If you’ve been living in a rental property or apartment, you may not have given much thought to buying a new home. Sure, friends and relatives bug you about getting your own place, but you haven’t necessarily seen a good reason to do so.

Buying your own home, however, has several distinct benefits, each of which is appealing in its own right. Here are just a few:

Appreciation

While real estate values do cycle, overall real estate grows in value. Over the decades, real estate appreciation is consistent. Home ownership can be something of a hedge against inflation.

Tax Considerations

Buying a home has some huge benefits in terms of your taxes. As long as you owe less on your mortgage than your home is worth, you can deduct your interest from your tax return. This can add up to big bucks, as the largest portion of your mortgage payment goes to interest.

You can also get another tax benefit from buying a new home. As long as you have lived in a home for two of the previous vie years, you can reduce your capital gains. Specifically, you can exclude up to $250,000 for an individual or up to $500,000 for a married couple. There is no requirement to buying a replacement home, and there is no age requirement. You can do this every two years, which means you could literally buy and sell a home every two years (under those amounts) tax free.

In addition, if you get more profit than the allowed exclusion when you do sell your home, the profit is considered to be a “capital asset,” which gets preferential treatment for tax purposes.

Finally, you can also deduct property taxes for your home.

Equity

One of the best reasons to buy a home is to build equity. Every month when you make your mortgage payment, part of the payment goes to the principal. As you pay more of your mortgage, you build up a difference between what you owe on your loan and what the home is worth.

Eventually, you can use that equity for a number of purposes. For example, you can take out a home equity loan, which will allow you to get cash for home improvements, medical bills, start a business or even pay off credit cards.

For the past decade or more, home loans have tended to be anything but basic. Complex loans, such as those that feature interest-only payments or option Adjustable Rate Mortgages, have been the rule, rather than the exception. The sheer complexity of the home loan marketplace can leave the new home buyer frustrated and confused. In addition, these complex loans are, at least in part, intertwined with the economic downturn in the housing market.

Option-AMR mortgages, for example, allowed the borrower to defer their interest while they made payments on the principal. This worked fine, until home prices began to fall. At that point, payments rose and the deferred interest payments caused many mortgages to increase while the value of the home dropped. This created a huge loss for the lender. Many companies that featured these products, such as IndyMac, Bancorp Inc., Washington Mutual Inc., Downey Financial Corp., Wachovia Corp., and Countrywide Financial Corp. have all folded or been bought out since the downturn hit.

Home lenders, such as Wells Fargo, are realizing that this is a problem, and are offering potential home buyers the choice of a basic, “vanilla” loan. Many of the home loan companies offering exotic mortgage products are closing their doors or at least scaling back, and Wells Fargo sees this as an opportunity. New home buyers need and want simple mortgages that they can afford and that won’t create a great deal of risk either for the lender or for the mortgage company.

Wells Fargo and the mortgage companies offering these vanilla loans aren’t the only ones who support the idea. Many politicians, including the President, support the idea of the vanilla loan. There is even legislation being talked about that would make it so that a new home loan is a vanilla loan, by default. If the home buyer wanted to explore other loan types they could, but most loans would be your standard loan, such as a 30-year fixed mortgage.

In the end, vanilla mortgages will not only help the overall loan market, they should create less risk for home-buyers. Buyers can be relatively sure that their home won’t be worth less than what they owe, even if the housing market should take another dive.

If you are buying Denver Metro real estate, you will be using the services of an escrow and title company. Title and escrow companies are necessary third parties that are being used in real estate transactions. You should understand the function and role each play in the transaction.

Title Company

The title company insures that the title is marketable and clear. The title company performs a title search and examines the chain of title ownership to insure that are no claims to ownership interest in the property by a third party.  The title company also checks to make sure that there are no encumbrances or liens on the property other than what the seller has disclosed.   All liens have to be paid off before title can be transferred.  Liens include taxes and any mortgages on the property or judgments. The title company makes sure there is no fraud or forgeries on documents as well. All lenders require title insurance.

