Should We Shop Around For A Lender?

Dave,

Simple question: should I shop around for a lender? I’ve heard it’s good to interview a few different real estate agents before starting the home buying process. Is it the same thought for lenders or are they all pretty much the same across the board because of regulations, etc.?

Thanks man!
Gregg, Fruita

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Gregg,

Clearly you have read my column and realize I can be pretty verbose, but in this instance I think I can keep it fairly short! It is really pretty simple, no two lenders are the same and it is in your best interest to shop around and I am not necessarily talking about shopping around for the best interest rate!

Just like in real estate or any other profession, you want to find someone who works in lending full time! They should have years of experience and knowledge. Most importantly he or she should be up on all the latest lending requirements and programs and know what it will take for you to get a loan approved. I know everyone is human and can make mistakes, however it still amazes me at the sloppiness/last minute rush that some mortgage lenders put their clients through when it comes down to crunch time. I understand there is a load of paperwork that is required from the buyer when obtaining a loan and getting all that paperwork processed is a time consuming process that requires systems and processes to ensure proper handling. As with anything you have to ask questions! 

Some simple questions to find out more about your prospective lender might be:

• 1. What kind of experience do you and your team have? If they don’t have a team working with them, move on….There are too many details that can get overlooked.

• 2. Can I get references? If they don’t readily hand them over, move on.

• 3.How much time do you need to fund? If they hesitate or say more than 45-60 days, move on (30 -45 days is typical).

• 4.Can you guarantee an on time close? Most should not hesitate to give you a firm closing date. Remember you MUST be timely in document submission. Many times, it is not the lender, it’s the buyer who is dragging their feet and that causes a loan to either not close or delay closing.

• 5.What are my estimated closing costs and are there any other fees or costs I should know about? They should be able to provide you a good faith estimate of all your costs right up front.

Clearly you should find out about the interest rate and the closing costs each lender will charge. However, I will drop this little nugget on you…you will not care or be worried about your interest rate and closing costs if your loan hits a major snag 4 days prior to closing and you lose your dream home. Imagine having to scurry about looking for a short term rental or ponder moving in with the in-laws for a few months while you sort out your homelessness. NO THANK YOU! Experience matters! I know cost is always part of the equation, however knowledge, experience, track record and reputation are more important. Trust me, when a deal starts to go bad, you will throw cost out the window in trade for someone who knows their way around a difficult deal and can find a way to get it closed. Even more important is to find a lender that never lets you get near a situation like I described above. 

Like everything else, do your homework on your lender. No two lenders are created equal and some are better than others. That being said, we have some wonderful lenders in this town who do an excellent job and are really quality people! Another good way to evaluate a lender is by reading online reviews. 

So much for keeping it short! I guess there’s always next time. I hope this helped.

Dave Kimbrough
The Kimbrough Team

Should We Host A Holiday Open House?

Dear Dave,

Our home is currently for sale and we are considering having an open house to showcase our home and offer some holiday treats to the neighbors.

What do you think of this idea?  We are getting frustrated and really need to get our home sold.  We need to do anything we can to make that happen.

Thank you,

Bonnie and Roger – Grand Junction, CO

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Bonnie and Roger,

Oh, I know how you feel.  This is a common seller response when the showings get further and further apart and old man winter is bearing down on us.  Desperate times call for desperate measures, right?   Not so fast…..  Remember, this can be a hard time of year for home sales.  Statistically speaking the two month period from the middle of December to the middle of February are the two slowest months of the year….almost every year.  This is not to say that homes don’t sell during this time - they do, but in far fewer numbers than during the spring, summer and fall seasons.  Showing traffic can be slow and contracts can be hard to generate and frustrations can begin running high. 

In the real estate business we are competing for people’s time and attention year-round, but this time of year it is especially difficult.  Right now everyone’s time and attention is consumed by so many things - seasonal parties, school performances, kids sporting events, family get-togethers and Christmas shopping make it very difficult to find time to shop for a new home.  The silver lining is that buyers who are home shopping are generally serious and are not just kicking the tires.  Also, generally speaking, there are fewer homes for sale so every showing counts!

