What's The Deal With "No Money Down" Loans??

Dave,

I occasionally see houses that are advertised as “no money down.”  Isn’t this what got us in trouble, when the housing bubble occurred?   How are they doing $0 down loans again and why would we go back to the same loans that sank the economy back in 2010?  I must admit that I am surprised to see this, as I thought we had learned our lesson, but clearly we might have to learn it the hard way! 

John, Grand Junction 

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John,

Great question and one that I am sure many people have when they see these types of advertisements.  It HAS become more difficult for many buyers to get a loan (at least as compared to 2007), but in my opinion the “firming” up of lending practices was needed and only significantly impacts those who might be labeled as “marginal” buyers.  Lending from 2002-2008 was too lenient, which was a big part of what led to the housing bubble, and now we have returned to much stricter guideline practices, especially for those potential buyers who may be on the fence and not completely credit worthy.  You must have good credit, good payment history, good work history and believe it or not, at least 3 ½ % down for most loans that are not VA (loans through the Veterans Administration) or RD loans (Rural housing and development).  If you meet fulfill these criteria, there are many avenues to lending and purchasing a new home!! 

It is my bet you are seeing homes advertised that are classified as Rural Development eligible.  Rural Development is a loan program that is meant to encourage potential home buyers to consider more rural areas to promote growth in those areas. (i.e. Fruita and East of 32 Road)  Rural development has recently expanded the areas that qualify for these no money down loans and I bet you may have seen signs in one of the areas that is eligible.  Rural Development loans are very desirable to potential buyers because you can purchase in these areas with NO money down. You can get a rundown of the new map from any local lender, as these loans are very popular in our area. 

I would agree with you that, on the surface, loans of this type appeared to be at the root of the housing crisis, but the major difference is, these RD loans are designed to promote growth in designated areas and to promote the growth, buyers are enticed by the zero down option.  Remember, the down payment requirement is less, but the other criteria of good credit, good payment history and good work history are still part of the equation. These loans historically may have a higher default rate, but with the tightening of the overall lending standards I believe these types of loans will now fall in line with more conventional lending options.   

In summary, what led us down the housing crisis and impending disaster was not just the no down payment loans, but no documentation (referred to as no-doc or sub-prime) loans and the adjustable rate mortgages.  The Adjustable rate mortgages were very enticing as the low interest rates in the first 5 years was very attractive, but what many found was they quickly ballooned out of control.  There was a time, not very long ago, that verification of income was not always required to obtain a loan etc...  When you DO NOT have to verify your income to obtain a loan, trouble is, as we found out, just around the corner.  At today’s interest rates, you can bet that lenders are going to remain somewhat cautious, however if interest rates ever go up (above 6%) we might just see some riskier lending practices return.   With interest rates right around 4% virtually any significant risks outweigh the gains.  As interest rates go up, easier money availability will increase, but hopefully only trending towards barrowers who have good credit, good payment history, good work history and some skin ($) in the game.  I am confident we will continue to see that there are some solid checks and balances.  Hope this answers your question. 

Dave Kimbrough,

The Kimbrough Team

Where Should We Spend Our Money to Spruce Up Our Home to Sell For Top Dollar?

Dave,

We will be putting our home on the market this spring/summer.  Our home is an older home, built in 1993 and is looking somewhat dated, but it is in good condition as we have maintained it very well.  Our kitchen and bathrooms are original, but we put in hardwood floors 3 years ago and our yard is wonderful.  We do not have a lot of money, maybe $3,000 - $4,000, to spend on it before we put it on the market, but want to know where we would get the most return for doing some things to bring it up to today’s standards?  Where are the areas or what items deliver the best return?   

Ben and Chelsea, Grand Junction

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Ben and Chelsea,

Your home, built-in 1993, is at the age where you can see some significant dating of the features, but luckily you are beyond the '70s & 80's where you see dated features that are much more expensive to remedy.  There is more good news in your question, your home is in good condition and you have a beautiful yard.  Great curb appeal is hard to replace and if your yard is really wonderful, you will see an increase in showings because you have passed the “curb appeal” test.  Typically buyers get their first exposure to your home by seeing it on the internet and if the pictures look good then the next thing they do is drive by it to get a first-hand look.  The drive-by is where the “curb appeal” test takes place and if it is attractive or has the features they are looking for from the curb, then they are likely to set up a showing.  Sounds like you have a handle on the outside features, let's concentrate on the inside.

More good news, you can make a major difference inside without breaking the bank.  In my mind, the two things to look at first are paint and flooring.  Nothing beats a fresh coat of paint, not only in appearance but also in smell.  Remember, purchasing a home is a process that involves the senses and new paint sure makes things feel fresh and new.  Flooring is also key and it sounds like you made a great call by installing hardwood floors, most buyers see hardwood floors as a desirable upgrade.  If you have carpet in your home, look it over and if is worn out or worse yet, blue or rose-colored look to replace it!!  If you have a nonneutral carpet color, it will cost you showings and generally cost you money, it is just that simple.  It is the rare buyer who loves the navy blue carpet in the living room.  Also note that if your carpet is not in terrible shape, try having it professionally cleaned.  I have seen a professional carpet cleaner work miracles.  Both carpet and paint can deliver a great return.

