What can I afford when buying a house?

When looking for a home, it is very important to have a good idea of what you can afford before looking for a home.  There is a simple formula that many lenders use to determine how much of your income should be used for your total housing costs.  Generaly speaking, lenders figure that no more than 28% of your income should be used for total housing costs.  Lenders also require that your total monthly debt should be less than 36% of your total income.  These numbers may vary slightly depending on your lender, but they are a good check when deciding how much to spend on a home.  Here is an example of how this would play out.  If you make $60,000 a year, divide that by 12 months.  Your total monthy income would be $5,000 before taxes.  Twenty-eight percent of $5,000 is $1400.  So the payment you would want to shoot for would be $1400 which would include your mortgage, insurance and taxes.  So if you wanted to purchase a home for $250,000 and put 10% down ($25,000), at 5% interest your payments would be $1207.85 before insurance and taxes.  Make sure to find out how much property taxes are annually, and divide that by 12 months to find out your monthy taxes.  In addition talk to a qualified homeowners insurance agent to find out your monthly costs for insurance as well.  You will then have a good idea of how much you can afford when looking for a home.  A lot of figures I know, but trust me this will be extremely helpful in determining what price to shoot for when looking for a home.  Good luck!

Selling your Home: Little things with big returns

Do you want to increase your home's resale value.  According to HomeGain's annual home improvement and staging survey, there are several inexpensive projects that can add positive value to your home.  In a survey of 600 real estate professionals, six projects stood out as winners.

1.  Cleaning and Declutteriing:  By simply removing personal items, clearing off countertops, organizing closets and shelves and thinning out some of your favorite knick-knacks, you can make your home look cleaner and more buyer friendly.  Possible Cost: $190/ Possible Return $1,990

2.  Brightening:  Clean the inside and outside of windows, update older light fixtures, replace old curtains and remove anything that might block light from your windows.  The lighter the better.  Possible Cost:  $375/ Possible Return: 1,550.

3.  Smart Staging:  Rearrange furniture, incorporate artwork, play soothing music, touch up with some fresh paint, add some new accessories.  Possible Cost: $550/ Possible Return: $2,194

4.  Enhance Landscaping:  Keep the lawn cut, add fresh mulch, plant flowers and newer bushes, and trim plants and shrubs where needed.   Possible Cost: $540/ Possible Return: $1,932

5.  Repairing Electrical or Plumbing:  Fix any leaks under sinks, and look for and clean up any mildew stains.  Update any necessary electrical wiring, light fixtures or outlets that do not work properly.  Replace old plugs with new safety features if possible.  Possible Cost: $535/ Possible Return: $1,505

6.  Replacing or Cleaning Dirty Carpets:  Steam clean carpets, or replace any worn carpet.  Look for floor creaks and repair as well.  Possible Cost: $647/ Possible Return: $1,739


Excerpted from Realtor..org and HomeGain's 2011 Home Sale Maximizer Survey

Ducks in a Row: Things a home buyer should know

Many people want to know how the process works when purchasing a home.  Below I will outline the basic steps in the home buying process.

1.  Find a Realtor you trust:  It is important to find an agent that you like and feel comfortable with.  You need to have confidence that they will represent your needs and values and work hard for you.  Sit down with your realtor and set a price you can afford, talk about what location, features, priorities and style of home would fit you best.  

2.  Prequalify:  Meet with a lender and get yourself prequalified.  It is important to know exactly how much of a house you can afford, and it will help you in the negotiating process if you are already pre-approved with a lender. 

3. Drive Around Neighborhoods:  Drive around the community you are most interested in.  Look for parks, schools, shopping, restaurants, trails or whatever is most important to you.  Once you fall in love with a certain area, the house will be easier to find.

4.  Start looking in homes:  Set up showings with your realtor and begin narrowing down your choices by looking at the external and internal features of specific homes.  It is during this process where you may choose a home outside your favorite location, or visa versa depending on what the most important factors are for you.  For some location is most important, for others the house is most important. 

5.  Making an Offer:  Remember an offer must be in writing, and you must be willing to pay earnest money up front to show good faith that you are serious about the home.  You will then need to decide on a price you are willing to pay, closing and occupancy dates, contingencies including qualifying with a lender, inspections, appraisals etc.  It is important to decide on what possession date all the parties feel comfortable with as well.  Usually this happens on the day of closing.  Lastly you will need to discuss what personal property you want included or excluded from the offer.

6.  Lending Process:  Once the offer is accepted, you can then continue to work on gettting your loan.  If your mortgage company is not sure they can make the deal work, feel free to try another lender while under contract.  If you want the house, it is important to work as hard as you can to get the right loan for you. 

7.  Closing:  As closing, the buyer and seller will meet with the lender, the realtors, and the closer to complete the transaction, sign paperwork, and exchange keys.  Once this is complete, the documents will be filed with the courthouse, and the house will officially be put in your name.  Congrats.

-Jeff

River Fun in Clear Creek in Golden

This past weekend the Colorado School of Mines held a boat race on Clear Creek in Golden.  Students created boats out of cardboard and launched down the river to see how far they could make it before they sunk into the icy cold river.  This annual tradition brings out many folks from the community and is always a good laugh!

Spring in Colorado

It is finally April, and I love spring in Colorado.  Literally ,"you never know what your gonna get."  A week ago I was skiing in heavy snow just fifty minutes up highway 70, and drove back to a balmy 60 degree day in Golden.  Often in the spring, you will still get heavy snows up in the rockies, and very mild weather in the Denver Metro area.  Wild tempature swings are also common.  Saturday was a beautiful 85 degrees, and everyone was outside.  Downtown Golden was packed with people strolling the streets window shopping.  The river trail was full of runners, bikers and of course lots of people walking their dogs.  Flowers were starting to sprout, and the warm temps continued to help turn lawns green wherever you looked.  Yet, just 24 hours later, the temperature had dropped almost 50 degrees and it was snowing Sunday afternoon.  This see-saw weather pattern is pretty normal for Spring in Colorado.  The old saying goes something like this..."If you don't like the weather in Colorado, just wait five minutes for it to change."   So if you are at all energized by change, Colorado will provide plenty of opportunity to satisfy your soul.  Until next time..
-Jeff