It’s Harder For First Time Homebuyers If Using FHA or VA Financing

First time home buyers are often among those who use the services of FHA or VA to purchase their home. The Federal Housing Administration (FHA) provides low interest mortgage assistance to homebuyers. The Veterans Administration
provides low interest mortgage assistance to military veterans. Unfortunately, these finance options can rule out many homes that these buyers can afford to purchase.

Can be harder to purchase

It’s Harder For First Time Homebuyers If Using FHA or VA FinancingIt can be much harder to purchase your home if you use FHA or VA financing. Each program has certain conditions and requirements that can make getting an affordable home difficult.

For instance, in many states condos are not VA/FHA approved and only fee simple townhomes with a homeowners association or single family homes are. That means a higher cost from the start. Let’s look at each.

FHA home loans

FHA home loans have rather low limits as to what may be borrowed. That means that if the home you are looking at is more expensive, you need to come up with either more down payment money or find another way to finance it. This can be difficult if you don’t’ have much saved or have credit problems.

This leads to another issue: credit. You have to have some credit established to qualify for an FHA loan. It doesn’t have to be perfect, but there has to be some credit history. Another issue can be your monthly payment budget. Many first time home buyers don’t realize that their monthly mortgage payment will include things like homeowners insurance and real estate taxes. An FHA mortgage also includes a monthly fee for private mortgage insurance. You will be responsible to pay an upfront fee at closing, plus 0.45% to 1.55% annually depending on the terms of your loan.

VA loans

VA loans also require an upfront fee which can vary from 0.5% to 2.8% of the loan amount, depending on factors like your service background, down payment or whether it’s your first VA loan or not. VA loans also require private mortgage insurance if you are putting less than 20% down. Quite honestly, if you have 20% or more to put down a conventional mortgage may just be a better deal.

The VA places a cap on the amount of closing costs you may pay as a buyer. This means that any closing costs over that cap will most likely be rolled into the price of the home. How is this a problem? Well, it raises your monthly payment, and if the appraisal comes in below the sales price, you’ll have to come up with the difference between appraised value and sale price to complete the sale. VA loans take longer to close due to requirements for paperwork and inspection approvals.

Are The Millennials Going To Buy Houses?

In the real estate world one of the biggest questions is Millennials.The question now is are they going to buy houses. It’s important because millennials are in the age group of first time buyers.

Are The Millennials Going To Buy Houses?The market has been much stronger but one area where it has lagged is the first time buyer market. It’s the lowest in almost 30 years. That may be alarming, but those in the know think that the drop is a long term thing. Millennials are putting off buying into the American dream, but they haven’t given up on it. While this is good news in the long run, in the short term it will be an issue.

Economic issues

At the moment this age group is shunning home buying. This is for a few reasons. Millennials watched their parents deal with the housing crash, making them more cautious about taking out large mortgages in order to buy a home. They are also, as a group, dealing with massive student debt loads that put a strain on their income and what they are able to save. They are also having a harder time finding employment and while that has become a smaller issue in the last few years, it impacts their decision making.

Marriage choices

Another reason they are holding off home buying is that most first time home buyers are young married couples who are settling down. However, Millennials are marrying later. Under age 34, just 24% of women and 30% of men are married, about half the figure for that age group in 1940, according to the Pew Center. The median age of first marriage is now over 29 years for men and 27 for women. That means that they will be in a life position to buy later, say about 35 to 40 years old.

So it’s a mixed bag, but the pieces will fall into place and they will buy houses in the future.

Why Accepting The Highest Offer Is Not Always Best

Your home has been listed and seen by a few or many people. Now you have a few offers. Your knee jerk reaction is to take the highest offer. That may not be your best plan. The highest offer may not be the best offer and here’s why.

The highest offer may not be best

Why Accepting The Highest Offer Is Not Always BestFirst reason the highest offer may not be best is that your home may not appraise for that price. This is especially  true if your home was the subject of a bidding war. If that top bidder has to get a mortgage then the mortgage company will have the property appraised. If they find that the contract price is higher than the appraised value, they won’t write a mortgage for anything more than the appraised value.

So unless that high bidder can put more money down to make up the difference, the contract will fall through. Those other bidders will have moved on and then you are left holding the bag.

