Is Understanding Costing You Money?

People tend to fear what they don’t understand. Homeowners understand fixed rate mortgages and remember the horror stories of people who lost their homes because they could no longer afford them when their adjustable rate mortgages went up.iStock_000023022788Small-250.jpg

Interest rates on fixed-rate mortgages have been so low for enough years, that borrowers haven’t even given much consideration to an adjustable rate mortgage. Changes in the way adjustable rate mortgages are now made make them much safer for borrowers who understand how they work but also know they’ll only be in the home for a limited period of time.

Adjustable rate mortgages can go up or down according to an index that the lender has no control. The amount that can be adjusted is limited by caps for each period and for the life of the loan. While there are different periods for ARMs, the most popular lock the first period for five to seven years and then, can adjust annually after that.

One quick and easy way to determine whether an adjustable may be a viable alternative to a fixed would be to determine the maximum payment adjustments possible to find out when the savings from the early years are exhausted which would be the breakeven point. If the borrower is certain they’ll move prior to that date, the ARM will definitely provide a lower cost of housing.

The breakeven point for a $250,000 mortgage would be 8 years 3 months comparing a 2.9% 5/1 adjustable-rate with 1 and 5 caps to a 3.8% fixed-rate mortgage. In the initial five-year period, the payments on the ARM would be $124.32 lower and the unpaid balance would be $3,522 less than the fixed-rate to make a total savings of $10,981.

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Whether you’re buying or refinancing, get some good advice from a trusted lending professional about the adjustable-rate alternative. If you’re only going to be in the home a short time after the mortgage is made and your tolerance for risk allows you to feel comfortable, the ARM may be the best choice for you. Check out this ARM Comparison to use your own numbers.

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What’s That Smell?

Homeowners may be totally unaware that their home has an unpleasant odor. It can be unrecognizable to them but immediately apparent to visitors on entering the home. smell - 300.jpg

Candles, aerosol spray or even chocolate chip cookies can’t get rid of the smell. To eliminate the odor, the source of the smell first has to be removed and then, the affected areas can be treated.

Cigarette smoke is particularly offensive to people. It is very common for buyers to refuse to even consider looking at a home where smoking is allowed. This odor permeates the air in a home and soaks into carpets, furniture, drapes, clothing and even the building materials like drywall and cabinets.

Pets may be considered part of the family but it is still a problem when the animals are not adequately house-broken. Urine isn’t just absorbed by the carpet but also the padding and in some cases, the subflooring. Sometimes, walls and floors have to be treated and sealed before painting and new floor covering can be installed.

If a casual friend doesn’t want to hurt your feelings about the jeans you’re wearing, you can bet the ranch that they won’t tell you about the odors in your home. You’ll need to rely on your closest friends to tell you the truth or maybe your mother-in-law.

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Remember to Get Your Annual Credit Report

You are probably aware that Federal law entitles you to a free copy of your credit report annually by each of the three credit bureaus: TransUnion, Experian, and Equifax. By regularly looking at each of these reports, you can determine if there are any errors on them and be aware of your credit worthiness.

Instead of ordering all three at the same time, experts recommend that you stagger them throughout the year. This will let you look at your credit at three different times during the year instead of only once a year.32619499_s-300.jpg

An easy way make this happens on a timely basis is to set a recurring appointment on your digital calendar whether it is on your phone, your email program or a contact manager. Make the appointment to order a free credit report from a recurring event to take place every four months. You’ll order one report from each of three companies once a year.

You can record that date and the bureau you ordered the last report in the appointment’s note section so that you’ll have a history and won’t try to order the same report twice in one year.

This isn’t just for people who are trying to clean-up their credit. This procedure allows you to monitor your credit to be sure that your report is accurate. You might even discover that someone is illegally using your good credit.

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It’s Your Advantage

Technology has certainly streamlined the home buying process and introduced things that help purchasers make better decisions. Buyers have enthusiastically embraced video tours, digital signatures and the enormous amount of information available about a home, neighborhood, schools and neighbors.

The ironic thing is that buyers are ignoring the one single thing that can help them secure the “right” home. Talking to a lender or using a financial calculator is not pre-approval. pre-approved-300.jpg

Pre-approval requires written verification on employment and income and ordering a credit report for the purpose of obtaining a mortgage. A mortgage credit score is different than what a person might see from credit reporting websites.

Pre-approval gives buyers the confidence to know the amount they can borrow which can result in bargaining power when dealing with a seller or competing against another offer. Transactions can close quicker once a buyer has been pre-approved.

If any issues are discovered in the initial process, the purchaser and lender will have more time to correct them compared to trying to get it done during the loan approval period as stated in the sales contract.

Most lenders best interest rates are only available to the best borrowers. You might get approved on a loan but at a higher rate than you expected which could make a significant difference in the monthly payments.

The “right” home without financing will never have the buyer’s address. Getting pre-approved with a trusted mortgage professional is one of the first steps in the buying process. It can definitely be an advantage that will benefit you in negotiations and ultimately, during the time you own the home.

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Early Burnout Could be Good

Most of us understand the expression “burning the candle at both ends” to mean working so hard that you burn yourself out. Normally, that wouldn’t be a good idea unless it is intentional.