 I, personally, am not a big believer in open houses as a tool to actually sell homes.  Open houses are a very useful tool for meeting new customers and introducing them to your services and company, however, they rarely result in a buyer for the home being held open!  They do provide the seller some visual evidence that something is being done to sell their home and sometimes that is important enough to warrant an open house.  Especially during this time of year, I would suggest you trust that your agent has a marketing plan in place that is reaching the buyers who are shopping for a new home.  Lean on their marketing plan and expertise, not on an open house as a desperate effort to sell your home.  

I know the sale of your home is important, very important, but sometimes, patience is what is needed and this time of year patience is key.  For your own sanity, this is not the season to get desperate and wrapped around the axle.  I suggest taking a deep breath and enjoying the blessings of the next thirty days.  Focus on friends and family and enjoy the Christmas season.  If your home sells, chalk it up to your agent’s good marketing plan and finding the right buyer. If your home does not sell, I suggest meeting with your agent in the middle of January and adjusting your game plan to get the job done as the market pulls out of the Holiday Hangover.  Hang in there.  You will get it done, however right now may not be the time to pull out all the stops.

Dave Kimbrough

The Kimbrough Team  

Should We Decorate Our Home For Sale For Christmas?

Dear Dave,

We have had our home on the market since the beginning of October.  Now that the holidays are upon us, we would really like to be able to decorate for the holidays – but we don’t want to scare away potential buyers.  We would typically set up a couple of holiday blow-ups in our yard, as well as decorate our house with Christmas lights – our kids just love this.  Do you think that is too much?  What do you recommend when someone is trying to sell their home during the holiday season?

Thanks in advance and Merry Christmas!

Jack and Linda, Fruita, CO

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Jack and Linda,

I say, decorate and enjoy the holidays.  In my opinion a home never feels more like a home than it does during the Thanksgiving and Christmas season.  I don’t believe you will scare anyone away, but remember to decorate tastefully and try to err on the side of too little rather than too much.  Believe me, if you kids love the way you decorate the likelihood is the families that come to look at your home during the holidays will love it also. 

Remember that buying a home is still very much a “feel” thing for most buyers and the more senses you get involved and the more “like a home” you make your home feel the better off you are.  I can tell you that more often than not, when a buyer gets a feel about a home and they can picture themselves or their family living there, your chances of them making an offer go up significantly.  Also, don’t be afraid to bake some cookies, pies, a cake or at the least light a candle that plays up the season.  Also note that a little Christmas music will not hurt your cause either.  We purchased our cinnamon pine cones this weekend for less than 5 bucks and they smell wonderful.  This is the greatest time of year to have fun and get immersed in the season, enjoy it because it will be gone too soon.

The key take away here is tasteful and not overdone, yet have fun and enjoy the season.  The spirit of the holidays is contagious and my bet is someone will catch the spirit at your house this season.  Have a wonderful Christmas and don’t be shocked when your home sells because it looks so good!

Dave Kimbrough

The Kimbrough Team

After Touring The Parade of Homes, We Want To Build!

Dave,

My husband and I are in a predicament—we have been thinking of moving for a few years. We've been poking around on Zillow to see what’s available and if anything sparks our interest. We weren't having any luck, but then we attended the Parade of Homes this fall. We fell in love with one of the homes on tour. The only problem is it was out of our price range. Our Realtor has shown us a few houses since then, but we can’t stop thinking about how perfect that home is for us! We need your help making a game plan. What would be better in our current market?

Option One: Stay in our current home, and strive to save a large enough down payment so we can afford to build that same house?

Option Two: Sell our home, use the equity to purchase a house in the next price range up, live in it a few years to build more equity, and then make the jump to build our dream home?

We need your help! Thank you in advance!

Laura and Adam, Grand Junction

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Laura and Adam,

Oh my, you have what one of my friends calls the “want its” and once you get a case of the “want its” it is very hard to rid of it.  The “want its” show up when you are most unsuspecting and innocently looking at something that you may or may not really need.  While you are looking, something inside taps you on the shoulder and plants the seed of “I want that” and that is when the real trouble begins.  We have all had this disease so there is no shame in acknowledging you have it, its what you do to get rid of it that separates the men from the boys!  All kidding aside, you really do have a problem and it will take self-control and discipline to put it in the rearview mirror.   