Escrow Company

The escrow company is a neutral third party that passes paper and holds money on behalf of the parties until the closing.  They exchange, transfer and disburse title deeds.

Who Pays for Their Services?

Local customs dictate who pays for title and escrow services.  Typically, the seller pays for the owner’s title insurance policy, and the buyer pays for the lender’s title policy. The seller and buyer split their escrow closing fees.  The fees can add up to thousands of dollars.

While the President is proposing changes to the financial industry that would oversee the regulation of financial interests of the public, which may including the regulation of title insurance and closing fees, you can shop around and protect yourself right now by negotiating your title and escrow fees. Your Realtor can recommend a reasonable escrow and title insurance company to you.

Title and escrow companies are part of the closing process so it is important that you clearly understand their roles, the fees that they charge and why it is necessary to use them in your transaction.

Getting ready to sell your home involves more than just researching the comparable home sales in your neighborhood, hiring a Realtor, and getting your home ready inside and out.  You also need to know about your specific buyers.  Once you figure out who your target market is you can concentrate marketing to those specific buyers and sell your home quicker.

Types of Buyers

• Single professionals (both men and women)
• Married couples
• Families
• Women
• Empty Nesters
• Retirees

Taking a close look at each of these groups, here is what they require:

Single Professionals

• Updated and move in condition townhouse, condo or 2 or 3 bedroom single -family home.
• Close to the city and transportation.
• Walking distance to restaurants and shops.
• Hardwood floors
• Granite counters in the kitchen and stainless steel appliances
• Home office area

Married Couples

• Privacy
• Extra room for home office
• Extra storage
• His and Her Closet
• Dual bathroom sinks
• Separate Stall Shower

Families

• Homes on cul-de-sacs or away from the street
• Good schools in the area
• Backyard for children to play
• At least 3 or 4 bedrooms
• Open floor plans
• Family room
• Home office
• Laundry room
• Jack and Jill Bathrooms

Women

• Security system or gated community
• Condo or townhouse
• Move in condition and updated
• Granite counters
• Stainless appliances
• Home office
• Laundry inside the unit or home

Empty Nesters and Retirees

• Comfort and lifestyle
• Smaller space, low maintenance
• One story home or condo
• Inside laundry area
• Security systems or gated community
• Amenities such as pool, tennis court, gym and golf courses nearby or on the premises
• Close to shopping, restaurants and entertainment

By knowing your target market, you can highlight the features of your home that appeal to them so that you attract the right buyers and sell your home for top dollar and in a short period of time. Your Realtor can help you with your marketing strategy.

The recent economic downturn and subsequent efforts by government to loosen up the credit crunch have created a truly unique environment when it comes to home prices. In many places, housing prices have dropped dramatically. According to one study by Fiserv Lending Solutions the national media home price is down as much as 26% since home prices peaked in 2006. In some places, prices have dropped even more drastically.

Median Single Family Home Prices

Homes are selling in places that foreclosures are rampant, such as states like Arizona, California, Florida and Nevada. In the last quarter of 2008, almost half of all home sales fell into the “distressed” category, meaning that they were either foreclosures or short sales. As more and more foreclosures hit the market, traditional sellers have had to cut their prices in order to keep up.

This is, in many ways, a buyer’s market. You can make low home prices work for you, if you know where to look. Finding the right bank owned home, or finding a home where the seller is asking for less than they owe on their mortgage can get you quite a good deal on a home.

There’s another way you can make low home prices work for you, however. You can use the low home prices from short sales and from foreclosures to add pressure when making an offer on a home. Traditional sellers know that they have to compete with these homes, and may be willing to give a lot more in their negotiations than they would have just a couple of years ago.

By studying your local market and exploring all of the available options, you can make these low home prices work for you. You may be able to find the ideal home for your family, and to find it at a much lower price than you’d have hoped for.

