Thinking of a Remodel? Here Are Your Financing Options

Thinking of a Remodel Here Are Your Financing Options

People are spending a lot more time at home. Whether it’s because of a stay-at-home edict or just choosing to work remotely instead of heading toward the office, many are choosing the stay-at-home model and some employers have found the stay-home can be an option for the employee going forward. And spending more time at home might also lead to thinking of a few household projects. Is the kitchen looking a little dated after all? How about some new countertops and upgraded appliances? Is the living room carpet looking a bit threadbare? If so, you’ll need to decide how to pay for those improvements.

The obvious way is to pay cash. It’s quick, interest-free and you can tap into a checking or savings account pretty much anytime you need it. You get a bid, decide whether or not to move forward and write a check. On the flip-side however, pulling money out of an account can put a dent in the balance and in any interest-bearing account, money out no longer pays interest. The bigger the project, the more that’s pulled out. And, once those funds are used to upgrade the kitchen, the asset is no longer liquid, it’s in the cabinets, appliances and flooring.

You can get a home improvement loan to pay for a remodel. With a home improvement loan, your loan goes directly toward the improvements. Depending upon the size of the home improvement loan, the funds might be delivered straight to your bank account at your settlement or if you have a larger project in mind, the bank might deliver the funds in stages as the work is completed.

Say for example you’d like to add on a third bedroom instead of selling your home and buying an existing three bedroom house. This would be considered a major remodel while at the same time increasing the value of your home by adding a third bedroom. This entails hiring an architect and a builder and paying for inspections and final appraisal as part of the process. With such a loan, it is phased in like most any other construction loan. The bank reviews your plans and specs, comes to an appraised value based upon what the final three bedroom project would be worth once complete. When the third bedroom is added on and finished out, one final inspection is performed to confirm completion. At the end of the project, the construction loan becomes due and a permanent mortgage is needed to replace the temporary construction funds.

A home equity loan can also be a solution. A home equity loan is a loan taken out with some of the equity in your home as collateral. There are two basic types of equity loans, a standard equity loan and a home equity line of credit, or HELOC. A standard equity loan is issued as a lump sum payment. a HELOC acts much like a credit card. You’re issued a line of credit based upon the as-completed value. If you want to pull out $10,000 for new appliances, you can do so but you also have the option of paying some or all of that $10,000 back based upon the terms of the loan, freeing up the equity to be used once again at some point in the future.

Another option is to utilize a cash-out refinance. During the process of refinancing an existing loan, homeowners may elect to pull out a little extra after paying off the outstanding principal balance and closing costs. If the loan balance is $200,000 and closing costs are $3,000, the new loan could also include some extra money in the bank account by tapping into the available equity in the home. However, exploring a cash-out refinance should only make sense if a non-cash out refinance lowers the interest rate on a low, changing loan terms, avoiding a balloon payment on its own, then pulling a little extra out in the form of cash might be an option for you.

All of these financing options have their advantages. Your loan officer can break down all the options, compare monthly payments, costs, etc. and help you choose the right financing tool for your individual project.

Message me if your thinking about buying or selling a Fort Collins or Loveland home at m.me/EdPowersRealEstate

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Ed Powers Real Estate 970-690-3113 ed@EdPowersRealEstate.com www.EdPowersRealEstate.com

Preparing Your Home for Sale During the Pandemic

Preparing Your Home for Sale During the Pandemic

Despite the ongoing coronavirus pandemic, the real estate market must go on. Homeowners still need to sell, house-hunters still need to buy, and real estate agents still need to make a living. But the typical home selling process involves frequent contact with strangers—which is not recommended during this time of social distancing.

By now, you’re probably getting pretty good at making adjustments in your everyday life to protect the health and safety of yourself and those around you. Along the same lines, there are steps you can take to show your home to potential buyers without risking your health or hurting your chances of a sale. Here are some tips to prepare your home for sale in the coronavirus era! 

Get Help with Staging

According to The Mortgage Reports, staged homes sell an average of 73% faster than non-staged homes. Staging involves eliminating clutter, incorporating decorative elements, and adjusting the layout of your furniture to improve the flow of your home. The overall goal is to make your home appear bigger, brighter, and more inviting to potential buyers. Fortunately, some staging steps are easy to tackle on your own, such as cleaning, decluttering, and depersonalizing. These steps will help buyers picture themselves living in your home instead of feeling like intruders in someone else’s space. 

When it comes to décor, however, it’s best to hire a professional. An interior designer can help you stage your home to effectively show off key aesthetic elements as well as the features that make your space functional. You can easily find freelance interior designers on job boards like Upwork. To keep yourself and your designer safe, make sure they have adopted special procedures to conform with CDC recommendations for COVID-19.