I can tell from your question you guys are not the type to make a rash decision as both of your options are very reasonable and show financial discipline and the development of a realistic plan for the future.  There are a lot of things to consider, but option one sure sounds like it might be the best play especially when you consider that there are costs in both buying and selling that you can only incur once if you don’t do option two.  Each time you sell it will cost you on average of 6-7% and each time you buy it will cost you 1-2% and this does not include any soft costs associated with both.  Considering these costs, if you are selling $250,000 and purchasing $400,000 you will spend at least $25,000 to buy and sell.  If you don’t buy and sell in between the “dream house” then you will automatically be that much closer to your goal.  Clearly you will eventually have to sell this home and purchase the “dream home” but it illustrates that doing it twice will likely just add time to achieving the desired dream home! 

 I would also take into consideration that option one is the safer play against any economic upheaval that potentially exists during the next year or two while we grind through what is sure to be a messy presidential election cycle with plenty of potential clouds on the horizon.  I personally believe our area will remain strong over the next several years, however choice two would serve as a bit of a hedge against any potential unforeseen downturns.   

Option two might also be the right choice, especially if you are outgrowing your existing home, have had a shift in needs that your existing home does not fulfill or are just plain sick of where you live!  I am always a proponent of your home being ones “happy place” and if you are just not happy where you currently live, then option two would certainly be a more appealing choice, as I have often said “it’s not always about the money.”  My vote, on face value of your question, would be to strongly consider choice one and work hard to put the “want its” on the back burner and work hard to keep it at bay for as long as possible.  I honestly believe you will make it work regardless of your choice, as both are very reasonable and the outcome of most every decision is determined by what you make of it!  Good luck!

Dave Kimbrough

The Kimbrough Team

How do we build a home today that's easy to sell in 10yrs?

Dave,

We have purchased a lot and are beginning the process of designing our home. We are planning on being there for a minimum of 10 years, but want our design to not only fit our lifestyle and needs, but also be a design that will readily sell when that time comes. We have seen so many homes that probably fit the owner’s needs, but were built so specifically that they are hard to sell to another owner. In order to create the best design possible, what trends are you seeing in the housing markets, i.e., smaller vs larger, price ange, 3 car garages, solar systems, energy efficiency, xeriscape, ranch vs two story, RV parking, etc.. Your input is appreciated. 

Jim and Jerry, Grand Junction

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Jim and Jerry,

What an exciting time, having a new home designed and built can be a wonderful experience and a very exciting time. I will also add that it is a labor of love that can be stressful and overwhelming, but the reward at the end will ultimately be worth the effort! This is a great question, because I too have seen many homes that were designed so specifically for the owner that it makes them very difficult to sell when the time arrives for you to move on. Building your new home with the forethought of implementing features that other home buyers will find attractive is a great idea and should save you some of the heartache of selling in the future. That being said, also understand that what buyers desire now, can certainly change. Many of the things I will recommend will be what I believe to be timeless features that buyers will still want 10 years from now.

There is no doubt that buyers are trending towards smaller homes, the days of the 5000 square foot home are not over, but certainly buyers today are willing to sacrifice some square foot space to keep the purchase price down. It has been said many times before, but it is true, some homes that are 2000 square feet live like they are 2400 square feet and some live like 1700. It all comes down to a livable floor plan that is space conscious and efficient. Open floor plans generally live much larger than more traditional / compartmentalized floor plans. As far as price is concerned, you should really stay towards the lower to middle end of your neighborhood price ranges. Homes near the middle to lower end of the neighborhood price points generally lose less when the market shifts down and gain more when the market moves up, being the highest priced home in the neighborhood or area is not always the best play for long term investment and year over year appreciation. I hope that makes sense. Definitely go with a 3 car garage, as most buyers need, or want, as much garage space as possible. As a society we all have way more “stuff” than we need and instead of recycling we tend to store, thus the huge boom in rental storage units over the past 20 years. A 3 car garage, I believe is a timeless, feature that will benefit you when you decide to sell. RV parking can also be a big selling feature, as we live in Western Colorado and many people have ATV’s, boats, campers, rafts, sport vehicles etc.. and love having a place to park them on their property. Buyers here value their personal time and spending time at play and do not like having to store these items off property..

Energy efficiency is no longer a feature that is “coming” it is a feature that is here and here to stay. Building your home in an energy efficient manor is very important and will become increasingly important as building codes and buyers expectations change as time move forward. Energy Star Ratings will become more and more important and 10 years from now I believe buyers will really see energy efficiency as a big “value add” vs. homes that are not as energy efficient. Going green is here to stay and while it is not a “must” now, it may very well be by the time you go to sell. Low maintenance is good, but complete xerisacpe can narrow your buyer pool extensively. I maintain the recommendation to still have an area of grass that will allow kids, grand children, or pets to have an outside area to play or “do their business”. (pets, hopefully not the kids, but to each their own!) Professional landscaping can make a big difference in a homes value, so do not skimp or go “cheap”.