Another reason:

That high bidder may just not have the financing in place or available to complete the sale. Just because they bid or offered the highest amount, it doesn’t mean they can get the financing they need or already have it in place.

Last big reason:

If they have the highest offer, they may also ask for the most repairs or concessions. Here is an example: A woman lists her home and gets a full price offer in less than a week. She accepts that offer and the home inspection takes place. The home, which was updated and in rather good shape inspected well, but the inspector mentioned a few things like “the heating system will eventually give out” although nothing is wrong with it now. The buyers then demanded that the seller replace the heating system, put an expensive filtration system on the well and make some other minor repairs. The seller refused to do anything but the minor repairs.

The house then was put back on the market and another buyer bid for under asking, but it was a cash sale and not one concession was demanded. The lesson? The seller actually walked away with more money in her pocket than she would have with the full price, higher offer.

Have your home appraised

So your best bet is to get information before accepting any offer about financing. Have your home appraised prior to sale so you know what that number will look like. Be prepared. Then you can accept the BEST offer, not necessarily the highest.

3 Places To Buy Investment Properties In Denver

Denver has lots of different neighborhoods and each has their own character. Whether downtown, in the towns surrounding or further out, each are great places for investment properties.

College areas

3 Places To Buy Investment Properties In DenverOne great place to look for an investment property is around colleges. Colleges offer a slew of opportunities for tenants. College students often look to off campus housing to make college more affordable. Not all are party animals who will destroy your property. In fact most landlords find that students tend to be better tenants than others.

While it may mean faster turnover, students may only stay a year or so, there is always another class of students coming to town. So purchasing a home, town home, condos or apartments, students will jump at the chance to live independently off campus.

Find out more about area colleges: 5 Best Colleges In The Boulder Denver Metro Areas

Nearby suburbs

Other places just outside of town can mean great properties for families. Think of the nearby suburbs that have great schools, close shopping and parents who will be working in Denver.

Of course, there are also the wonderful opportunities in the suburbs or just further out. Some great suburbs to check out are Westminster, Broomfield and Brighton in the North and Parker or Lakewood in the South.

Executive rental properties

Larger estate properties that will make fantastic executive rentals. The properties must be top notch and equipped with the latest and greatest updates, technology and amenities. Executives expect no less and will pay through the nose for it. Although you may have to invest more money into the property, you will definitely make it back in rental revenue.

Find out more about Denver Executive Rentals

Denver has great places to make your mark as a real estate investor. Look at who you may want to have as a tenant then go find a great Realtor to help you find the property you need.

Great Space Saving Tips For Your Home Office

Great Space Saving Tips For Your Home OfficeWhether you are selling your home but need to keep your small home office up and running or you just want some great ideas to turn a small space in the home you just purchased to make a home office, space saving is very important.

Being able to close up and hide your workspace at the end of the work day is important as well. So here are some great space saving ideas for your office.

Start out with small furniture

Sounds like a no brainer, but if it’s a small space, large furniture won’t work. Choose a small desk, or build a small one in the space you have.

If you’re planning on making a small nook or closet into an “office” extending a shelf to make a desktop is a smart idea. Have the table top fold up or down, like a secretary, to hide your desk items out of sight. Do the same with the remaining shelves so your private papers are out of sight as well.

The key is to be able to close everything up and use the rest of the room for its usual purpose.

Closet office

If you use a closet, use the inside of the door to hang a shower organizer to hold things like pens, pencils, staplers, etc. to save desk space. Attach cork rounds that are used under plants to the inside of the door to use as a corkboard. Paint the inside walls with chalkboard paint or whiteboard paint to use the space for messages and notes, saving paper and clutter.

Use binder clips to hold and corral all your cables and charging cords. Slip the cord through the larger end of the wire “handle” and move it to the smaller round end. Then clip the binder clip to the edge of the desk. Hang magnetic strips on the wall or inside of the door to hold things like letter openers, scissors and paper clips. When you’re done at the end of the day, simply close the door!
Your prospective buyers will appreciate the use of the space and you, the seller will appreciate the fact that your room doesn’t look cluttered, small and without its proper purpose!