REAL ESTATE MOVES TO MAKE BEFORE THE END OF THE YEAR

Many of us know about some end-of-the-year financial tips we can use to lower our tax obligations – maxing out our 401(k), funding an IRA, and making charitable donations. But there are several real estate-related actions that can also help. With time ticking down before the calendar rolls over to a new year, jump on some of these smart strategies that can help you hold on to more of your money.

1. Buy a house

With a quick escrow, you can close before the end of the year, which will mean you can take a nice deduction on your 2015 taxes. “We calculated that a homeowner who took the average for each of four tax benefits would claim $15,871 in home-related deductions (if he or she itemizes),” said houselogic. Those include mortgage interest, points paid on a mortgage, property taxes, and mortgage insurance.

Getting preapproved now can also mean locking in a low interest rate before the predicted rise this month.

“Americans looking to buy a home are facing pressure to act as soon as possible, as the era of rock-bottom mortgage rates that have sustained the nation’s housing market since the recession could be coming to an end,” said the Washington Post. “For years, many home buyers have enjoyed interest rates of under 4 percent, far lower than historic averages. But many analysts say that will change if the Federal Reserve begins pulling back its support for the American economy next month, as is widely expected. An increase in the central bank’s benchmark rate is likely to result in rate raises for all sorts of loans, particularly mortgages.”

The Post noted that mortgage applications were up 20 percent this fall compared to last year – perhaps a reaction to the threat of rising rates.

2. Refinance

Quick, before interest rates go up. “The Mortgage Bankers Association expects that rates on 30-year loans could reach 4.8 percent by the end of next year, topping 5 percent in 2017,” said the Washington Post. “Rates haven’t been that high since the recession.”

But not everyone is a prime candidate for refinancing. “If you can shave at least 1 percentage point from your current mortgage rate, then refinancing probably makes sense,” said Interest.com. “Let’s say you have a 30-year fixed-rate home loan that’s charging 5.6%.Refinance at current interest rates, and you’ll reduce your monthly payments by about $90 a month for every $100,000 you borrow.

The best deal for most borrowers is the one that offers the lowest interest rate, with no points and lender fees of $2,000 or less.”

3. Make your January house payment early

If you’re already a homeowner, making your mortgage payment for January in December will allow you to deduct the interest this year.

“Unless you expect your income to rise next year, try to claim as many deductible expenses as possible by year-end so that you can take the write-offs sooner rather than later,” said Kiplinger.

4. Pay your property taxes early

“In states where property taxes are due in multiple chunks, it may make sense to pre-pay next year’s first installment before this year ends,” said Forbes. “This is especially the case for people expecting their incomes to go down in 2015. Just be sure that your mortgage company allows for pre-payments.”

5. Defer rental payments

Have rental property? “One simple way to lighten your tax burden in the coming year is to delay the receipt of payments on rental properties until after the first of the year,” said ABC News. That way it won’t be taxed until the following year.

6. Purchase a rental property

The depreciation of rental property can actually help make you money. It might be too late to pull together a purchase at this late date, but at least you’ll know what to be prepared for next year.

“It’s no secret that rental properties lose money on paper. With the power of deprecation, the fact you get to deduct the mortgage interest your renter is paying for you, and not to mention travel, property taxes, HOA fees, repairs, maintenance, home office, supplies, cell phone, etc… the tax benefits add up quickly,” said CPA Mark J. Kohler. “At the very least, you will be able to carry these losses forward indefinitely to write off against future property sales, if you aren’t able to deduct them immediately against your other income. The tax benefits can be phenomenal.”

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Betsy Spitzer, Montrose Real Estate Group, 970-901-1181 spitzerej@msn.com

WHY REAL ESTATE MARKET CONDITIONS MATTER

A Comparable Market Analysis (CMA) can tell you what buyers recently paid for homes similar to yours, but that’s not all you need to know to choose the right listing price. You need to know the market’s appetite for your home, and that can only come from an overview of your community’s current market conditions.

Market conditions are like a weather report; it helps you predict what the current crop of buyers will do. Using this knowledge, you can price your home to sell quickly, and for the most money possible.