This 3 bedroom, 2 bathroom ranch-style home is located in the heart of Park Hill. Don’t pass up this opportunity to belong to the exclusive Park Hill neighborhood which was rated one of the best neighborhoods in the US about two years ago.  The home sits on a large lot with a great backyard and a patio.  There are beautiful hardwood floors throughout the home and there are tons of upgrades.  The kitchen has newer appliances and the formal dining room is just steps away.  Downstairs there is a partially finished basement with a family room, laundry room, exercise/ recreational room, and bathroom.  This house is priced to sell at $245,000 and the owner wants this home to go way.  All offers above $245,000 will be considered.  Offers will be accepted until 5:00 pm, October 29th, 2009.  Bring us your Highest and Best!

For more information contact John at 720-353-0353.

We’ve talked before about the federal first-time home buyer credit, and how this $8,000 tax credit can really be a wonderful opportunity for people who are looking to buy a home in Colorado. Well, we thought we’d take a moment to review how it’s been going, and talk about where things are headed now.

The program, as you’ll recall, provides a tax credit of 10% on the purchase of a new home, up to a maximum of $8,000. So, if you buy a new home for $65,000, you will qualify for a credit of $6,500. The program is available only to people who have not owned a principal residence for three years before the home purchase.

According to US News & World Report, nearly one and a half million people have taken advantage of the first-time homebuyer tax credit so far. Around 40 percent of all home sales have fallen into this category. The tax credit has been just the push that some folks needed to take the leap and sign on the dotted line to buy their new home.

This has caused an increase in home sales in certain categories. The program caters to starter homes, and these types of homes are selling much better right now than other types of homes, although the credit does apply to other homes, too.

Real estate agents in Denver have noticed an increase in activity and interest, as well. People are looking at that looming deadline in November, and they’re rushing in to find out what they can do to get it before it’s too late. While July and August tend to be the biggest months in terms of new home sales, it is expected that this year September and October numbers will very likely rise above the earlier months.

The deadline for the federal first-time home buyer credit is November 30, so if you’re thinking about buying a new home now is the time to get moving. Most experts suggest that you try to get everything signed by the 31^st of October at the latest, as your closing can take several weeks. While there is some discussion among lawmakers about extending the program, the fact of the matter is that waiting to buy until December or later could cost you as much as $8,000 in tax savings.

Aurora is more than just Colorado’s third largest city, it’s a wonderful place to retire, according to U.S. News & World Report. The magazine listed Aurora on its list of “America’s Best Affordable Places to Retire,” and for good reason. From the weather to community activities to the proximity of quality medical care, Aurora is a great place for seniors.

Aurora is temperate during the summer, with temps in the 70s. The average maximum temperature in July (Aurora’s hottest month) is 88 degrees. The coldest month, January, tends to have an average minimum temperature of around 15 degrees. Rain is distributed evenly through the year in Aurora, and the city boast of nearly 300 days of sunshine each year.

For retirees who enjoy an active lifestyle, Aurora has plenty to offer. There are seven award-winning municipal golf courses in the city. There are sports leagues, art classes, wine tastings and many other leisurely activities, as well. Retirees and other residents of Aurora can enjoy a night out with the Aurora Symphony Orchestra, as they offer their interpretations of both classical masters and today’s favorites. There is also the Aurora Fox Arts Center, which is a movie house from the 1940s that has been restored and offers live performances, workshops, and classes. Finally, the Aurora Center for Active Adults caters to retirees and offers everything from Ping-Pong to Wii bowling.

Denver is not too far from Aurora, either, offering plenty of other activities and amenities. Aurora has access to Denver via I-70, I-225 and E-470, and is just a few minutes from the Denver International Airport.

One of the most attractive aspects of Aurora, at least for seniors, is proximity to quality medical care. The Fitzsimmons Army Medical Center is located in Aurora, offering top-notch medical care to vets. The Anschutz Medical Campus is in Aurora, as well, and includes the world-renowned University of Colorado Hospital. These two facilities provide retirees with the resources they need to maintain good health and a high quality of life well into their golden years.