Another area with great impact at an affordable price is lighting fixtures.  Nothing, except wallpaper, can date a home like light fixtures and you can get some really nice fixtures at an affordable price that can help transform an entire house.  Light fixtures are big impact items are reasonable prices, get rid of the polished brass, it is old school.  Also, look at doorknobs and hinges, as these are also fairly inexpensive touches that will help bring your home up to date.  If your interior doors are flat-panel dark wood doors, replacing them with paint grade doors can make a big difference, especially if you have long hallways.  It is amazing what new doors can do to lighten up a hallway. 

In the kitchen, consider cabinet hardware, a tile backsplash or a new faucet.  A nice tile backsplash can give new life to even the most dated kitchen and does not have to cost a fortune to look great.  In your bathrooms, look at new hardware, new towels, faucets, sinks. (especially if they are not neutral or white in color)

This should give you a good starting point, work your way through the items and decide what features your home needs the most and just go for it.  You do not have to do everything to make a significant impact, but sometimes not doing anything can make a big impact in the wrong way.  You are setting yourself up for success. Merry Christmas everybody! 

Dave Kimbrough

The Kimbrough Team

How Do We Spruce Up Our Winter Curb Appeal?

Dave,

We are getting ready to put our house on the market and need your advice. Our home’s landscaping and curb appeal is super cute when everything is blooming in the spring…the only problem is that it’s not spring! When you drive up to our house it’s just kind of…blah. Everything is brown and dead right now. Any tips for kicking up curb appeal in the winter? We really want to make a good first impression on buyers and could use some serious help!

Thanks and Happy Holidays!

Trish

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Trish,

Wow…. You are wise to be thinking about your home's curb appeal during winter. Few people put enough emphasis on their homes curb appeal even in the summer, but to have that on your list of “to-do’s” this time of year is seriously being on the ball. Believe it or not, there are quite a few things you can do to spruce up your homes curb appeal during winter and it all starts with de-cluttering!

What do I mean by de-cluttering? You can start by trimming back over-grown bushes and trees (make sure to consult an arborist before you go to crazy on trimming thing back). Rake up and dispose of dead leaves and sticks that seem to pile up in entryways, walking paths, window wells, decks, and patios. Don’t be afraid to even cut your lawn on a day where we get some warmer (40-50 degree) temps. I know that sounds over the top, but you can have a fresh-looking lawn and a quick cut and trim will definitely spruce it up. I am always amazed at my neighbor’s yard. He will cut and trim his yard sporadically even over the winter and it always looks clean and fresh! I wish I had his dedication! Once you have it cleaned up, consider the thought of some new plants. Even in winter, they can make a serious impact with an affordable price tag!

You can bring in colorful pots or planter boxes and plant some smaller evergreen trees or shrubs (small pines, junipers, boxwoods etc) around your front door and entryway that will add color and at the same time provide added pops of green in an otherwise brown and drab western Colorado winter. In the same vein of adding color, don’t be afraid to put a fresh coat of paint on the front door and even shutters (easy to install if you don’t have them already) on some of the warmer days that we can have here in the Grand Valley. I think that people assume that you can not paint at all during winter, however, there are some paint brands (McCormick is one of them) that allow for painting when temperatures are as low as 35 degrees! This may at least give you an opportunity to add a pop of color if you choose. While you are at it, you might also consider a quick refresher on the old mailbox (that is if you don’t use a neighborhood cluster box). You might hit that with a quick paint touch up at that same time and the same color as the door. If you have a front patio or porch area you can still stage it with outdoor furniture and add a few new cushions to freshen up the winter look. Any of these ideas are low cost, moderate to high impact ideas that should be quite easy to implement. Lastly, don’t overlook the opportunity to upgrade your exterior lighting to improve the look of your home in the winter.

Keep in mind that it gets dark earlier this time of year and many buyers will be exposed to your home during dark or low light times and upgrading or adding to your lighting can make a big impact. Don’t be afraid to play with some brighter bulbs, new lights, lanterns, directional landscape and path lights to help make your home come to life. Lighting can have a dramatic impact on a homes curb appeal, especially during the winter months when the night hours are much longer. Lastly and easy upgrade is to change out your address numbers on your home. Even something that small can have an impact as there are now many different types of house numbers and even some that even light up!

I hope this gives you a few ideas of things you can do to freshen up your curb appeal during the winter! Curb appeal is one of the things that provide the highest return on investment and can deliver a huge impact. Best of luck with winter selling! Merry Christmas.

Dave Kimbrough

The Kimbrough Team