Why is a quick sale important? The right price generates a bumper crop of buyers. If you price your home too high compared to other similar homes, you’ll appear to be testing the market. Buyers will assume that you’re going to be too difficult in negotiations.

Here’s what you need to know – what kind of a market are you in? Market conditions are formed by buyer attitudes, made sunny or cloudy by jobs, incomes, mortgage interest rates, and overall consumer confidence.

It’s possible that your community could have buyer’s and seller’s markets simultaneously. For example, your neighborhood may be hot, while the subdivision a mile away is stone cold.

A seller’s market is characterized by confident buyers, short “days on market” and low inventory levels of less than six months on hand. This usually results in rising prices.

A buyer’s market is characterized by longer “days on market,” and high inventory levels of seven months’ supply or more. To get buyers to come in from out of the storm, sellers must offer incentives such as seller-paid closing costs or lower prices.

The market conditions will tell you the long and short-term trends. If the market is heating up, you can ask a little more for your home. If the market is cooling, you may need to price your home slightly under the market in order to attract more buyers.

One thing you absolutely should never do is ignore market conditions. It’s said the market is always right. If you price your home too high, you’ll know when you get few to no showings.

That’s why it’s important to ask your real estate agent for occasional market updates as well as a fresh CMA. You’ll get a better idea of what your home will sell for and how long it will take to sell.

Betsy Spitzer Montrose Real Estate Group 970-901-1181 spitzerej@msn.com

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WHY HOME BUYERS SHOULD HIRE A PROFESSIONAL

Getting a purchase closed in today’s market is complex. The real estate market has changed greatly from only a few years ago. Buyers face many more hurdles including stricter financing, low housing supplies, higher mortgage rates, and rising prices.

To negotiate today’s challenges, you need a real estate sales professional to help you close the deal. A good real estate professional understands current market conditions. He or she has house-by-house neighborhood experience and can help you obtain the right home at the best price and terms.

Your agent can help you find a home quickly. Not only do real estate agents have access to the local multiple listing service, they also share knowledge of homes coming onto the market with their colleagues. Your real estate professional will tell others about your requirements for a home so they can also be on the lookout for you.

In fact, networking is one of the biggest industry advantages. Many homes are bought and sold without a sign ever going into the yard. But, for buyers to be shown the latest homes on the market, or to hear about homes about to come onto the market, there has to be a strong relationship between the buyer and the real estate professional.

If you want to be the buyer positioned to make first and best offers on the most desirable homes, make certain your agent knows you are committed. How do you show you’re serious? There are several ways.

Get prequalified with a lender. Share your financial records so you know exactly how much home you can buy. Your agent won’t go over your limit because it would be a waste of time to show you homes you can’t afford to buy.

Work with only one agent. You can do this by signing a buyer’s representation agreement, if it’s customary in your area. If not, show your loyalty by telling other agents you may meet at open houses or socially that you are represented and give them your agent’s name.

Don’t shop for homes without your agent. If you want to look at open houses or builder homes, invite your agent to go along. If your agent can’t go, make sure you register your agent’s name with builder sales reps and open house sellers’ agents.

Be loyal. Real estate professionals work primarily on commission. If the deal of the century is about to come on the market, who do you think your agent will tell first – the buyer with five other agents or the buyer who is loyal? If you’re playing agents against each other thinking you’ll get people to work for free and that you’ll have your pick of homes to choose, you’re wrong. Agents talk, and they’ll find out they’re working for the same buyer. If you want great service, show appreciation, confidence, and commitment.

Once you find the house you want, the work really begins. You’ll have to navigate negotiations, loan approval, seller’s disclosures, inspections with environmental and structural reports, and so on. From helping you make a reasonable offer, to providing for the discovery and disclosure of material facts, your agent can help protect your interests.

Buyers and sellers are natural adversaries. Agents must be skilled negotiators and problem solvers, as well as anticipate problems before they happen. Pride, ignorance, or stubbornness can get in the way of a fair deal for both sides.