Lastly, go ranch style if you can. Going with a ranch style home will keep your buyer pool wide and deep and not cut out those buyers who do not want to deal with stairs. Ranchers almost always command more money and sell more readily than two story homes. Stairs can be a killer for some buyers and you want your buyer pool to be as big as possible. I hope this helps a little with your design, but it would appear that you are going about the design process the right way. Also, make sure to discuss these things with your builder or designer as they will have very valuable input on what sells and what sits!

Dave Kimbrough

The Kimbrough Team

We're having trouble navigating a home loan online, any advice?

Dave,

We are starting the process for looking for a new home.   We are currently renting, but have decided that the interest rates and home prices are attractive enough to lure us into home ownership.  We filled out an application from a lender online and found out our credit score is only 674, we thought it would be much higher as we are not aware of any missed payments etc.. in the past.  We thought it would be easier to get a loan than it appears it is going to be.  We both have good jobs and have held them for several years and do not understand why our credit score would not be higher.  Can you fill us in on why our credit score might be low and what we can do to get it higher so we can qualify to get a new home?   Looks like, from checking on line, we need a credit score around 700 to get qualified for a new loan, is this a typical qualification standard?  Thanks for your help and advice.

Troy and Jennifer, Orchard Mesa

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Troy and Jennifer,

Sounds like you are headed in the right direction, with one small detour, I would recommend you  stop filling out forms online and go to a reputable local lender and sit down with a loan officer who can help you evaluate your financial capabilities and help you put together a strategy for getting your credit score in better standing and get you into a good loan, while rates are still attractive.  It sounds to me like a 674 credit score is “pretty good” and should not preclude you from buying, so I posed your question to one of our trusted resources, James Pulispher, Regional VP at Fidelity Mortgage and he agrees.

“There are two basic loan types.  FHA and Conventional.  The Conventional type of financing is much more credit sensitive than the FHA financing.  It may be that an FHA loan would be the best option in this scenario.   A conventional loan would likely still allow financing, depending upon what was on the credit, but might simply charge a higher rate of interest in order to provide the financing.  As a general rule you must have a 620 or better to obtain financing, which this particular buyer certainly does have.”

James also points out, “Many internet lenders have over‑layed the credit standards that exist, allowing them to only deal with the top tier customers. This customer would certainly have viable financing options when dealing with a local lender, and should not be discouraged about buying.”  The internet can be a good thing, but does not replace your local expert’s advice.  By establishing a local lender, that you can trust and can count on, you will put in place an important piece to your long and short term financial needs.

According to James, your credit scores looks at many things.  “One item that can influence credit scores is the utilization of credit.  35% of the credit score takes into account what percentage of available credit is owed on revolving accounts. (ie. credit cards)   The lower percentage of available credit that is owed, the better the score will be.  This customer may have paid all bills on time, but may owe close to the limit.  This could lower the credit score.  That doesn't necessarily create negative credit, but does lower the score.”  As you can see, your credit score can be impacted by many things, but also having a “go-to” person to discuss these issues with can literally be a life saver. 

To get your score up, continue to pay your bills on time and try reducing some of your debt burden.  By reducing your debt burden, I mean pay down some of your revolving accounts that can lower your debt to income ratio which will in turn raise your score.  Remember, one or two missed or late payments can cause your credit score to drop up to 10% and it can take a year or longer to get it back up. 

This Ask Dave column should be entitled, Ask James, but it is all good and relevant information for any home buyer or consumer who really does not understand the world of credit scores.  We throw the term “credit score” around loosely and many times do not fully understand what it is or what impact it really can have on our financial picture and purchasing ability!  Hope this helps and happy house hunting! : )

Dave Kimbrough

The Kimbrough Team

Is Now a Good Time To Buy?

Dear Dave,

It looks like interest rates are going pretty low. We are thinking about taking the jump and buying a house. Do you think that now is a good time to buy considering the rates or should we wait until after the first of the year?

We have heard many different opinions on the time of year to buy a home and just aren’t sure of when to proceed.

