Denver & Our Aging Parents – 1 Aging in Place

The myths of aging are astounding to me, even here in Denver! For instance:

“Old People are all the same”!

Actually, all of us have lived very diverse lives and have an amazing collection of experiences and memories that we would love to share with others, even riding up a ridge of a mountain in a blinding thunder snow storm with a string of teenagers on horse back in front of me. I even discovered a map and the name of the mountain last year: Parika Peak and we rode right up the Continental Divide!

Here are some others:

“Families Dump Relatives into Nursing Homes”

“Old equals ill and Disabled”

“Old People are lonely and gradually withdraw”

“Older People Are Richer, Poorer Than Young People”

“Older People Are More Likely to be Victims of a Crime”

“Every Retiree Wants to Live in Florida”

“Older People Don’t Use Technology”

Six Living generations in Denver

Our aging generations

Where do your parents fall on this chart? Mine are long past but in the next installment you will see a chart on planning for their next home and where they are health wise. BTW all elderly folks say their health is GREAT! and I have a chart on that too.

I have found that most folks in Denver want to stay in their home and so we will be adding to this series a number of posts about adapting a home for aging in place. It certainly will not be a comprehensive list but it will give you some ideas, and of course I do have a list of contractors that could help make the changes you might need. One I learned of and never thought about was how throw rugs and runners can cause trips and fall because as one ages the height of the steps we take are lower and lower.

If you want to visit with me about this and my designation of Senior Real Estate Specialist please contact me.

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Which Value Do You Want?

Often, when asked to help someone sell their home, or to just sit and visit, the true value of the conversation ends up being staying in Denver, versus moving across town or to another state. Your decision may be based upon the estimated value that I can provide you (and that may even suffice for an estate!). Should you be thinking it might be time to move, a conversation about real estate might be the best way to determine what the plans really are. But read on, there’s more…

What your home is worth depends on why you ask the question. It could be one value based on a purchase or sale and an entirely different value for insurance purposes.Denver real estate

Fair market value is the price a buyer and seller can agree upon assuming both are knowledgeable, willing and unpressured by extraordinary events. This value is generally indicated by a comparable market analysis done by real estate professionals.

Insured value is determined for insurance coverage. Homeowner policies typically have replacement clauses in them and the cost of demolition, new construction and the added complexities of matching existing construction could exceed the cost of new construction.

Investment value is based on the income it can generate during its useful life. This value is dependent on what kind of yield an investor requires to capitalize the value over time. The formula for this is to divide net operating income by the capitalization rate required by the investor.

The assessed value of a home is used to determine the property taxes the owner must pay. This value is determined by the responsible state government agency.

Homeowners are generally more familiar with their home’s market value. Since it can be lower than the replacement cost, owners should review the insured value with their property insurance agent periodically.

There can be a surprising difference in each of these separate values. It is important to know the purpose that it is going to be used for the value.

With my level of experience ( since 1985) I am often asked to establish a value for a home here in Denver that is being managed by an estate or a trust, and they need to liquidate. A divorce can be another reason to get a value for a home as can the blending of 2 families, or the expansion of another. I have even estimated value for an un-developed oil & gas lease in the DJ Basin. Life as a Realtor here in Denver can be very diverse. So Let’s Have a conversation about real estate. CONTACT ME

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Shorter Term – More Savings

When counseling someone about that next Denver home it always seems to be the question: “How much can I afford?”.Only the most disciplined clients can stay in the 15 year mortgage range of price, but it can be so worth it. And it can also provide the college tuition for later on, simply by providing the equity in your home. Yet that first/second home is about other things, like family & schools, and neighborhoods. So read on…

Whether you’re refinancing your current home or buying a new one, something worth considering is a 15-year loan rather than a 30-year term. The payments will be a little higher but you’ll get a lower interest rate and you’ll build equity much faster.Denver short term

Let’s look at an example of a $300,000 mortgage with the choice of a 30-year term with a 3.92% rate compared to a 15-year term with a 3.2% rate. The payments would be $682.28 higher on the shorter term but the equity would be considerably higher even after you adjust for the higher payments.

