall and winter just may be the best time for you to get a hot deal on a new home. Don’t let the blues of shorter days keep you from house hunting in the fall winter. There are some good reasons that now may be the best time to buy your new home.

Fewer buyers are house hunting.
Most home buyers shop in the spring and summer, when homes pop up for sale like tulips. Because there are so many fewer buyers, winter home buyers are more likely to get a good deal on the house they want.

Lower prices.
With fewer buyers in the market, home sellers often lower prices to attract the buyers who are out there.

Sellers are motivated.
Motivated sellers may be a great thing for home buyers, as they are more willing to negotiate. When you find the house you are looking for, you may be able to negotiate on price, closing costs, repairs, and even items such as appliances or other items you want included in the sale.

Inspections may turn up more or different items in the different seasons.
You will have the opportunity to see the house at work in the winter. Gutters, windows, heating systems, etc. get put to test during the colder months. You may miss some of the curb appeal of the manicured lawn when shopping in the winter, but you’ll know if the plumbing is working at full capacity and able to handle extremes.

Don’t miss out on buying your dream home because it’s cold outside. Seize the opportunity to put the season to work for you.

Q&A about VA Loans

Military Father and Son

VA loans are $0 down payment mortgage options available to veterans, service members and select military spouses. VA loans are issued by private lenders and guaranteed by the U.S. Department of Veterans Affairs (VA).

Since its inception in 1944, more than 22 million VA loans have helped veterans, active duty military personnel and their families purchase homes or refinance mortgages.

How does a VA loan compare to a traditional/conventional home mortgage? Read on.

What is the down payment?

  • VA loans: 0% down.
  • Conventional loans: Up to 20% down.

Do I have to pay mortgage insurance?

  • VA loans: VA loans do have a form of mortgage insurance, the VA Funding Fee. It is usually 3.3% and financed into the loan up front. If the borrower separated from the military with a qualifying disability, the funding fee is waived to 0%.
  • Conventional loans: If buyers do put down less than a 20% down payment, they must pay for private mortgage insurance.

Are the interest rates for VA loans competitive?

  • VA loans: The VA backing gives lenders a greater degree of safety, which means the interest rates can be more competitive than non-VA loans.
  • Conventional loans: Without government backing, banks take on more risk with conventional loans, which can result in less-competitive interest rates.

How easy is it to qualify for a VA loan?

  • VA loans: Because the loan is backed by the government, banks assume less risk and have less stringent qualification standards for VA loans, making them easier to obtain.
  • Conventional loans: Conventional loans require stricter qualification procedures that can put homeownership out of reach for some homebuyers.

Can I do a cash out refinance? 

  • VA loans: Borrowers can do a cash out refinance up to 100% of their home’s value.
  • Conventional loans: Borrowers with conventional loans must leave some equity in their home when doing a cash out refinance.

What else should I know about VA loans? 

  • VA eligibility is re-usable. A lot of people think they are only eligible for a VA loan one  time, but they are able to get VA loans more than one time.
  • You can have more than one VA loan at a time. It’s a myth that you can only have one at a time.
  • VA loans are assumable.

 You or someone you know may be the perfect fit for a VA loan. Contact a loan officer today to learn more about VA loans and other types of home loans that may be a good fit for you. 

 

Scaredy Cat Sellers: You can sell your home and move into your dream home in this market

Arrow Shaped Home For Sale Sign

“I’d sell my house but where would I go?”

In Colorado and across the hottest housing markets in the United States, potential home sellers are asking themselves this very question. “Where will I go when my home is sold?” Scarcity has reared its head, and in turn, is helping to drive housing markets into some of the lowest inventory levels ever seen.

But is burying your head in the sand and waiting for the market to change the best way to make financial decisions that will impact you and your family now and in the future? Perhaps there are ways to put this sellers’ market to work for you as a home seller and a home buyer.

According to some of metro Denver’s Realtors, what you need in a market like this is a good team on your side, a bit of preparation before you begin the process of buying or selling, and a healthy dose of gumption. And they all agree that you can sell and buy a house with those pieces in place.

