Denver Sale Isn’t Final Until It’s Funded

“Mortgage brokers”in Denver used to be far & few between, but they are making a comeback. They promise the moon and stars of lower interest rates and costs and yet cannot deliver. Denver s Professional Realtors always seem to have dependable, respected lenders, who will tell you the truth, not pump you full of promises. Rates are not the only savings a lender can offer you but read on, then call me at 720-989-6768 to discuss putting together a plan to get you moved into a new place here in Highlands Ranch, Littleton or Denver.We should talk!

Mortgage approval isn’t final until it’s funded. Things can change prior to the loan being closed that can affect a pre-approval such as changes in the borrowers’ financial situation or possibly, factors beyond their control like interest rate changes.Denver Home Buyer

Good advice to buyers is to do nothing that can affect your credit report until the loan closes. Opening new credit cards, taking on new debt for a car or furniture or changing jobs could affect the lender’s decision if they believe you may no longer be able to repay the loan.

The benefits of buyer’s pre-approval are definitive: it saves time, money and removes the uncertainty of knowing whether the buyer is qualified. The direct benefits include:

  • Amount the buyer can borrow – decreases as interest rates rise
  • Looking at “Right” homes – price, size, amenities, location
  • Find the best loan – rate, term, type
  • Uncover credit issues early – time to cure possible problems
  • Bargaining power – price, terms, & timing
  • Close quicker – verifications have been made

It is a very common practice for mortgage lenders to require income and bank verifications and to re-run the borrowers’ credit one final time just prior to closing. Mortgage approval isn’t final until it’s funded.

My Denver area recommended lenders can be found at They won’t let you down. And when they say you can get a loan, I believe them! Yet sometimes their personality may not fit you. If you are concerned, about that, reach out to me by clicking here so we can talk about what you are looking for in Denver.

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Denver topic “Gift” or Inheritance aka Basis or “IN SERVICE”

It happens a lot here in Denver. It is a shame when a child has to pay taxes on $250,000 because the good hearted nature of the parent was to give the property to the child before the parent’s death. Before you make such a transfer, make sure to talk to someone who knows the rules for “basis” and “capital gains”. I can direct you to some great folks here in Denver who can confirm this for you. Now read on…

A person called into a radio talk program with a situation that was troubling to the caller and disturbing based on the potential tax liability that may have been avoided.Denver inheritance or a gift

The caller’s elderly father had deeded his home to his daughter a few years earlier because in his mind, his daughter was going to get the home eventually and this would be one less thing to be taken care of after his death. The daughter didn’t really care because the father was going to continue to live in the home and take care of it so that it would be no expense to her.

Obviously, unknown to either the father or the daughter, transferring the title of a home from one person to another could have significant tax implications. In this case, when the father “gave” the home to his daughter, he also gave her the basis in the home which is basically what he paid for it. If she sells the home in the future, the gain will be the difference in the net sales price and her father’s basis which could be considerably higher than had she inherited it.

If the home was purchased for $75,000 and worth $250,000 at the time of transfer, there is a possible gain of $175,000. However, when a person inherits property, the basis is “stepped-up” to fair market value at the time of the decedent’s death.  If the adult child had inherited the property, at the time of the parent’s death, their new basis would be $250,000 or the fair market value at the time of death and the possible gain would be zero.

In most cases, there are less tax consequences with inheritance than with a gift. There are other factors that may come into play but being aware that there is a difference between a gift and inheritance is certainly an important warning flag that would indicate that expert tax advice should be sought before any steps are taken.

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In Denver…It’s the Principal of the Thing

Denver Home Equity has grown. Now reduce the loan

Denver has seen 5 years of the median price of houses rising from $209,900 (10/11) to $345,000 (10/16). This is the result of lower inventory*, and from what the statistics look like today, this trend will continue especially with houses available to purchase in October 2016 standing at only 8,008 versus 2010 when there were over 23,049 houses for sale in Denver. So while your equity has grown making up for the downturn, your mortgage may not have shrunk as much as you would like. There are options to consider here in Denver and the following is a plan to reduce the time and current balance. See the end of that article for another pair of tools to help your Denver home mortgage shrink.