Your agent will share your risk, and will make sure you go into any home purchase with your eyes wide open. Take advantage of the greatest home buying resource available — your own real estate agent.

Betsy Spitzer
Montrose Real Estate Group
970-901-1181

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APPLYING FOR A MORTGAGE? KNOW YOUR NUMBERS

When you buy a home, it’s all about the numbers. Your mortgage rate is based on your credit scores, debt-to-income, and how much of a down payment you can afford.

Know your credit scores: Your credit scores can fall between 300 and 850. Lenders use these numbers, which are compiled by three credit bureaus and Fair Isaac to give them a quick snapshot of your credit-worthiness.

Lenders are still in a low-risk mood and are requiring fairly high credit scores from borrowers. To qualify for the best mortgage interest rates, such as a benchmark 30-year fixed rate, your credit scores must be approximately 720 or more. To find out what your credit scores are, visit www.annualcreditreport.com, the site where you can get free copies of your credit report and scores.

Know your income–to-debt ratios: To qualify you, lenders use two ratios — income to mortgage debt and income to total debt.

To qualify for a 30-year fixed rate conforming loan that is federally insured (FHA), your income to mortgage debt can be no higher than 29% of your gross annual income. If you make $5000 gross income per month, your house payment, including principal, interest, hazard insurance and property taxes, should be no larger than $1,450.00.

If you’re carrying credit card debt, student loans, or pay child support, your monthly debt service must be counted. To get the income to total debt ratio, multiply your monthly income by 41%. If you gross $5000 per month, your total debt -including your house payment – can be no larger than $2050.00. That means to qualify for a $1450.00 house payment, your other debt payments can be no higher than $600 per month.

Know your down payment: For most loans, your credit scores affect down payment requirements. If you have a high credit score, you can get an FHA-guaranteed loan with only 3.5% down, but if your scores are low, you may be required to put as much as 10% down. . FHA loans with less than 20 percent down require mortgage insurance that will not be discharged unless the home is refinanced or sold.

Conventional loans are sold by banks as securities to Fannie Mae and Freddie Mac, with the best rates only available to consumers with 20 percent down. You can obtain both FHA or conventional loans with less money down, but expect to pay a mortgage insurance premium, which reduces the risk for the lender.

Where your down payment originates also makes a difference to lenders. If you have saved the money yourself, or it comes from a recent real estate transaction, lenders tend to be more relaxed than if your parents are giving you the money as a gift.

All these numbers have to dovetail and make sense to the lender, so you can comfortably afford the home you want to buy.

Betsy Spitzer
Montrose Real Estate Group
970-901-1181

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35 Acres of Seclusion, Privacy and Views in Montrose Colorado

A very unique property for those looking for seclusion, privacy and views.

BORDERS BLM AND DOW, has partial ownership of horsefly canyon. Kitchen renovated in 2014, along with partial renovation of both bathrooms. Spacious living room with gorgeous wood fireplace that heats the majority of the home. Large mudroom, laundry room and pantry, lots of storage with large freezer that comes with purchase.

Two car detached garage with extra space for storage and toys! Four stall barn with tack room and attached corral area. Four large dog kennels, another large hay barn, two chicken coops, and much more!!! 

35 Acres, a must see at $454,750

For more information or to schedule a showing please contact me:

Betsy Spitzer – Montrose Real Estate Group

Montrose Colorado, 970-901-1181

email:spitzerej@msn.com 

   

Real estate today: Older buyers, more bathrooms

Good news abounds: In August, new home sales were at their highest level since 2008. Homebuilder confidence is back to its best level in a decade and even mortgage applications are climbing again.

Data released shows construction crews are starting on homes at the fastest pace since the recession.

Put all that together and the housing market is finally starting to be a real boost to the U.S. economy — and stock market — instead of a drag.

But today’s real estate market is a very different place than before the recession. American home buyers are getting older and homes are getting bigger.

The median age of a homebuyer has gone from 35 to 43

The median age of a homebuyer in 1985 was 35.

When the housing boom was nearing its peak in 2005, the median homebuyer’s age was 39. Now it’s 43, according to U.S. Census data.

