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This blog is for buyers and sellers in the Roaring Fork Valley and beyond! Come back every Wednesday for new Real Estate tips and discussions!

What is an HOA?

October 14, 2020

If you are in the market for a new home or rental, then chances are you have come across HOAs. Home Owners Associations are put into place to help both residential communities and planned developments (townhouses, condos, ect..) maintain a clean and protected neighborhood/living atmosphere.

Every HOA you will encounter during your home search will have similarities and differences. For example, in a townhouse the HOA may cover landscaping and yard maintenance , whereas in a residential community, the HOA may dictate the square footage of your house and appearance of your property. Regardless, all HOAs require owners to pay monthly fees that are correlated to the services the HOA provides.

These fees vary depending on location and the type of HOA. Gated communities and residential Quick read more or view full article communities, like golf course, often have higher fees than planned developments or non-gated residential communities. When living in a planned development you will most likely encounter HOA fees that help cover the building's community as a whole. For example, HOA fees associated with a condominium will help cover the building's insurance, building repairs, common areas, and lawn maintenance .

As you continue to search for your new home, keep in mind that you should also be looking into the HOA's as well. Make sure their dues are feasible and that you align with what the HOA covers. You want to make sure that you are feeling good about your contribution to the neighborhood/development. In other words, make sure you can see and respect the value of the specific HOA before you opt to buy and live there. If you can get behind the HOA's value, you will feel much better about your purchase in the long term.

For a deeper dive into HOA's, please read Investopdia's article here.

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Debunked: 5 Common Real Estate Myths

September 16, 2020

Regardless of whether you are buying or selling your home, it is not only an exciting process filled with new beginnings, but also one filled with many unknowns. The more knowledgeable you are, the better experience you are going to have. This week I will debunk five of the most common real estate myths.

Myth #1: As a Home Buyer, You Don't Need an Agent

With all of the available apps out there like Zillow and Trulia, it has become a common myth that as a home buyer, you don't need to find an agent. These apps allow you to, with the click of a button, get in touch with the seller's agent and schedule a home viewing. And while it is nice to be able to shop from your Quick read more or view full article

Getting a buyer's agent will help prevent you from making easily-looked over mistakes during the buying process. You will have a licensed agent on your team, advocating for your needs. This often saves time, money, and headache. Not to mention, the buyer does not pay for their agent's commission as it is typically covered by the sellar of the house.

Myth #2: FSBO Will Save You Money

On the flip side, a common misconception is that you will save time and money by listing your home For Sale By Owner, aka FSBO. While yes, this does save you a bit on commission, it doesn't necessarily save you money. In many circumstances, a seller's agent can help negotiate a higher price.

In 2017, the National Association Of Realtor's came out with the following find: A home sold as a FSBO property typically sold for 25% LESS than those properties that had a broker behind the sale. For example, a FSBO property may go for $300,000, while the same property could sell for $365,500 with a real estate agent.

Myth #3: You Must Sell Your Current Home Before Buying a New One

While this one boils down to finances and the buyer's situation, it is not necessarily a bad thing to hold on to your current home as you buy a new one. Especially if the rental market is good! Having a passive income through renters can be a blessing while buying a new home and moving into it.

Not only that, but you can continue to build equity through the old home.

Myth #4: Pick Out Your Perfect Home and Then Get Pre-Approved

It is SO tempting to search for the perfect home from the comfort of our current one. With apps like Zillow and Trulia, this has become incredibly easy! However, you should always get pre-approved before getting your hopes up about the "perfect property".

Getting pre-approved will not only set you apart from other buyers during the bidding process (as it shows the sellers that you are a serious buyer), but it will also give you realistic guidelines and expectations about what home you can by with your budget and loan possibilities.

Myth #5: All Real Estate Agents Are The Same

It is easy to think that all real estate agents are the same, however, that is yet another (costly) misconception. Every agent has a different personality and skill-set—not to mention, you will want to find someone who you can connect with an trust to have your best interests at heart.

In terms of skill-set, one of the most significant differences between agents is whether their background is as a seller's agent or a buyers agent. Even though an agent can do both, knowing their primary focus can help you determine if they are right for your process. Same goes for commercial versus residential.

Choosing an agent that aligns with your stance as a buyer or a seller is key, and finding one that makes you feel advocated for is even better!

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Top 10 Tips for Home Buyers

July 22, 2020

Buying a house in one of the largest financial commitments you will make in your lifetime, which is why it's vital to make the right decision to fit your lifestyle and needs. When you are finally ready to sign the papers and move in, you want to be confident that you made the best choice! Below are the top 10 tips I like to tell people when they are looking into buying a home.

1. Get Pre-Approved and Aim for a Fixed Rate

There are two very important steps in the first stages of the home buying process: getting Pre-Qualified and Pre-Approved. Pre-qualification is the first step, and is something anyone can do. (Read more about getting pre-qualified Quick read more or view full article

2. Budget Your Down Payment

Many lenders will require you to have a down payment as it financially incentivizes the buyer to stick with the purchase. Just think, if you had put $20k down, you would be far less likely to sell and move than if you hadn't yet invested any money. But the down payment can work in the buyer's favor too! The more money you put down, the less interest you will have to pay in the long run. Many lenders ask for at least 10%, but if you can do more, your future-self will thank you.