Most people think they’ll have a house payment and a car payment for the rest of their lives but it doesn’t have to be with a plan and a little discipline. The plan is to make additional principal contributions to a fixed rate mortgage to shorten the term and save tens of thousands in interest. Denver Home

If a person were to make an additional $100 payment each month applied to principal on a $175,000 mortgage, it would shorten the loan by five years six months. If the person were to make $200 a month additional payments, it would shorten the loan by 9 years. $459 additional payment would shorten it to 15 years.

Denver Real Estate

If a person does make a decision to regularly pre-pay their mortgage, it will be their responsibility to verify that the lender is applying the money to the principal each time as opposed to being placed in the reserve account for taxes and insurance.

In today’s market, a savings account pays around 0.5% or less. Even with the low mortgage rates available, there is still a considerable savings. People who might need the funds in the near future should carefully consider this option due to the difficulty to access equity easily from one’s home.

Make your own projections using the Equity Accelerator.

*Too often Realtors, self included, talk about homes as though they are just items on the shelf, or inventory. Unfortunately it seems that after 31 years in the residential real estate business, this is normal to me. It is your home and we, the Realtors, need to remember that. So challenge me when I come to talk about your home, make sure I do not use the word “inventory”.

When you have just purchased a Denver Home and have a new mortgage, it almost seems impossible to shrink it. There is a way and we should talk about a rather crafty way to shrink your mortgage. Just e-mail me and ask for my “Honey I Shrunk the Mortgage” presentation. It is another way to approach what appears to be a daunting task. OR Call me at 303-880-5585 ext 3 so we can visit!

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A Cost to Consider

Denver weather can cause huge maintenance issues. Be pro-active

Every year I walk the outside of my home here in Highlands Ranch on a sunny day like today, looking for tell-tale issues. Leaves hanging out of the gutters. Dripping faucets. Denver FrozenPeeling paint. Loose steps or sashes. Burnt out lights. All get my attention and I try to take care of them while we have good weather. Today it will be 70 and sunny but you never know around here what the Colorado weather will be like. As I drive through Denver seeing houses for sale I almost always see one of these:

Now, anyone who has been here for a while will tell you this can happen over night, and this is not an insurance claim you want to make. So walk around your Denver home and do a quick inspection before it does get this cold.

Homeownership, part of the American Dream: a home of your own where you can feel safe, raise your family, share with your friends and enjoy life. The benefits are easily recognizable but maintenance is just as real and should be considered.Denver Real estate Maintenance

Property taxes and insurance are two of the largest expenses homeowners have aside from their mortgage interest. But, as any homeowner knows, there will be occasional expenses for repairing toilets, faucets, windows and other things. There are also the significantly larger expenses that arise like replacing a water heater or HVAC unit. And don’t overlook the periodic maintenance like painting or floor coverings.

Financial experts suggest that homeowners save one to four percent of the home’s value per year for repairs and maintenance. Two to eight thousand dollars a year may sound like more than you’ll need but the cost of an air conditioning unit can easily be $6,000 and some homes have more than one unit, which hopefully, won’t need to be replaced in the same year.

Some homeowners purchase home warranties to avoid the unexpected costs. An annual premium instead of an unexpected large expenditure. Coverage varies from company to company and are not intended to cover existing conditions.

The alternative to not saving for these anticipated expenditures means that a homeowner might have to put it on a credit card at a very high interest rate or get a home improvement loan. Appreciation is a distinct benefit of home ownership and deferred maintenance can limit the value as well as lengthen the market time when it sells.

If you do need services feel free to call me at 303-880-5585 ext 3. And please feel free to use my vendor list at

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Dial Down Risk for Retirement

Denver has a Vibrant Rental Market, especially Single Family Homes

Many years ago I was introduced to a retirement planning tool where you bought rental properties and held them until paid off. Then use the equity to buy more all the while allowing the rents to make the payments. In Denver with rents the way they are and interest rates as low as they are, this is a great strategy. When you are done reading this blog, call so we can visit about your plans.

There is certainly no shortage of retirement planning strategies available to individuals who actually take the time to consider them. What most financial experts do agree on is that the closer you are to retirement, the less time you have to recover from a loss. For that reason, many people start dialing down their risk factors as their age increases.

Denver Real EstateOne way to minimize risk is to invest in things that you know and understand. For the majority of homeowners, their largest asset is the equity in their home which they generally have more familiarity than other types of investments.

