FOR BUYERS:

Cost vs. Price Explained

We need to talk more often about the difference between COST and PRICE. As a seller, you will be most concerned about ‘short term price’ – where home values are headed over the next six months. As a buyer, you must be concerned not about price but instead about the ‘long term cost’ of the home. Let me explain.

Yesterday, it was reported that the Mortgage Bankers Associati

on (MBA) is projecting that mortgage interest rates will inch up over the next twelve months. Many experts are calling for home prices to also increase over the next year.

What Does This Mean to a Buyer?

Not only will the asking price most likely increase over the next year but so will interest rates. Back in 2006 when interest rates were at 6.5% the monthly principle payment on a home with a $400,000 mortgage was $2,528. Now with interest rates at 3.5% that same mortgage amount would end up costing you $1,796. 

So the 2006 buyer with the SAME monthly payment of $2,528 can now afford a $562,972 mortgage with the current 3.5% interest rate. That is a lot more house!

Future prediction of Mortgage Rates

Where Are Mortgage Rates Headed?

by THE KCM CREW on NOVEMBER 6, 2012 · 0 COMMENTS

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We are often asked where we think mortgage rates are headed over the next year. The best people we can go to on this issue are the people who deal with it on a daily basis –The Mortgage Bankers Association (MBA). Here is what was reported by MarketWatch in a recent article:

“After reaching record lows in 2012, mortgage rates are expected to creep up slowly in the year ahead, the Mortgage Bankers Association predicted.

Rates on the 30-year fixed-rate mortgage are expected to average 3.8% in the fourth quarter of 2012, rising to 3.9% in the first quarter of 2013 and eventually rising to an average 4.4% by the fourth quarter of next year.”

If the MBA is correct, mortgage interest rates could inch up almost a full percentage point in the next year. Tomorrow, we will explain what that means to a potential buyer.

2012 Update

The real estate market in Boulder and Broomfield Counties has taken a serious turn for the better this spring and there is no doubt our property values are increasing.  Median home prices in Boulder are up 7%, year over year, and sales volume is up 28% yr over yr. According to data this quarter, Boulder, Lafayette(prices up 17% y o y), Erie(prices up 9% y o y) and Longmont(prices up 2% y o y) all have six months of house inventory or less, while Superior(no change), Louisville(prices up in some neighborhoods 20% y o y) and Broomfield(prices up 6 % y o y) have fewer than four months of inventory.

If you are waiting to purchase a house, now might be a good time to move. Home affordability may not improve, and according to statistics home prices are on the  rise and interest rates an all time low.  Say you purchase a home for $300,000 and put 20% down. If you take out a 30-year mortgage at 3.75 percent interest (which is commonly available today however todays rates have fallen to 3%), your payment would be $1,111 a month with $361 of that amount going toward principal. You would be paying $750 a month to borrow $240,000 not even considering the deductibility of home mortgage interest.  If you’re on the sidelines waiting for prices to go down 10 percent, imagine that $300,000 house can later be bought for $270,000. You put the same $60,000 down on the home, leaving you with a $210,000 mortgage. Let’s say 30-year mortgage rates have increased to 5 percent, still at low levels. Your mortgage payment would be $1,127, with $252 of principal paid down a month. That $210,000 mortgage would cost you $875 a month.  The point is that 3.75 percent interest for a 30-year fixed mortgage presents us with a tremendous opportunity for those with long-term horizons.  Buyers purchasing investment property are making wise financial decisions. Warren Buffett knows that the simple maths of more households being formed than houses being built is good news for housing-related investments.

For sellers in healthy markets, it’s not too late to list your home. If you’ve been thinking about selling your home, consider listing it now. Sellers now have the advantage of a buyer pool that can afford to pay more with historically low interest rates. If interest rates even tick up to 5 percent, the number of prospective buyers of your home would shrink significantly. With most Boulder County cities having healthy or low levels of inventory, buyers will be motivated to bid on a well-priced home. 

Data collected from David Gardner, Boulder Camera and BARA and Trulia

BUY IN 2012!

Buy a Home in 2012

Have you decided that this is the year to buy a home? With affordability at record highs and interest rates at record lows, this is indeed a great time for many people to become homeowners.