If the candle is your mortgage and the strategy is to get it paid off early, being “burned out” would be a good thing. One end of the candle would be your regular mortgage payments and the other end would represent additional principal contributions.candle-250.jpg

Since the Great Recession, lenders have been reporting a higher than normal number of borrowers getting shorter term mortgages not only when they purchase the home originally but when they refinance them also. It seems like the mindset of America’s homeowner has shifted a little from the belief that they will always have a house payment.

The extra $100, $200 or $500 in your checking account isn’t earning interest. Additional principal contributions with your regular payments on a fixed rate mortgage will save interest, build equity and shorten the term of the mortgage.

Wealth management is about making financially wise choices. If having your home paid for by retirement age is one of your goals, making extra contributions regularly could get you there. Use this Equity Accelerator to see how it will affect your loan.

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Puncture in a snowstorm

As you may know i come from Scotland. This week in the middle of the “snowstorm” i found that our car had a puncture. So being the “man” i was tasked with heading to the repair shop, and yeah you guessed it the tire was unrepairable. So i used my experience in the auto repair trade from Scotland and headed to a car supply store and picked up a repair kit (which can be used at the side of the road) and a small compressor which i am pleased to say fixed the puncture and kept us moving without having to replace the tire. So sometimes it is definitely what you know that will save you the much needed dollars.

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First proper snow

20151111_063442This past Wednesday we had our first ‘proper’ snowfall of the season in Denver, having just relocated here from Edinburgh, Scotland. I am not used to getting snow this early in the season.

Both of our kids woke up so excited that there was snow actually lying on the ground, as the snow we are used to is wet, sticky and tends to melt as soon as it touches the ground or freezes (if the conditions are correct), which makes driving very treacherous. What i experienced here was how effective the plowing teams on the main routes are and the fact that everyone took responsibility for clearing their own driveways as well as their own section of sidewalk.

It is very refreshing for me to see such a community spirit here.

If you are relocating to Denver and are wondering, Like me about the weather as we only hear the worst stories, or for any other real estate needs you can contact us here

We look forward to serving you

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Denver Relocation: Here are some tips for a warmer, safer winter season

Denver certainly has its share of surprise weather systems, going from 80 during the day to the 30s at night.  I remember a day where we went from 50 degrees to 26 inches of snow in 24 hours! So a Denver Relocation can surprise you. These things will help you stay warm & cozy…. (here is a picture of a surprise winter event…pretty eh?)Surprise Denver winter event

Make sure there are no gaps in insulation or crawl spaces that expose pipes to cold air, which could put the pipes at risk of freezing and bursting. When a cold snap is expected and a sink, shower or tub is on a n exterior wall, open the cabinets.


I use petroleum jelly to keep my hands from cracking…try it…my doctor recommended it!
Have your heating system checked by a licensed technician before cold weather requires daily use. You will find a great list of providers at

Denver Realtor recommends dis-connecting hoses

Denver Hose Bib

TAKE THE HOSES OFF THE HOSE BIBS to prevent flooding the basement next spring!

I always carry a blanket & boots in the car.
Block drafts around doors, windows and baseboards with weather stripping, window film and caulk to control heat loss.
Install storm doors and windows to improve energy-efficiency and get rid of drafts.
If you burn wood have your chimneys cleaned by an experienced chimney sweep to prevent the risk of a fire from buildup or blockages. Again, is a great resource.
Realtors pay attention here: Spray door locks with powdered-graphite lubricant to prevent freezing and sticking. I carry this stuff in the car and use it in my lock boxes too.

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Denver Colorado weather equals Changing weather

From my son in law Stewart Renton:

Having moved from Scotland recently, I didn’t really appreciate what “Denver Colorado weather and a change in the weather meant”. Today I noticed that the temperature was at 40 when I woke up this morning, Now I’m used to a slight change in temperature and weather where it may rise 5-10 degrees centigrade, but today I experienced ‘sweater weather’ then by lunch time I was just way too warm.

Which brings me to the revelation I had today, if the temperature can swing 30-40 degrees Fahrenheit up the way it can surely swing the other way to, so I would ask you to make sure all of your outdoor hoses are drained of water, drain your sprinkler systems if you can and make sure you keep at least half a tank of gas in the car as well as making sure your tires can handle the change in temperature and be safe.

Check out Denver Relocation.

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Denver Freezes Are COMING!

Denver has a surprising climate. 80 during the day and 40’s at night. Shirtsleeves in the winter in the sun. Today it is cold and foggy. I love it here! Yet there are surprises we need to be aware of though, right?

Denver Realtor recommends dis-connecting hoses

Denver Hose Bib

1: Hoses on the faucet: This time of year it is a good idea to disconnect them so they do not freeze and flood the basement. Draining your hoses can make them last longer too.

3: Get your furnace filter changed and have the furnace cleaned & serviced. If they say you need a new furnace, get a 2nd opinion (for Denver referrals call me).
4. Water is great for the lawn but you should be able to reduce the usage by cutting back the time per zone and you may want to drain the system.
5. It is a great time to “winterize” the lawn with a fall feeding.
6. Get your snow equipment ready. If a snow blower, does it start? Shovels sometimes loose parts/screws.

Pete Doty has lived in “Denver” since 1978 and has been an active full time Realtor since 1985. Experience and focus on his clients and customers make him the choice for your next Denver Realtor. For more information about living in Denver see

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