“We consistently tell that story of people delaying homeownership,” says Skylar Olsen, senior economist at Zillow. “People are delaying things that pre-date homeownership — like getting married later and having children later.”

Homes are getting bigger

Homebuilders are catering to more middle aged buyers by building larger homes.

Since 2000, the typical American home for sale had about 1,800 square feet. That’s remained fairly steady over time.

But new homes that are just being built typically have 2,200 square feet, according to an analysis by the National Association of Home Builders. Potential homebuyers say they want a place that is at least that large.

So what’s going into all that extra space?

More bathrooms.

“Builders are adding more bathrooms. You want a little bit more privacy,” says Olsen.

Multi-family homes are also booming as people buy homes as investment properties to rent out. In the late 1980s, people would rent for four years before purchasing their first home. Now it’s at least six years.

Large homes often translate to more money for builders. No wonder the stock market funds that track homebuilders are soaring this year.

The iShares U.S. Home Construction ETF (ITB), SPDR S&P Homebuilders ETF (XHB) and iShares Residential Real Estate Capped ETF (REZ) are all up about 6% or more in 2015. That’s much better than the overall stock market, which is negative for the year.

Student debt doesn’t explain housing trends

The other common explanation for this big shift in American real estate is that young people have too much debt to buy homes, especially from student loans.

But economists at Zillow took a look at the probability that someone would buy a home if they have zero debt all the way up to $50,000 in student loans.

They found that higher student debt had almost no impact on the decision to buy a home.

Banks were very willing to lend to young people who had bachelor’s degree or higher, a recognition that these people would be likely to earn good salaries and pay off their loans.

The one exception was people who earned only an associate’s degree. There was a 75% chance of buying a home if they had no student debt.

But that fell to less than 60% chance of purchasing property if they had $50,000 in loans.

It’s an economic reality that workers with at least a bachelor’s degree now earn about $65,000 on average a year, compared to less than $50,000 a year for those with only an associate’s degree.

Betsy Spitzer, Montrose Real Estate Group, Montrose Colorado

Call: 970-901-1181 Email: spitzerej@msn.com 

Source:CNNMONEY

10 Things to Take the Trauma Out of Homebuying

1. Find a real estate professional who’s simpatico. Homebuying is not only a big financial commitment, but also an emotional one. It’s critical that the practitioner you choose is both skilled and a good fit with your personality.

2. Remember, there’s no “right” time to buy, any more than there’s a right time to sell. If you find a home now, don’t try to second-guess the interest rates or the housing market by waiting. Changes don’t usually occur fast enough to make that much difference in price, and a good home won’t stay on the market long.

3. Don’t ask for too many opinions. It’s natural to want reassurance for such a big decision, but too many ideas will make it much harder to make a decision.

4. Accept that no house is ever perfect. Focus in on the things that are most important to you and let the minor ones go.

5. Don’t try to be a killer negotiator. Negotiation is definitely a part of the real estate process, but trying to “win” by getting an extra-low price may lose you the home you love.

6. Remember your home doesn’t exist in a vacuum. Don’t get so caught up in the physical aspects of the house itself—room size, kitchen—that you forget such issues as amenities, noise level, etc., that have a big impact on what it’s like to live in your new home.

7. Don’t wait until you’ve found a home and made an offer to get approved for a mortgage, investigate insurance availability, and consider a schedule for moving. Presenting an offer contingent on a lot of unresolved issues will make your bid much less attractive to sellers.

8. Factor in maintenance and repair costs in your post-homebuying budget. Even if you buy a new home, there will be some costs. Don’t leave yourself short and let your home deteriorate.

9. Accept that a little buyer’s remorse is inevitable and will probably pass. Buying a home, especially for the first time, is a big commitment, but it also yields big benefits.

10. Choose a home first because you love it; then think about appreciation. A home’s most important role is as a comfortable, safe place to live. Find an experienced REALTOR® who can help you through the process.

Betsy Spitzer                                                                                                                                                     Montrose Real Estate Group                                                                                                                           Montrose, Colorado                                                                                                                                         970-901-1181 spitzerej@msn.com