Why make a move now in this market?

Home prices and mortgage interest rates are continuing to rise. So, although staying where you are and waiting for the market to “fix itself” may seem safe, you’re betting against yourself. As interest rates rise, the amount a buyer qualifies for goes down. As time goes by and home prices rise, buyers may find that they qualify for less home.

“It’s a unique time to make a move in the Denver Metro real estate market,” says Jamie Nevers, Real Estate Advisor with the Legends Team of Your Castle Realty. But selling your current home and buying your next dream home is possible. Sellers can use the equity in their home, buy a home that better suits their needs, and use the equity they have accumulated to put a larger down payment on a home, while keeping their mortgage payments close to what they are accustomed to, she notes.

“Just because you are making a move doesn’t mean that you have to overpay or have a larger mortgage payment to reach your goals,” she says.

Julie Voorhees, a Realtor with Keller Williams Action Realty, echoes Nevers, adding that to forge ahead in this market buyers and sellers must get in the right mindset and have reasonable expectations and a strong team supporting them, whether they are buyers, sellers or both.

“In this market we have been experiencing ‘seller greed’ and ‘buyer fatigue,’” says Voorhees. Now is not the time to enter the market on your own. “The best way to be positioned to buy and sell is to have an excellent Realtor and lender… This is a skills market. Hire someone who has the skills.”

Why do sellers need a Realtor in a market like this?

First and foremost, if homeowners are selling their home with the intention of moving to another, they need to have their “ducks in a row,” before they make a move. They need to be agile and ready. A Realtor is positioned to help them negotiate offers on their current home, find the right home to purchase, and get their offered accepted on the new home, something that can prove challenging. Now is not the time for sellers or buyers to go-it-alone.

But what if a homeowner who wants to move still feels nervous about putting out the “for sale” sign?

Amy Hitch, a Realtor with HomeSmart Cherry Creek, acknowledges that for sellers who want to make a move now, letting go of your current home feels risky. The looming question, “Where will I go?” never disappears.

“I remind them that I am here to help them through the entire process. You never know what a day will bring, and what will be listed and on the market tomorrow,” she says.

She also educates her sellers who are looking to move to their next home about “buy before you sell” programs to ensure homeowners are ready to make a move when the sold sign goes up in their yard.

Voorhees complements this suggestion with other ways that home sellers can make their decision to sell and move less stressful. She reminds her sellers that they can ask for a lease back period of 60 or more days, which gives the sellers time to purchase their next home, or they can ask for a delayed closing, again providing sellers the cushion they need.

Nevers offers yet another approach – She recommends being proactive, having a pre-approval letter from the lender and being ready when your home goes under contract to start looking for your new home immediately. She works with her buyers to be strategic and practice patience.

“Start looking in the areas you are interested in purchasing as soon as possible and educate yourself on what a strong offer looks like in that area. When you do find the perfect home, you can put your highest and best offer in without hesitation,” she concludes.

As with anything in real estate, these professionals all agree that there is no one-size-fits-all approach in this market, but with the right team, the right amount of persistence, and a bit of gumption, there is something for every seller and every buyer, and they can help any scaredy cat seller off the fence and into their new home

Seniors Can Find Power and Peace of Mind with a Reverse Mortgage

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Retiring, planning for retirement, and actually living out your golden years can be among the most exciting times in your life. They can also be among the most daunting. The choices can feel overwhelming and might make some seniors feel unsure of themselves. Some seniors may even feel like they have lost their power.

A reverse mortgage can help seniors make choices based on possibility not fear.

A reverse mortgage, also known as a Home Equity Conversion Mortgage (HECM), allows seniors age 62 and older to convert a portion of their home equity into cash. The loan requires no monthly payments and lets them retain ownership of the property. The equity built up can be paid to them. Unlike a traditional home equity loan or a second mortgage, they do not have to repay the loan until they no longer use the home as their principal residence or fail to meet the obligations of the mortgage.