Another benefit is that the shorter-term loan creates a forced savings situation where the savings on longer term loan might end up being spent rather than being saved and invested. A conscious decision to pay more in payments could pay big dividends in the future.

30 vs 15 in Denver

When the time comes to “discuss your plans” about whether to re-finance, sell that Denver home and move into something that suits your lifestyle, or to access the equity for improvements, I can aim you at professionals who can help. Just CONTACT ME to start the ball rolling.

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Denver: Be Home Energy Aware

When we first moved to Denver and bought that first house, I was thrilled to have aluminium dual paned windows. Today they would be the first thing torn out, yet there are people who can only afford that house. Extra insulation, and more efficient, dual speed heating systems, even a furnace that looks like a fireplace, have all come along to help us reduce our energy bills. So read on Denver…

After the mortgage payment, the largest homeowner expense is for utilities and the major component is energy. Contributing factors include air leaks, insulation, heating and cooling equipment, water heaters and lighting.Denver Where does my money go.png

Computers, monitors, TVs, cable and satellite boxes, DVRs and power adapters are spinning your electric meter even when they’re not being used. Even though they only represent a small percentage of a home’s total energy consumption, about 3/4 of the electricity is used when the products are turned off.

Unplugging devices can actually make a difference in the size of your electric bill. Plugging several of these offenders into a power strip with a single on/off switch may make the task easier. Most computers have options to put them into sleep mode or even turn when not in use.

The Department of Energy has an Energy Saver Guide and do-it-yourself suggestions.

Here is a offer you might not want to refuse! Anyone who buys a house in metro Denver from me this year will get a free energy/airleak audit from me. This service is known as a “blower test” where air is blown into the home (or sucked out depending on the season) and thermal images are taken with infrared camera to see where insulation can be added. Additionally, if you have newer appliances, or features that are saving energy, those will be noted. And just so you know, and Debbie with Bestway Insulation will be there; what a font of information she is. You can reach her at 303 469 0808 if you want to know more about the service offered or just CONTACT ME.

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Highlands Ranch – Home Safe Home

Years ago here in Highlands Ranch, we had our neighborhood watch program with the Douglas County Sheriff in place on our street and interdicted a planned kidnapping because a neighbor noticed something strange. The reason it was actually successful was because neighbors spoke to each other. If you want to generate a neighborhood watch program contact either your county sheriff or police department. And read on…

Home is a place you should feel safe and secure. Sometimes, we take it for granted and unfortunately, we do need to remain vigilant about things we do that could compromise our safety. Here are a few tips to consider:Highlands Ranch Home Safe

  • Everyone loves an inviting home including burglars. Make sure it looks occupied and is difficult to break in.
    • Always lock outside doors and windows even if you’re only gone for a brief time.
    • Lock gates and fences.
    • Leave lights on when you leave; consider timers to automatically control the lights.
    • Keep your garage door closed even when you’re home; don’t tempt thieves with what you have in your garage.
    • Suspend your mail and newspaper delivery when you’re out of town or get a neighbor to pick it up for you.
  • Posting that you’re out of town or away from home on social networks is like advertising your home is unprotected.
  • Equally dangerous could be allowing certain social network sites to track your location.
  • Don’t leave keys under doormats, in flowerpots or the plastic rocks; thieves know about those hiding places and even more than you can think.
  • Trim the shrubs from around your home; don’t give criminals a place to hide.
  • Use exterior motion detectors and yard lighting.
  • Have an alarm system and use it when you leave home and go to bed.
  • Put 3 ½” deck screws in door plates and door hinges.
  • Have good deadbolts on all exterior doors.
  • Exterior doors should be solid core.

Considering a move to a safer home/neighborhood? Let’s chat about your needs. Contact me.

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PARENTS of small children in Denver! College Tuition!

Denver PARENTS of 1 to 5 year olds: If you have great credit and some down payment (equity in your house) why not buy a rental that will be mostly paid off in 15 years? And the rents or a 2nd or even a re-finance, or sale might pay for ALL of the kids college costs! Read on as there is some great info here…

Consider the goal of funding a child’s college education in the future. If “other people’s money” in the form of a scholarship is not a possibility, there still may be another way to use some “other people’s money.”Pay Denver College education

A $25,000 investment into a mutual fund paying 5% would earn $1,250 in the first year. Alternatively, the $25,000 as a 20% down payment to purchase a $125,000 rental home appreciating 3% a year would have gone up by $3,750 or three times that of the mutual fund in the first year.