Here are some things you need to start doing NOW so that when you find the home you are searching for, you are ready.

1. Find a Qualified Buyer’s Representative. It is imperative that from the beginning of the process, you have an advocate who will represent your interests, and ensure that you find the right home and pay the best price possible. Look for an experienced agent who knows and understands the local real estate market and can navigate you through each step of your transaction.

2. Check Your Credit. If you are going to need a mortgage to buy a home, having a good credit score is imperative. Higher credit scores mean lower interest rates and lower mortgage payments. At www.annualcreditreport.com you can pull a copy of your report from each of the 3 credit reporting agencies for free once a year. Look over each report in detail and make sure the information is all correct. It takes some time to get incorrect information fixed, so it’s best to start as early as possible.

3. Talk to a Lender. Even if you aren’t ready to sign mortgage papers, it is always a good idea to get in touch with a lender early. They can also help with pulling your credit report, and can give you advice about anything you can do to improve your credit score. They can also give you an idea of what you can afford and what your monthly payments will be, so you are sure to be looking only at homes in your price range. You will need to submit a pre-qualification letter with any offer you make, so get this part done ahead of time. Contact us if you would like a recommendation for a good lender in the Boulder area.

4. Make a List. This is the time to sit down and make two lists. First, make a list of the criteria that you NEED. Things like a certain number of bedrooms, bathrooms, and garage spaces. Maybe you work from home and need space for a home office. Or perhaps you must have a fenced yard for pets. These are the items that are non-negotiable. Second, make a list of the things you WANT in a home. If you love to cook you may want an updated kitchen or a gas range. Maybe you love a certain style of home, or specific furnishings like hardwood floors or a gas fireplace. It is important right away to understand your needs vs. your wants. Ideally you may be able to find all of both, but typically some sacrifices will need to be made. This list will help you stay focused on the qualities that are the most important.

5. Research, Research, Research. Now is the time to start learning about the area that you are interested in. Websites like www.education.com and www.greatschools.org can help with school information and ratings. Do you like to play outdoors? Find out what parks and trails are in the community. Love to dine out? Find out about the nearby restaurants. Research commute times to work and school. The more you know and understand about the community before you start looking at houses, the better equipped you will be to make a decision when the time comes. If you are looking for a home in the Boulder or Broomfield area, ourcommunity pages are a great place to start.

You have done the work, now it’s time to start looking at houses. Schedule a time to sit down with your agent and share your wants and needs with them. Make sure they are in contact with your lender and know how much you can spend. Find a time to start touring houses, and be sure to keep communicating with your agent while you are looking so they understand what you like and don’t like about the homes you see.

The home purchase process can be intimidating, especially if you haven’t done it before (or in 10 years). By taking these steps, when you find the house of your dreams, you will be ready and able to make it yours.

- From Colorado Landmark Realtors

Please feel free to use our web site for all your local real estate searches. It is accurate and to date unlike most public real estate search sites.

February 16th, 2012 Colorado Landmark Website awarded Website Quality Certification We are very proud to announce that our website,www.coloradolandmark.com, has earned the 2011 Website Quality Certification (WQC), presented byLeading Real Estate Companies of the World® to member companies that have demonstrated excellence in website design, functionality and execution. Every aspect of the site was reviewed to ensure exacting standards were met in six key areas, ranging from design and content to human interactivity to search engine optimization. The WQC was introduced in 2009 to recognize and encourage superior websites among Leading Real Estate Companies of the World’s 550 member firms. “With so many people going online to obtain information on homes, communities and everything relating to home buying and selling, it is vital for a real estate firm to have a current, easy-to-use and relevant website,” notes Pam O’Connor, president/CEO of Leading Real Estate Companies of the World®. “By earning the Website Quality Certification, Colorado Landmark, Realtors has demonstrated that it offers fundamental online resources to home buyers and sellers, which are further supported by the expertise only a dedicated real estate professional can provide.” We have also been nominated for a 2011 WQC Award for Best Visual Design, which will be awarded at the Leading Real Estate Companies of The World Annual Conference in Orlando in March.