If you’re a retiree and searching for somewhere to relocate, Aurora is one of the best places you’ll find.

The real estate world has long operated under the mantra, “Location, location, location.” Whether you’re talking about the spot for a new business or whether you’re talking about buying a home, where exactly the property is located is an important factor. However, recent trends in the real estate market have changed the game up a bit.

Today, homes are selling at prices well below what they’ve been at in over a decade. Between tax credit incentives and low prices due to market pressures, people are snatching up homes like hotcakes. When you factor in low mortgage rates, it’s no surprise to find that more and more homes are selling for less.

One of the current market phenomena is the return of repeat buyers to the real estate market. The ratio of repeat home buyers continues to grow, while the ratio of first-time home buyers shrinks. Nearly half of all home sales in the second quarter of 2009 were to repeat buyers. During normal market times, the ratio is more like two thirds new home buyers and one third repeat buyers.

In addition, many new and repeat home buyers are taking advantage of those current conditions. They are buying foreclosures, sometimes at a fraction of what the home would cost if it were not distressed. Other buyers want that $8,000 federal tax credit. Today, more people than ever can afford the price of a new home. Now, home buyers can get bigger homes for less money than just a few years ago.

Many major housing markets, including Denver, have seen a price stabilization in recent months, as well. What this means for home buyers is that we may very well be toward the bottom of where home prices are going to get. Now is as good a time as any to get into a new home because of these low prices. No one knows for sure how long it will be before home prices begin to rise again.

Home sellers are pricing their homes more realistically, too. Sellers are getting around 90% of their asking price, which is a rather staggering statistic considering just how low home prices have gone. On top of this, the average time it takes to list and sell a property is dropping, too.

In most areas, sellers outnumber home buyers by two to one. When you couple this with the prevalence of unsold homes and distressed properties, you can see the many reasons for these low home prices.

As we’ve looked at before, Colorado is currently experiencing an increase in foreclosure filings. 2009 is on track to outpace 2008 and 2007 in terms of the number of foreclosure filings, and even completed foreclosure rates are rising at a steady pace. Colorado foreclosure rates are not the highest in the nation, but Colorado ranks 8^th in the list according to RealtyTrac, Inc.

These high foreclosure statistics have created a unique environment in home prices. Over the past few years, home prices have dramatically dropped, in part due to the influx of foreclosed homes onto the market. Prices nationwide have dropped around 26% since their peak in 2006.

Around half of home sales in the last quarter of 2008 were distressed homes – either foreclosures or short sales. As these foreclosures hit the market, traditional home sellers have been forced to cut their prices in order to stay competitive.

What this means is that it’s still a home buyer’s market in Colorado. To really take advantage of these market factors, there are some things you need to keep in mind:

• First, you can use low home prices on foreclosed and short sale homes to add pressure to the price negotiations for your new home. Traditional sellers know full well that they need to be competitive. While you can’t expect to pay the same for a traditional home as you would for a foreclosed home, you can leverage those prices to help negotiate.
• You also need to study your local market. Explore the options available to you. Know how much distressed homes are selling for.  If you want to make an offer to a traditional seller, it’s amazingly helpful to have that data. It also opens up the possibility of buying a home that’s been foreclosed.
• Be willing to consider a distressed home, too. There are some limitations in buying a foreclosure, to be sure. The process of purchasing a distressed home can be very different from buying a new home or one that’s not distressed. Spend some time learning about how to buy a foreclosed home, and talk to your real estate agent about the options.
• Understand that, if you buy a bank-owned home, the property is sold “as-is.” You’re not able to negotiate the home price based on certain conditions. You can, of course, create a purchase contract that will be contingent on an inspection, but this doesn’t help you at all with the price negotiation process. It just gives you a way out of the purchase, if the inspection turns out badly.
• There’s no way to know how much longer these foreclosure rates will continue. Most experts agree that we are somewhere near the end of the economic downturn, so if you’re going to take advantage of low home prices that have come about because of foreclosures, you probably need to act sooner rather than later.