Don’t Neglect Your Curb Appeal

Don’t let your home preparations stop at your front door! Even if buyers aren’t visiting your home in person, they will still want to see your home exterior. In fact, a picture of your home exterior will likely serve as the bait that draws potential buyers to your online listing. Don’t neglect your curb appeal!

Tool Review Lab recommends several ways to boost your curb appeal—even if you’re on a tight budget. For example, you could power wash your front porch and siding, install a new mailbox, hang modern house numbers, and do some basic lawn maintenance. 

When it comes to your front yard, make sure your lawn is lush, freshly mowed, and free of weeds and dead spots. Consider planting new flowers and remember to weed and mulch the beds to keep everything looking neat. You may even want to hire a professional to give the trees and shrubs around your yard a good trim.

Consider Safer Showing Alternatives

While it’s clear that hosting an open house is off the table, you may also want to limit in-person showings. Offer your buyers no-contact alternatives! Shoot a video walkthrough of your home and upload it to your online listing so buyers can tour your home virtually. You could even schedule live video-chat showings with interested buyers so they can ask questions about your home or request specific shots of rooms or features. 

Since buyers will form a first impression of your home based on your listing, make sure it does your home justice. Write a strong listing title, include a detailed and exciting description, and post plenty of high-quality photos. A great real estate agent can help you craft your listing so that it properly showcases your home’s best features. Your real estate agent can also help you navigate virtual showings! Take the time to find a professional who is well-versed in using online tools to connect with buyers.

Selling a home in the age of the coronavirus is bound to be a bit of a challenge. Thankfully, the real estate industry has been quick to adopt virtual alternatives to open houses and buyers are happy to continue their housing hunt online. With some special attention to staging and a solid virtual presence, you’ll have no problem closing a sale during the pandemic!

Message me if your thinking about buying or selling a Fort Collins or Loveland home at m.me/EdPowersRealEstate

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Ed Powers Real Estate 970-690-3113 ed@EdPowersRealEstate.com www.EdPowersRealEstate.com

30 Year Mortgage Rates Push Lower Last Week

30 Year Mortgage Rates Push Lower Last Week

30 Year Mortgage Rates pushed lower last week reaching a new low of 2.88%, according to Freddie Mac, a government-sponsored agency that backs millions of American mortgages. Congressional gridlock over the next fiscal relief could drive rates even lower.

The limited supply of homes on the market continue to cause an obstacle to buyers looking to own a home. Credit tightening is also putting a squeeze on buyers to qualify for these record low rates.

Message me if your thinking about buying a Fort Collins or Loveland home at m.me/EdPowersRealEstate

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Ed Powers Real Estate 970-690-3113 ed@EdPowersRealEstate.com www.EdPowersRealEstate.com

Deferment of Mortgage Payments May Affect Borrowers in the Long Run

Deferment-of-Mortgage-Payments-May-Affect-Borrowers-in-the-Long-Run

When Congress passed Section 4021 of the CARES Act in response to the effects of COVID-19, their intent was to help borrowers who were having problems making their mortgage payments. Little did Congress realize that they were potentially setting up borrowers for trouble in the future when it comes to credit worthiness as assessed by the lending community.

According to Mark Hanf, president of Pacific Private Money, “Section 4021 of the CARES Act contained a regulation that loan servicers “shall report the credit obligation or account for those participating in forbearance as current”.  In other words, those participating in a forbearance program should not see their credit scores drop. However, there is a loophole that allows lenders to discover whether or not a borrower is actually making payments. It is the “comments” section of a credit report.  The CARES Act does not mention the comments section of credit reports, and that’s where forbearance notations are going.”  What borrowers are not being told is that any reference in a credit report to forbearance can be a Scarlet Letter for an applicant seeking a new mortgage, according to Kathleen Howley in an article she wrote in early May 2020.

According to Hanf, within a week of Howley’s article, his company received a loan request from a home buyer who was denied credit from a major bank for just this very situation. Although the bank sees the existing mortgage as “current” the forbearance has let the world know via the comment section that this borrower has requested a deferment. The major bank involved would most likely not deny the loan on its face due to the deferment, as this would violate the law; however, banks are notorious for coming up with a myriad of reasons for denying a loan and still stay within the guidelines set out for them.

Conventional lenders desire to have plain vanilla borrowers who pay back loans in a timely manner. When a borrower changes terms of the loan by requesting principal forgiveness or other aspects of the 

loan, the lenders generally do not usually extend credit again to these borrowers and can negatively affect the borrower’s ability to borrow again from unrelated lenders. Such is the case back during the Great Recession wherein some borrowers took advantage of the economic climate by asking their lender to reduce the principal of their loan [total forgiveness rather than just a deferment]. The borrowers may have gotten a reprieve, but the long-term effects may have been more drastic. Similarly, to when a borrower files bankruptcy. The borrower may get out of paying creditors, but their ability to borrow in the future is usually severely hampered. 