Seniors can use the money from a reverse mortgage to:
• Build an emergency fund
• Purchase long-term care insurance
• Buy a safe and reliable car
• Keep savings in a retirement fund for longer-term growth
• Stay in their own home, in their neighborhood, with their friends
• Live debt-free
• Build a cabin on a lake
• Remodel a kitchen or bathroom
• Take a well-deserved vacation
• Earn a college degree
• Support a favorite charity

How seniors use the money they receive from a reverse mortgage is up to them. The choices are limitless.

To learn more about how you or a senior you love can take back their power, contact us today, or click here to have more of your questions answered. Remember, there’s power in knowledge!

Decisions, decisions – FHA or Conventional Loan?

Piggy Bank and Scales of Justice - 3D Rendering

It’s easy to feel overwhelmed when you’re considering a home loan. The last thing you want to feel is conflicted and confused! We’re here to help. One of the questions we hear most often is “What is the difference between a conventional loan and an FHA loan?” Let us tell you.

FHA stands for Federal Housing Administration, which means that FHA loans are backed by the government. Originally, they were created to help make homeownership more accessible to buyers with damaged credit or minimal savings. Over time, they became popular across all income levels and especially with first time buyers.

Conventional loans are your “basic loan.” They must conform to specific guidelines, but they are not backed by the government. They also are very popular.

Both loans offer you flexibility in type (fixed rate vs adjustable rate) and term length (30 years or 15 years).

There are some key differences between the two loan types.

FHA vs Conventional Credit Guidelines

FHA Credit Score Requirements
FHA has lower credit score requirements. A credit score of 580 or over allows you to make a down payment of just 3.5%. If your score is between 500-579, and you need to put down at least 10%. Buyers with credit scores under 500 likely won’t be able to qualify.

Conventional Credit Score Requirements
Exact credit score numbers needed vary from lender to lender and are impacted by other factors, but as a “rule of thumb,” 620 is generally the lower limit of conventional credit requirements.

Down Payment Requirements
One of the biggest myths about mortgage loans is that you need to put 20% down to buy a home. There are options available to put as little as 3% down.

FHA Loan 3.5% Down Payment
With an FHA loan, you can put as little as 3.5% down. For many, this is the same amount as you’d put down for a rental deposit.

Conventional Loan 3% Down Payment
With a conventional home loan, you can go as low as 3% with the program’s “conventional 97 loan.”

Private Mortgage Insurance for FHA and Conventional
If you put less than 20% down using any loan except a VA loan, you must have private mortgage insurance. Private mortgage insurance (PMI) protects lenders in the event that borrowers with low equity default on their loans.

FHA Loan PMI
For FHA loans you pay PMI for the life of the loan if you initially make a down payment of less than 10%. To remove the PMI, you must refinance once you build enough equity. In addition, PMI tends to be slightly higher for FHA loans than it is for conventional loans, since FHA have slightly more relaxed credit and debt requirements.

Conventional Loan PMI
PMI is simple with conventional loans. Once you have 20% equity in your home, PMI drops off. You can get there by putting 20% down on the house for your down payment, or by paying PMI until you hit 20% equity with your monthly mortgage payments. Your lender is legally required to drop your PMI automatically at 22%, or per your request at 20%.

Income Requirements
Debt to Income (DTI) is the percentage of your gross monthly income that will go toward paying off debt Lenders use the following formula to work out this number:
monthly expenses ÷ pre-tax monthly income = DTI %

FHA Debt to Income Requirements
With FHA home loans, some lenders may offer a bit more flexibility if the borrower’s finances and credit are good.  However, you want to choose a lender who has your best financial picture in mind, so working with someone who wants you to get your DTI more in line is a positive factor for your long-term financial security.

Interest Rates
FHA loans tend to come with lower interest rates than conventional loans, likely due to the fact that FHA borrowers have historically been less likely to pay off their mortgage early than conventional borrowers. However, if interest rates are your only factor, the difference is usually negligible, and you can easily pay more in PMI during the life of the loan.