The mutual fund’s growth depends on the value of the money invested. Rental real estate benefits because a 20% down payment controls a much larger asset because you’re using “other people’s money.” Leverage allows the investor to profit not only from the amount of cash invested but from the value of the investment.

With a 20% down payment and current interest rates, a typical rental would have a positive cash flow. In ten years, the equity could be $75,000. On the other hand, the $25,000 initial investment in a mutual fund earning 5% annually would only grow to about $40,000 in the same 10 years. It would require an additional $2,700 each year to reach the same $75,000 value.

Leverage is just one of the many benefits that make rental real estate the IDEAL investment. Whether you are saving for higher education, retirement or wealth accumulation, consider rental real estate. Using single-family homes as investments are attractive because homeowners have a better understanding than many other investments and self-management is a possibility.

In my years of recommending this a number of clients have gone through the learning curve of being a landlord and paid for their children’s college education…then sell the home once graduation is past. There may be a refinance to get cash out for certain years or even using the rent payments for the tuition bills. Buy one for each child. But do it early in their life. Contact me if you would like some ideas on financing such a purchase.

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Assumptions are an Alternative

OH do I have a story about a non-qualifying assumption from the mid 1980’s that was done out in Parker Colorado, a suburb now of Denver! Then it was horse property haven and country living! And it was one of the reasons that…

In the late 80’s, both FHA and VA began requiring buyers to qualify to assume their mortgages. The main reason there haven’t

Denver FHA VA Assumption.png

been many assumptions in the past 25 years is that interest rates have been steadily going down and if a person has to qualify, they might as well do it on a new loan and get a lower interest rate.

Based on projections by Fannie Mae, Freddie Mac, the MBA and NAR, rates for the second half of 2017 and 2018 are expected to be higher. When interest rates on new mortgages are higher than the rates of assumable FHA and VA mortgages in the recent past, it becomes more advantageous to assume the existing mortgages.

FHA and VA loans originated with lower than current interest rates have great advantages for buyers and sellers.

  1. Interest rate won’t change for the qualified buyer
  2. Lower interest rate means lower payments
  3. Lower closing costs than originating a new mortgage
  4. Easier to qualify for an assumption than a new loan
  5. Lower interest rate loans amortize faster than higher ones
  6. Equity grows faster because loan is further along the amortization schedule
  7. Assumable mortgage could make the home more marketable

An Assumption Comparison can help determine the savings and financial benefits of an assumable mortgage with a lower rate.

The process of assuming a loan is similar to getting a mortgage. One has to substitute your credit and liability to the lender for the original borrower and they are released from future liability on the loan. Given the rapid appreciation we have had here in Denver, often a 2nd mortgage or a HELOC might be needed to fill the equity difference. As a buyer you still need to qualify for both loans, yet if you have a large down payment and a home with a 2013-2016 era FHA loan fits the bill, it may be a possibility. And a great question to ask. It would be my pleasure to help you find a good loan officer to assist you. Just reach out to me at here.

 

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Family & Friends Mortgage in Denver

Somehow it just seems right to give your kids a mortgage when they buy a house in Denver, if you can afford it. Wouldn’t it be great for someone to pay you 4-5% interest on a secured loan? Yes it is until the IRS sticks their nose into it. THE IRS??? Yep. Read on…

Anytime a lender and borrower can agree on rates and terms, it can be a good match but IRS has specific rules that govern the transaction especially when the parties are family or friends.Denver Parent Mortgage

The loan must be done in a business-like manner with a written note specifying the loan amount, interest rate, term and collateral. IRS requires that the mortgage be a recorded lien to allow the interest deduction.

Sometimes, a friends and family situation might have a less than normal interest rate on the mortgage. However, the rate charged in the note is regulated by the minimum applicable federal rate which is published monthly by IRS based on current Treasury securities. For July 2017, the rate is 2.57% for terms over nine years.