Buy the home you’d like to retire to today and use it as a rental property. Finance it with a 15 year loan so it will amortize quickly and possibly be paid for at retirement.

Continue living in your current home until you’re ready to move into the home you’ve designated at your retirement home which will not create a taxable event. Prior to moving in, you can rehab the home so that it fits your style and needs exactly.

If you’ve lived in the current home for at least two of the last five years, you can exclude up to $250,000 of gain for single taxpayers and up to $500,000 for married taxpayers. The proceeds could then, be invested for income.

Some of the attractive features of this proposal is that you’re familiar with the operation of a rental due to similarity of owning a home. Most experts agree that home prices will continue to rise and so will rents. The maintenance people that you use for your home can also work on your rental. If you don’t want to deal with tenants that can easily be delegated to a property manager. Low mortgage rates with short terms and high rental values contribute to positive cash flows that will pay for the property.

Obviously, there are many other considerations you’ll want to investigate with your tax and real estate professionals these can get the conversation started.

Call Pete to get the process rolling: 303-880-5585 ext 3.

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Down Payment: FOUND!

Denver Price Increases Out Strip Costs

Denver’s increasing cost of housing (so far this year prices have gone up between 11 & 16% over last year) and there are no indicators of an imminent change of this trend on the horizon, buying now is a intelligent strategy. Interest rates in the 3-4% range make this an even better time and homes will never be more affordable. Just a thought here…if you were to buy today and needed to sell in July you should, after all closing expenses are paid get all of your investment back in a short 8 months according to those statistics. Denver has one of the leading housing economy’s in the country and if you live here, now is the time to take advantage. CALL Pete Now 303-880-5585 ext 3.

Saving the down payment may be unnecessarily keeping would-be buyers from getting into a home. They may be unaware that the funds might be available.

The NAR Profile of Home Buyers and Sellers reports that 81% of first-time buyers got all or part of their down payment from savings. Less than 4% said that all or part of the down payment came from a withdrawal in their IRA and 8% from their 401(k) or pension fund. 21330457-250.jpg

Traditional IRAs have a provision for first-time buyers which include anyone who hasn’t owned a home in the previous two years. A person and their spouse, if married, can each withdraw up to $10,000 from their traditional IRA for a first-time home purchase without incurring the 10% early-withdrawal penalty. However, they will have to recognize the withdrawal as income in that tax year. For more information, go to

Allowable withdrawals from traditional IRAs can be from yourself and your spouse; your or your spouse’s child; your or your spouse’s grandchild or your or your spouse’s parent or ancestor.

Roth IRA owners can withdraw their contributions tax-free and penalty-free at any age for any reason because the contributions were made with post-tax income. After age 59 ½, earnings may be withdrawn as long as the Roth IRA have been in existence for at least five years.

Up to half of the balance of a 401(k) or $50,000, whichever is less, can be borrowed by the owner at any age for any reason without tax or penalty assuming the employer permits it. There can be specific rules for loans from a 401(k) that would determine the repayment; interest is usually charged but goes back into the owner’s account. You can consult with your HR department to find out the specifics.

A risk in borrowing against a 401(k) comes if your employment ends before the loan has been repaid. The loan may have to be repaid as soon as 60 days to keep the loan from being considered a withdrawal and subject to tax and penalty. Even if you continue with the same employer, failure to repay the loan could be considered a withdrawal also.

Your tax professional can provide you specific information on how making a withdrawal from your retirement program might affect you. Additional information can be found on

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It’s not far, if you know the way to that Denver Home

Buying a Home in Denver is easier than most think

 One of my greatest joys is to surprise & delight my clients by making the process easier, faster and less expensive than they thought it would be, and in Denver, that can be a real challenge! One of the ways I help is by creating a series of short videos about the home buying process in the Denver area. You can click here or cut and paste the link below

“It’s not far, if you know the way.” What this expression implies is that you could have a long way to go if you don’t know where you’re going or how to get there. Just like reading a map, there are some definite steps that will improve your success in buying a home in today’s market.Denver Home Buying Process

  • Know your credit score – the best mortgage rates are available to borrowers with the highest scores. Unless you know what your credit score is at all three major credit bureaus, you don’t really know what rate you’ll have to pay.
  • Clean up your credit – it is estimated that about 90% of credit reports have errors. Some are not serious but others could affect a borrower from getting the loan they want. It is your responsibility to know what is on your different reports and correct them if possible. You’re entitled to a free copy of your credit report each year from Experian, Trans Union and Equifax.
  • Get pre-approved – Taking the time to make a loan application with a qualified lender even before you start looking at homes will provide peace of mind, make sure that you are looking at the “right” homes and may help you negotiate the best price on the home you select.
  • Do your homework – when you find the home that meets your needs and desires, get the home inspected and research the tax assessments, school ratings, crime activity, possible zoning changes and comparable sales in the area.