Property Eligibility for FHA and Conventional Loans

FHA Property Guidelines
FHA home loans are backed by the government and are designed to help families, so they place more restrictions on the type of house that qualifies.
• Must be occupied by the buyer
• Must be your primary residence
• Must be occupied within 60 days of closing
• Must be assessed for safety with an additional home inspection
• Must be under the capped lending amount

Conventional Mortgage Property Guidelines
Conventional loans have fewer restrictions. Second homes and investment properties both qualify, and don’t require special inspections.

They have a capped loan amount called the conforming loan limit, which your lender can share with you.

Conventional 97 Property Qualifiers
However, if you use a conventional 97 loan and put just 3% down, there are additional requirements:
• The property must be a one-unit, single family home, co-op, PUD, or condo
• The property will be the buyer’s primary residence
• The buyer (or one of the buyers) can’t have owned a house in the last 3 years
• The loan amount is at or under the capped amount

Which Mortgage Loan is Right for You?
There’s no definitive answer here. Your lender will help you to review your finances to determine your best choice. You may want to consider the following:

An FHA loan may be best if:
• You have lower or no credit
• You have a lot of debt
• You already have an FHA loan and want to refinance
• You don’t plan on staying in the home long enough to hit 20% equity
• You have a bankruptcy or foreclosure in your past

A conventional loan may be best if:
• You have fair to excellent credit
• You have a reasonably low DTI ratio
• You need to be able to make the smallest possible down payment
• You want to be able to dump PMI without having to refinance
• You’re buying an investment property or second home

Remember, this is just a guideline to these two loan types. At Universal Lending we work to educate and inform our borrowers so they make the best financial decisions possible to keep themselves and their families financially secure while enjoying the benefits of homeownership.

More of America’s Families Turning to Multigenerational Homes

Multi Generation Family Relaxing At Home Together

Adult children return home after college. Grandparents move in with their children and grandchildren. It’s a new time for America’s families. According to the Pew Research Foundation in 2016, a record 64 million people, or 20% of the U.S. population, lived with multiple generations under one roof.

The share of the population living in this type of household – defined as including two or more adult generations or including grandparents and grandchildren younger than 25 – declined from 21% in 1950 to a low of 12% in 1980. But that tide turned. Among 25- to 29-year-olds in 2016, 33% were residents of such households. Among a broader group of young adults, those ages 18 to 34, living with parents surpassed other living arrangements in 2014 for the first time in more than 130 years.

What has changed in our families and our culture?

Economic and cultural factors have likely both had a hand in this change.
After the recession hit in 2008, the foreclosure rate skyrocketed, and families merged resources. Even as the job market began rebounding, college graduates still returned home while they looked for jobs and paid down student loan debt, which had reached an unprecedented high.

At the same time, seniors are living longer. They often benefit from the support of a family who can aid in daily chores and caregiving, while allowing them to protect their financial resources. The families gain from this as well, as cultures and generations build familial bonds, and often grandparents can help with child care and child rearing.

Another possible reason for the trend of multigenerational living, according to Pew, is that the Asian and Hispanic population is growing rapidly, and those groups are more likely to live in multigenerational households.

How does this change the housing market?

Homebuilders, developers, and designers are responding to this new demand, designing and creating floor plans that allow for separate living space, reconfigured kitchens, and that have more than one point of entry that allows for privacy.

One large builder, Lennar, has adapted to multigenerational living with its NextGen Communities concept, which it advertises as “Two homes. Under one roof” and “A home within a home.”  multigenerational building concept boasts providing accommodating floor plans for families without sacrificing comfort.

For families not ready to make a move to a new home, using resources from the sale of a home often opens up options for home modifications such as turning a basement into a grandparent suite, creating alternatives for stairs or building out a first-floor master suite, updating kitchens and bathrooms for accessibility, and eliminating tripping hazards between rooms and in showers.

What does the future look like?

No one knows exactly what the future for multigenerational homes looks like. There’s agreement that adult children will continue to live with their aging parents. And there’s agreement that college costs make it difficult for graduates to immediately strike out on their own. These two ideas themselves suggest that multigenerational families aren’t going anywhere soon.