3. Check out the Neighborhood

When buying a house you are not only moving into a new space, but also a new area. Checking out the neighborhood is a vital part of the home searching and buying process. Make sure you like the feel of where you live—you will be spending a lot of time there. Check out the local amenities, see what your commute feels like, and how close is your house to the supermarket. Additionally, checking out the schools is important, even if you don't have kids because it influences property value. You don't want to sign on a house only to find a few weeks later that the neighborhood is not the right fit.

4. Bigger Isn’t Always Better

Many people dream of owning a large impressive house, and for some that is a great fit to their lifestyle. But don't get caught up in the fantasy of having your own "mansion"— especially those buyers who plan to sell. If your plan is to buy and sell, make sure you are purchasing a house that is competitively priced. If you buy the largest most expensive house around, not only have you limited your selling options to a smaller pool, but you may risk limited appreciation. In other words, if you purchase a house that is $200k more than the surrounding houses, it will take longer for your house to appreciate in value.

5. It's Easy to Fall in Love—But Listen to Your Gut

When in the market to buy a new home, it's so easy to fall in love with a certain house. But be weary of this, buying based on emotions can lead to overlooking red flags and poor financial decisions. We all know the advice, "trust your gut"—and that is something you should always do when deciding on a purchase this large. Go with your instinct—you may love the idea of the house, but if your gut feeling contradicts your emotions, always acknowledge that.

6. Spend the Extra Money and get a Physical

When you are budgeting, set aside some extra money to hire a home inspector. Again, in the long run, it's worth it. When buying a car, most people get it checked by a mechanic—this is the same thing. Make sure that you are not missing any details by bringing in an expert who has your best interests at heart.

7. Your Main Focus: What is Important To You?

It's very easy to get caught up in the features of a house: maybe it's the high-tech kitchen, or the luxurious bathroom. Regardless, a buyer needs to take a step back (don't make emotionally-based decisions) and list out their needs. Make sure that your soon-to-be home fits your basic needs and wants, and once all of those boxes are checked, then start to enjoy the unique features of the house and property.

8. Buy to Improve Your Life, Not To Get-Rich-Quick

There are house-flippers out there who are very successful, but if a buyer is in the market to find a place to live, then buy with your best interests in mind. This is not to say you shouldn't consider the appreciation value and selling potential, but the market is too unpredictable to buy only for potential financial gain. Buyers who are trying to find a place to live need to prioritize their needs first.

9. Think Long Term

As a general rule of thumb, think about living in the house you are about to buy for a minimum of five years. Buying a house is a huge financial commitment and is not something many people take on every few years. In fact, reports show that many Americans live in their house for at least a decade before selling.

10. Be Willing To Say Goodbye

This goes back to emotionally-based buying. Buying a house takes time, from the initial search to the signing of the paperwork can take months. It's easy to get attached to an outcome, but buyers must remain objective. If your "dream" house fails the inspection, then chances are it really wasn't the house of your dreams. If the seller's don't accept your highest offer, then don't put yourself into an unstable financial place for the wrong reasons. Bottom line: Don't be afraid to walk away and say goodbye, the right house will come to you at the right time.

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What Credit Score Do I Need As a Homebuyer?

July 15, 2020

Your credit score is a vital number when it comes to the homebuying process. It will dictate your ability to get approved for a loan, your intertest rate, and, in certain circumstances can qualify you for certain purchases. This prompts the common question: What credit score do I need when buying a home? For some, it may even bring up the question, what steps do I need to take to improve my credit score? Find the answers to these questions and more below!

What Credit Score Do I Need As a Homebuyer?

The majority of lenders have a baseline credit score that they use to determine whether or not to accept a mortgage applicant. For many lenders, this baseline is Quick read more or view full article 680—and that is the lowest you want to have when applying for low interest rate. If you are hoping to get a really great loan and interest rate, a score in the 700's is what you want!

For most lenders, 700 and above is fantastic and will open up many poential doors for you, where as a score of 680 is considered adequate. If the credit score is anything lower that 660, that is when the buyer will run into trouble: high interest rates and possible rejection.

When a lender takes you on and gives you a mortgage, they want to know that you are good to pay it back. The higher your credit score, the more trustworthy you will seem to the lender.

Note: This information relates strictly to conventional loans. There are other ways to attain a mortgages, such as a Federal Housing Administration (FHA) or a VA-backed loan. These methods do not require as high of a credit score and many will work with you even if your score is lower than 500.

What If I Have Bad Credit? Can I Still Buy a House?

For those whose credit score has dropped below the 500 mark, there is still an option avaialble: a subprime loan (aka 'bad credit home loan'). Many subprime loans have significantly higher interest rates than the options listed above (aka Prime Loans), and can have additional fees attached.

The option for homebuying is still open to you, however it will end up costing far more than it would if you had a good credit score and go with a conventional loan.

How to Improve a Bad Credit Score?

A credit score is not set in stone, and therefore, improving your credit score is do-able! One of the simplest remedies is to track your financial habits and make sure you are paying everything off on time (credit cards, student loans, car loans, ect.. ). See if there is anything you can pay down and/or try to settle any discrepincies found on your credit history.

There are many sites that will not only help you find your credit score, but will also give you tips on how to improve it. CreditKarma.com or Credit.com are great options!

Bottom Line

It is recommended to step back and take the time necessary to build up your credit score before applying for a loan. Not only will get better rates, but you will also save a lot of money in the long-run.

Note: For those that cannot wait and have to purchase with a bad credit score, refinancing is always an option in the future.

As you can see, this number will dictate a lot of your opportunities as a homebuyer. Start by checking your credit score and depending on what you discover, talk with a lending agent to find out your next step in the pre-approval process.

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