Call for a recommendation of a trusted mortgage professional and an inspector.

As a Denver Realtor since 1985, and living in Highlands Ranch since 1989, I have collected the names and contact information for respected, honorable and trusted professionals in the trades and I am happy to share them with you. Call me at 303-880-5585 ext 3.

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Denver Home Sale by Surviving Spouse

<H3>Your Denver Home May Need to Be Sold For Tax Advantages</H3>

While far from a specialty in Denver Home sales, working with estates and spouses grieving the loss of a lifetime mate, or even the children or personal representatives can be a very different “not taught in real estate school” experience. Often it is a liquidation and “get us the best price you can for our mom’s house in Englewood” while other times it is more “let’s fix it up and get top dollar”. Knowing the difference and how to compare in different Denver communities is critical. And knowing  Mom’s house is her retirement fund makes a difference too. And while there are still fix up deductions, if there is no money to do them then the choice is made. Yet most critical is to have all the decision makers together to make their decisions.

Special consideration is made by IRS for the sale of a jointly-owned principal residence after the death of a spouse. Surviving spouse may qualify to exclude up to $500,000 of gain instead of the $250,000 exclusion for single people if certain requirements are met.Denver Homes

  • The sale needs to take place no more than two years after the date of death of the spouse.
  • Surviving spouse must not have remarried as of the sale date.
  • The home must have been used as a principal residence for two of the last five years prior to the death.
  • The home must have been owned for two of the last five years prior to the death.
  • Survivor can count any time when spouse owned the home as time they owned it and any time the home was the spouse’s residence as time when it was their residence.
  • Neither spouse may have excluded gain from the sale of another principal residence during the last two years prior to the death.

If you have been widowed in the last two years and have substantial gain in your principal residence, it would be worth investigating the possibilities. Time is a critical factor in qualification. Contact your tax professional for advice about your specific situation. Contact me to find out what your home is worth in today’s market. See IRS Publication 523 – surviving spouse.

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Denver & US Mortgage Rate History

Folks in Denver all seem to be concerned about rates on mortgages going up. The why of that is pretty simple…a 1/4% increase on a 385,000 loan means $56 per month more in payment. That is only a few coffees per month but when buying a home here in Denver, that could be a lot.

It’s not “if” the rate goes up but “when” the rate goes up; it could make a big difference for some buyers. Freddie Mac predicts that mortgage rates will be at 4.5% a year from now.Denver

If buyers can afford a home with higher interest rates, it means higher payments. Higher payments might mean they won’t have the money to spend on other things like furniture or improvements to the home or an unrelated purchase like a new car.

When the rate moves 0.50% on a $250,000 mortgage, the payment goes up by $70.66 a month. If it moves 1.00%, the payment goes up by $143.74 per month, each and every month for the entire term of the mortgage which means paying over $50,000 more for the house.

The question facing every borrower in this situation is “How will you feel about having to pay more to live in the same house because you were not ready to commit?”

Then, there’s the borrower who is absolutely maxed out as to what they can qualify for or sometimes, it is a borrower who just refuses to pay a higher payment. When that’s the case, the buyer has to make a larger down payment. In the same example, a 0.50% increase in rate would require $14,873 more in down payment. That could make the purchase impossible or require the buyer to buy a lesser price home that will not have the same amenities.

Mortgage rates have been low for so long that some people think that is what they should be. There are some economists who believe that the economy will not be strong again until mortgage rates are in the 7% range.

To see how this type of scenario might affect you, go to the If the Rate Goes Up calculator.

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Coffee table

Denver coffee Table

My third train layout in Denver

When our kids moved back to Denver from Scotland the 3 year old dictated that we change our decor. Our family room really became a family room and here is our new coffee table. Thomas has permeated our house, and of course I love trains too so this addition was welcomed and a surprise how much Calum knows.

To see more of my trains click here.

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