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

---

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

What Is The Advantage Of Aluminium Deck vs Composite?

Dave,

What is advantage of aluminum deck vs composite?

Collette, Grand Junction

---

Collette,

I can break this down pretty easily, I think.  Another question that requires a good bit of research, but here we go……Aluminum decking is the best for longevity and durability without question, but it is also MUCH more expensive (as much as 3X as expensive as composites) and can be slippery with winter/cold weather as it has the least amount of grip and appears to generally be more “slippery” when cold or subjected to freezing temperatures.  It is the best performer if you are going to have it subjected to water, like around a pool etc, and is quite popular in heavy rain climates because of its ability to stand up to moisture. It also does not expand or contract due to heat and cold which is nice, but color choices are quite limited and the sound under you feet appears to be something of and acquired taste. It appears to be the “Cadillac” of decking material.

Composite decking can vary significantly in pricing from quite expensive (within ballpark range of aluminum) to significantly less expensive.  It comes in a wide variety of colors and comes in capped and uncapped (the ends) versions that add to the life expectancy.  Capped vs. uncapped also has an impact on the pricing as capped is the more expensive route, but is the better product as the ends are protected from the elements.  Typical warranties will be 25-50 years for some of the top-performing brands, which is excellent.  It looks and feels more like wood than the aluminum and is generally weather-resistant with only mild concerns with mold and mildew of the uncapped versions.  In our climate, I would not think mold and mildew would be a significant concern unless you are using it as some sort of pool decking.  I have a composite decking material and have been VERY pleased with it thus far.   We installed it 5 years ago and it looks about like it did when we installed it and has proven very easy to clean and seems to hold up to the elements quite well.  I do shovel snow off of it, like my concrete, when it snows to prevent any freeze/thaw cycles that may negatively impact the condition over time, but other than that it has proven durable and aesthetically-pleasing thus far!    

It think ultimately it comes down to personal preference and budget!  It is rare, almost never, that I see some kind of aluminum decking here.  It appears that the big advantage is life expectancy and durability, but honestly who needs a deck that will last 50-75 years when the average time people live in a house before moving is 8 years!  The big question in my mind is, do I really need to spend the money for bombproof decking material when the odds are I will be moving in less than 10…. Maybe 15 years?  If you want the best material and money is not in the equation then go aluminum… if cost enters the equation I think you would likely be very happy with a composite material.  Best of luck and my bet is you will be happy with either product as I believe both are excellent!  Good luck and Happy Decking!!

Dave Kimbrough

The Kimbrough Team.

P.s.   Happy Fathers Day to all the Dads out there!  

How Long Do I Have To Keep My Closing Documents???

Hello Dave,

When can I shred the documents from homes I have bought and sold over the years? Is there ever a need to hang on to closing documents, etc, past 2 years or so?

I would like to shred them. Please tell me if there is anything I need to keep. Thanks!

Have a great day,
Diana, Grand Junction

---

Diana,

What a great question!   Wow…. It amazes me how many great questions I get and how relevant they are to everyday life! I never really think about some of these things because I know my wife will! LOL! She is the paperwork person in our house and Lord knows I could not get along without her help on all the things she does behind the scenes that keeps the ball moving forward.  I joke all the time that her job is MUCH harder than mine, plus I would be horrible at it!  I would never want her job!!  Moving on to your question. 

From my research, it does not appear under any circumstances that 2 years is long enough!  , When you purchase a home you should hold all your purchase contracts, closing documents, and loan documents for as long as you own the property.  If you refinance and close out a loan It appears to be good practice to keep the records of your closed loan for at least 3 tax return years….assuming that you filed your tax returns each of the 3 years.  After year 3 you should be able to shred a closed loan.  As long as you have a loan that is open or “active” you should keep all documents and payment history on record.

When you sell a property, it is a good practice to keep your documentation for seven years after the home sale.  This appears to be based on the IRS’s timeline for audits.  Apparently, the IRS has 3 years to audit your tax returns if good-faith errors are in question and six years if they suspect you underreported income.  If you sold a home more than 7 years ago I would believe that you are safe to have a shredding party! 

I hope this helps you gain some clarity!  I very much appreciate the question as I had to do some research and thus learned a lot in the process.  Please keep in mind that I am not an attorney or an accountant and before you shred, you might consider asking one or both if the data here jives with their recommendation.  On questions like these, I always get follow up comments that are different than my recommendations so I will preface all this by saying that this is to be used as a guide.  With that disclaimer, thanks again and happy shredding!!

Dave Kimbrough

The Kimbrough Team

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

---

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!

Advice For Providing Banking Passwords For A Mortgage Loan Application Portal?

Dave,

We were applying for a 30-year fixed-rate mortgage. Our credit scores are in the 800’s, and we were applying for a mortgage in order to avoid IRA withdrawals and the taxes. This mortgage company is pushing us to use an internet portal that requires all of our passwords to our banking and investment accounts. Having had my security hacked twice, I refused. They said I could furnish copies of the accounts, but when I did, they made it so difficult for me that my only course would be to furnish my passwords. Am I wrong to be concerned about this?

- Kathy, Grand Junction

---

Kathy,

First, I think congratulations are in order for the 800+ credit scores! It's not very often that we see those kind of credit scores so a little pat on the back is in order. As for your question, I do believe you have good reason to be concerned, but to be sure I posed your question to James Pulsipher, Branch Manager of Fidelity Mortgage.  He knows the Mortgage industry better than anyone I know, so I figured who better to ask than James!

Here’s what he shared with me, “I think that you are right to be concerned. In today’s tech-forward culture there are many solutions like this that are designed to make the process of obtaining a loan easier. However, it is just an option – not a requirement. The reason that this option has become available is that many people would prefer to provide that information instead of providing the documentation. I would simply let the lender know that you are happy to provide them what they need outside of this automation. What they will likely need is a 60-day statement on any banking accounts of reference. Hope that helps.”