The seller must report the interest paid to them along with the name, address and Social Security number on schedule B when the buyer uses the property as their principal residence. A mortgage between family and friends can be good for both parties. It may allow the borrower a slightly lower rate without the expenses of a traditional lender while giving the note holder a higher rate than they can earn in available investments.

Your tax professional can guide the transaction whether you’re a buyer or a seller and your real estate professional can help arrange to have the documents drawn and filed.

When you are faced with the idea of “helping your child” or a friend buy a home in Denver, or just a loan, make sure you have the right advice. At my website DenverRelocation.com under the drop down “Resources” you will find a plethora of folks who can help you. You can go there by clicking here. Feel free to share these fine folks with your friends too.

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Down Payment Problem – Are You Sure?

Denver has quite a few lenders who are willing to help first time buyers with minimum down payment loans. Some do not charge a mortgage insurance premiums but have other methods of helping. As long as there is work history, good credit and some “skin in the game” (money of some kind) most will help you figure out a way to buy that first home. This article covers other avenues of getting a down payment so read on…

There is increasing difficulty for first-time home buyers to save for their down payment as indicated in the graph. Several factors that contribute to this trend include rising rents, rising home prices, student loan debt and flat wages.Denver down payment graph.png

Some would-be buyers feel they cannot buy a home today but a large part of those decisions may be based on inaccurate assumptions.

Nine out of ten non-owners believe they need ten percent or more for a down payment. The typical down payment for first-time buyers is six percent. VA has 100% loan programs as well as USDA for certain qualifying areas and buyers. FHA is known for 3.5% down payments. And FNMA and Freddie Mac have down payments as low as 3% and 5%.

There are gift provisions available for buyers who have an “angel” who would like to help them with their down payment.

There are ways to borrow against a person’s qualified retirement program for a down payment. It isn’t necessarily limited to the buyer but could include a relative. Interestingly, a son or daughter can borrow against their retirement to benefit their parents.

In some respects, having good credit and sufficient income is more important than the down payment. Don’t rely on “common knowledge.” Get expert advice and counsel to see if there is a way to advance your dream of owning a home.

When you want to talk to a competent lender in Denver contact me and we can discuss who might be best for you. There are a lot of really good lenders to choose from!

PS: A SAFE & HAPPY 4th of July to you!

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Don’t Have a CLUE?

Denver & CLUE reports?

An insurance policy is required by most lenders when you buy a home in Denver or other places. The premium for that first year needs to be paid and an escrow is set up to pay next years policy. If that policy premium is too high you may not qualify for the mortgage on that home. And it is all related to the previous owner’s claim history. Read on…

If you haven’t heard of a CLUE report, it has nothing to do with the table game searching for a murderer. It is a report showing the insurance claims on your home and car for the past five to seven years.Denver CLUE report

This database is used by insurance companies to evaluate risks and determine rates. C.L.U.E. stands for Comprehensive Loss Underwriting Exchange. Rates can be increased not only due to legitimate claims but data entry errors also. Sometimes, simply asking a question without filing a claim can be logged as a claim.

For that reason, similar to verifying the accuracy of your credit report, it is important to check out the CLUE report on your home and car. The reports are free and there is a process for correcting mistakes.

An interesting and sometimes costly surprise occurs during the home buying process. The claim experience of the prior seller could impact the price of the premium of the new buyer. For that reason, you can ask for a copy of the CLUE report on the home you’re interested in buying prior to writing a contract.

Here is an interesting example: My neighborhood has been hammered by hails storms twice in the last 3 years hence 2 claims. A neighbor had the water line between the house and the street start leaking and raised the ground water in his and another neighbors crawl spaces. Well the neighbor filed an insurance claim, that makes 3, and now his insurance company has cancelled his policy due to the number of claims, and his clue report means he will pay excessive premiums for a few years until the claims fade away. And none of this has to do with any culpability on his part, only acts of God and a contractor who “kinked” a copper pipe 28 years ago. So when getting ready to sell your Denver home, it might be good to check that CLUE report if you have had multiple claims on your insurance.

If you need help getting a CLUE drop me a note here.

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