We would like to know what you think. Thanks for the time- 

Jim and Sherri - Grand Junction, CO

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Jim and Sherri,

Yes, I believe it is a great time to purchase a home!  We talk about it all the time with our clients and prospective clients.  If you believe you are going to be staying in your home for over 3-5 years then I believe buying at today’s interest rates (again at a multi-year low) is a really good idea.  As for the time of year…. I believe any time of year is a good time of year to buy, as long as it is the right time for you and you find the right home!  I believe the home you live in should be more than an investment, it should be where you want to shape your life and create memories and if you find that place, then that trumps the right/wrong time to buy! 

Who knows what next year will bring… higher prices?  Lower prices? Higher rates? Lower rates? Economic stability? Economic turmoil?  Who knows?  That’s why I subscribe to the “if the time is right” philosophy.  On a personal note, I have many times been hesitant to make a move because of future uncertainty and come to later realize that the uncertainty I was concerned about never materialized.  It was more my own concern about making the wrong decision that I got in the way of making the right one!  Often times the right decision is simply the decision we make, because each of us has a significant impact on the outcome of our decisions!  I will say this in close, don’t pass up on wave after wave looking for the perfect ride, make the most of the wave you catch and you just might get the ride of your life!  Good luck and make the most of whatever path you decide to take.

Dave Kimbrough

The Kimbrough Team

Have a question? Ask Dave!

What are the most important things to consider when evaluating your homeowner’s INSURANCE policy?

Dear Dave,

We recently bought a house and have been looking at what exactly our homeowner’s insurance covers.  We are quickly learning that there is a lot more to it than we initially thought and it is actually more complicated that we imagined it would be.  What do you think are the most important things to consider when evaluating your homeowner’s insurance?

Linda – Grand Junction, CO

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Linda,

I will admit, your question is going to teach me a thing or two about homeowner’s insurance, as I must admit it is not something I have spent any significant time looking over.  I have spent the past 15 years trusting my insurance agent, Mike Daniels at American Family Insurance, to make sure we have the right insurance coverage.  So where better to turn for a little help in giving you a credible answer?  I asked Mike to give us some insight into what you need to look for when reviewing your homeowner’s policy.

“Keep in mind that every homeowners needs are different and very personal, finding a local company and a local representative is a leading factor to ensure you are getting proper guidance and counsel.  There are a lot of great people in the business.  There are

2 homeowner’s policies that are very popular, HO3 and HO5.  Both of these will cover all named perils, however the form 5 will throw in some supplementary coverages that some will find important and some will not.

Everyone should pay close attention to look over the named perils of how the home is covered.  These primarily include fire, smoke, theft, windstorm, hail, explosion, vandalism, and frozen and broken plumbing.  Every company or agent should provide you with a brochure of all the named perils and supplementary coverages included with your policy.  When the policy comes in the mail, take the time to review the coverages and then also spend time reviewing the exclusion section of your policy.  It is important that if you have questions to call your agent to answer your questions or correct anything that may need to be fine-tuned.

As a home owner you need to consider the dwelling amount, how much will it be to re-build your home?  Make sure the insurance policy will cover that amount in full.  It is also important to know how much the deductible amount is on your policy.  Make sure to ask yourself how much you can afford if you have a loss?   The higher the deductible the lower your premium costs will be.  Generally speaking, if you maintain your property, you should be able to go with a higher deductible.  Lastly you also need to consider personal property loss.

When we are looking at personal property coverage, the questions to ask are how much? And how is that covered?  Also consider any specialty items you want covered such as jewelry, coin or gun collections or just any collection or specialty items you want to make sure are covered.  Lastly, look for discounts including Alarm systems, age and type of roofs, age of home, complete renovations.  It is also possible to save by combining other insurance needs including automobile and umbrella policies.  MOST IMPORTANTLY, review your homeowner’s policy at least every two years!” 

Well, that about covers it and as you can see, there is a lot to it and being a bit overwhelmed is completely understandable.  I always recommend, find an agent you can trust and build a relationship with.  I know, for our family, when we need our insurance to kick in, we can trust Mike has us properly covered.  Consistently review your policy with your agent to ensure you are both staying on top of your policies and things that may have changed so you are properly covered if you ever have to make that call.  

Dave Kimbrough

The Kimbrough Team 

Have a question? Ask Dave!