Good to know that you have the option to provide the information outside of their internet portal.  EVERYTHING is going the route of being easy and less cumbersome as our lifestyles are busy and time becomes more and more valuable. On a personal note, I know when I applied for a loan a couple of years, back with James, that Fidelity also uses a portal. I was intimidated and concerned at first, but quickly found that I fell in love with the ease of following the process and providing documentation online versus delivering paperwork. By the time we were done, I very much appreciated the collaboration of my accountant, James’ office and the ease of sharing needed documentation through the portal. Keep in mind it is always good to be wary of how you provide SS#’s and bank accounts to those requesting them. 

One note is to NEVER send either your bank account numbers or SS numbers via email. There are hackers and scammers that are CONSTANTLY scanning each and every sent email for numbers that fit the right character configurations of both and when they find a match consider yourself in serious jeopardy. I have several stories I could bore you with that would provide you with the proper amount of fear to never email either. 

The bottom line…you are right to be concerned as our information is no doubt under constant assault! You know the old saying (my mom would be proud!), “It’s better to be safe than sorry!” Great question and thanks for reading “Ask Dave”.

Dave Kimbrough
The Kimbrough Team

Have a question? Ask Dave!

What does a price reduction mean from a home buyer's perspective?

Dear Dave,

We are actively shopping for a home. We have been looking for about 3 months now and just haven't found the right place for us. As we keep looking, we have noticed the price drop on a couple of the houses that we have looked at. What do you think it means if a house drops $10,000 in price? Would now be the time to go in and make an even lower offer on the house? Is it worth it to settle on a house that might not be exactly what we want, if we can get it for a really good deal?

There sure is a lot to consider when deciding to buy a house! Thanks for any feedback you could give us.

Jack and Stephanie, Grand Junction, CO

---

Jack and Stephanie,

Shopping for a home can be painstaking sometimes and requires the patience of Job to find just the right home. It is great that you can afford to be patient and have the time to really look, however, sometimes you can start to overthink things and get caught up in a vicious cycle of “It’s just not quite right." Be careful not to get so caught up in finding the “perfect” house that you miss out on the “perfect” home! There is a significant difference between a house and a home.

Searching for any home is a process of give and take and I would say that there is never a “perfect” house, but there are “perfect” homes!! There will be sacrifices and knowing that everything will not be perfect from a house perspective might help open up some avenues to finding your perfect home. In some price ranges, mainly over $400,000 in our market, you can see price reductions as there is a bit more inventory in those upper price points. In the price ranges under $400,000, our market is still moving quite brisk. 

“Many times buyers interpret that a price reduction means a seller is desperate or there is a problem with the house. That is sometimes true, but typically it simply means that the seller is listening to what the market is saying.”

Many times buyers interpret that a price reduction means a seller is desperate or there is a problem with the house. That is sometimes true, but typically it simply means that the seller is listening to what the market is saying. I say it all the time, selling real estate is not rocket science! If a home is for sale and it is getting showings and no offers, the price is likely too high. If a home is for sale and is getting no showings either the marketing is bad or the price is too high. I will not get into all the reasons the price may be too high, as there are too many to list, but it is safe to say that if a house is a good deal there will always be someone there to buy it. Almost regardless of the market conditions. Price reductions are generally a sign that a seller is listening to what the market is saying, nothing more.

After a price reduction is a great time to make an offer, as generally price reductions open the door to a new pool of buyers and generate increased activity. Ultimately, when priced right, conditioned right and marketed right, any house will sell and being the first to make the offer increases your chances of getting it. After a price reduction, you may be met with some seller reluctance to reduce even further, however, if you don’t try you won’t know. Make the offer and see what happens. The worse that can happen is they say no. 

Your last question is a good one, should you settle if the deal is good enough? I always say that the house does not make the family, the family makes the house a home! If this is true then it does not matter in what or where you live. I am aware this is being overly simplistic so before you settle you have to ask yourself, “Can we truly be happy and at peace in this home?” If the answer is yes, then go for the good deal and you won’t look back. If the answer is no or I am not sure, then no deal is good enough or worth the risk! There is a lot to consider and it sounds like you are asking all the right questions. I bet you find the “right” home soon! 

Dave Kimbrough
The Kimbrough Team

Have a Question? Ask Dave!

With rising interest rates should I buy a home now instead of waiting until the summer?

Dave,

I’m planning the home buying process this summer, but I’ve noticed that mortgage interest rates have been slowly rising for the past couple of months. A friend mentioned that with higher interest rates I won’t be able to qualify for as large of a mortgage as I would be able to with lower interest rates and it really got me to thinking. Should I speed up my timeline to this spring so I can purchase a home I really love instead of compromising for something in a lower price range?

Dale, Fruita

---

Dale,

Yes, if you are concerned about rates going up then you should speed up your timeline! I know they have ticked up a bit over the past couple months, but mortgage rates are historically still VERY attractive and I don’t expect them to move aggressively over the next 3-4 months, but every ¼ point does add up! As the economy gets stronger, rates will continue to work their way up and the days of really cheap money are over. The real concern is what I call the “double whammy”. This is where rates are going up at the same time home prices are going up, which leads to home affordability really getting pinched.

If you can move your time line up a bit, it’s probably a good idea to help ensure you get in on the lowest rate possible, because I don’t anticipate them going down again anytime soon. Lastly, try not to settle for something you don’t love! Loving where you live is a real gift and we encourage all our customers to make that their primary goal, regardless of their price range. Best of luck.

Dave Kimbrough
The Kimbrough team