In one case, back in 2009, during the heart of the Greta Recession, one banker tells a story of how a wealthy borrower first asked for a principal loan reduction of $500,000 because his collateralized real estate had decreased and his request was granted. But, when this borrower was faced with the prospects of having this reduction reported on his credit report or the fact that he would have to inform any new lender that he requested a principal reduction [as this question is usually on bank applications], he voluntarily requested that the $500,000 abatement be reinstated. He decided his ability to borrow in the future was worth more than the $500,000 principal reduction.

Borrowers will have to decide if requesting deferments is worth the risk of potential future lending restrictions based upon the lender desire to lend to borrowers who choose to defer mortgage payments when the opportunity arises. Whoever said, “there’s no free lunch” must have been talking about these very situations.

Message me if your thinking about buying or selling a Fort Collins or Loveland home at m.me/EdPowersRealEstate

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Ed Powers Real Estate 970-690-3113 ed@EdPowersRealEstate.com www.EdPowersRealEstate.com

Ed Powers Real Estate August 2020 Newsletter

Get the latest news in the August 2020 Ed Powers Newsletter Real Estate Update

For the complete August 2020 Newsletter Click here

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It’s All About The ’Burbs: In A Time Of Pandemic, More Young Families Are Fleeing The City For The Country

Scoffers label it, ‘panic-moving.’ Others call it common sense. Wherever you stand, there is little doubt that, as the pandemic continues to surge, the flight of families from city to suburbs is picking up steam across the nation.
      “Young New York couples typically put off a move to the suburbs until after the birth of their second child,” said Elizabeth Nunan, president of Houlihan Lawrence, a leading New York residential brokerage. “It gives them time to save some money and enjoy the perks of city living until the need for space and the cost of childcare make the family-friendly suburbs a better choice.”  
      But circumstances

have flipped the concept on its ear.
      “Living in the epicenter of the coronavirus pandemic left most New Yorkers justifiably fearful,” Nunan said. CONTINUED >>>

Preparing Your Home for Sale During the Pandemic

Despite the ongoing coronavirus pandemic, the real estate market must go on. Homeowners still need to sell, house-hunters still need to buy, and real estate agents still need to make a living. But the typical home selling process involves frequent contact with strangers—which is not recommended during this time of social distancing.
      By now, you’re probably getting pretty good at making adjustments in your everyday life to protect the health and safety of yourself and those around you. Along the same lines, there are steps you can take to show your home to potential buyers without risking your health or hurting your chances of a sale. Here are some tips to prepare your home for sale in the coronavirus CONTINUED >>>

Thinking of a Remodel? Here Are Your Financing Options

Should You Refinance From An FHA Loan To A Conventional Loan?

For many first-time buyers, a Federal Housing Administration (FHA) loan is the prudent—and often the only—choice for a mortgage. With the flexible credit and low down payment requirements, an FHA loan makes it easier to qualify than almost any loan out there.  
      However, the ongoing private mortgage insurance (PMI) you have to pay when you have an FHA loan makes your monthly payments more expensive. And, unlike a conventional loan, which allows you to remove your PMI at a certain point, you can never get rid of it with an FHA loan—even when you have tons of equity in your home. So, with rates at historic lows, should you refi out of your FHA loan to a conventional loan? We’re looking at the pros and cons.
Pro: You can get rid of private mortgage insurance (PMI) “FHA loans require certain provisions which sometimes place a heavy burden on a homeowner’s budget, often in the form of premiums paid for mortgage insurance,” said PennyMac. 
      That mortgage insurance on an FHA loan ranges from .45–1.05% of your home loan amount every year. On a
CONTINUED >>>

Daily News and Advice

Read about the events shaping the Real Estate market today, find current interest rates, or browse the extensive library of advice and how-to articles written by some of the top experts in Real Estate. Updated each weekday.

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Mortgage Rates 

U.S. averages as of August 2020: 30 Year Mortgage Rates Push Lower

30 yr. fixed: 2.99%
15 yr. fixed: 2.51%
5/1 yr. adj: 2.94%

Mortgage Rates Oct 2020
Mortgage Rates Oct 2020

Message me if your thinking about buying or selling a Fort Collins or Loveland home at m.me/EdPowersRealEstate

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Ed Powers Real Estate 970-690-3113 ed@EdPowersRealEstate.com www.EdPowersRealEstate.com