The Double Comma Club

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False Summit or False Peak? DMAR June 2021

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The second half of May seemed to open up a bit. But, sorry, it was a false peak. Less inventory came on the market and more buyers went out looking for it. Inventory was down 6% from last month, and down 14% from last year inventory.

6718 homes went under contract, which was up 17% last month, and up 3% from last year.
Active listings dropped last month. In fact, there was a 20% drop and inventory fell below 2000 homes for sale the second time this year. Listings are spending and average of four days on market.

You have to be ready to pounce, offer 30K over asking, without any contingences and ready to close in 2 weeks.

26% higher close - higher end homes.
23% higher close -medium priced homes.
$700,000 average closed price detached.

We are nowhere near the peak. Same with rates. Rates turned up mid-month.
Inflation jumped 4.2% - the highest in 13 years. Core inflation jumped to 3%. This was the highest monthly gain - EVER. Get the rest of the insights by listening to this 9 minute episode. More false peaks are expected.

The Lowest Rate Doesn’t Mean Your Lender is Serving You Best

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Nicole gives you three examples as to what a creative lender can do for you. Creative is another word for experienced here. When you simply go with the lowest rate without any other thought to the best financial plan for your longer goal, you are selling yourself short and most likely costing you and your family a lot of money. 

Tune in to hear these quick examples.

Fact vs. Fiction - Reverse Mortgages

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Gabe Bodner, Reverse Mortgage specialist at The Rueth Team joins Nicole for this episode.

#1 myth: you give up the title of your house with Reverse Mortgage.
Bank or lender takes over the house.

FACT:
You still own the house.

#2 myth: you can no longer pass the house to your heirs.

FACT: 
your heirs can inherit the home, pay off the reverse mortgage and inherit the additional equity above the reverse mortgage.

#3 myth: You're losing equity

FACT: Not losing but USING some of your equity.
Interest is added back to the loan through negative amortization. This does eat away at some of the equity, but based on interest rates on traditional loans, and growth and appreciation, you gain more equity than you are using and saving money on the loan if you need it.

#4 myth: You have to own your home free and clear

FACT: The existing mortgage balance can be absorbed or paid off.

This should be a loan of last resort. 
You have a better probability of financial success by utilizing a reverse mortgage sooner because it's a more efficient use of the equity in retirement.

Can I use a reverse mortgage for purchase OR a refi?
Yes.
If I pull money out for a reverse mortgage are you limited on what you can use it for?
The equity money can be used for anything you want, including acquiring more real estate, paying taxes, gifting, converting an IRA to a ROTH IRA.
The proceeds received are TAX-FREE because it's considered a loan.

Listen to Nicole's happy ending story of how one couple retired and bought two income properties wiping out their mortgage and bringing in steady income.

Some additional information you may find helpful.

Comparison between Home Equity Loan, HELOC, and Reverse Mortgage:

Key Differences
Reverse mortgages, home equity loans, and HELOCs all allow you to convert your home equity into cash. However, they vary in terms of disbursement and repayment, as well as requirements, such as age, equity, credit, and income. Based on these factors, here are the key differences among the three types of loans.

Disbursement
Reverse mortgage: monthly payments, lump-sum payment, line of credit, or some combination of these
Home equity loan: a lump-sum payment
HELOC: as-needed, up to a pre-approved credit limit—comes with a credit or debit card or a checkbook

Repayment
Reverse mortgage (deferred repayment) loans are due as soon as the borrower becomes delinquent on property taxes or insurance or under other certain circumstances.
Home equity loans involve monthly payments made over a set amount of time with a fixed interest rate.
HELOCs involve monthly payments based on the amount borrowed and the current interest rate.

Age and Equity Requirements
Reverse mortgage: must be at least 62 and must own the home outright or have a small mortgage balance
Home equity loan: no age requirement and must have at least 20% equity in the home

HELOC: no age requirement and must have at least 20% equity in the home
Credit and Income Status
Reverse mortgage: no income requirements, but some lenders may check that you can make timely and full payments for ongoing property charges, such as property taxes and insurance
Home equity loan: a good credit score and proof of steady income sufficient to meet all financial obligations
HELOC: a good credit score and proof of steady income sufficient to meet all financial obligations

Tax Advantages
Reverse mortgage: none, until the loan terminates
Home equity loan: for tax years 2018 through 2025, interest-only tax deductible if the money was spent for qualified purposes—to buy, build or substantially improve the taxpayer’s home that secures the loan
HELOC: same as for a home equity loan

 

Inflation Explained to Understand Why It Changes

what is inflation and why should I care?

Headlines regularly push the topic of inflation. We usually know it's bad if it goes up, but why? What causes the change, and what industries are affected by it that will affect my life? These are questions answered in this episode. 

so what is inflation? We know it can occur in any product or service including need base expenses and want base expenses. We also know that the Federal Reserve Bank monitors the inflation rates.

The Consumer Price Index (CPI) measures what you and I feel at the grocery store, medical care, etc. Inflation rates have moved from 2.5 to 4.16 which is the largest increase since 2008. Food costs are rising twice as fast as pre-COVID. Retail sales are running out of steam after stimulus monies have been spent and sticker shock is settling in. This also pushes interest rates up.

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Earnest Money Guarantee is Your Secret Weapon Against All Cash Offers

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Being competitive isn't strategic, it's a must. Competitive offer tactics can include:

  • appraisal gap insurance
  • short closing timelines
  • waiving inspection items
  • strong loan approval

Here are some loan approval options to make your offer stand out.

  1. Prequalification is the very first and most common step with online and box lenders. This is the bare minimum.
  2. Pre-approval submitting the loan documentation to the lender.
  3. A pre-approval letter gives the listing agent and seller confidence that what you say you make is what you make, and what you say you have is true.
  4. 10 Day Close Earnest money guarantee loan approval through the Rueth Team.
    You can keep shopping, but once approved and no changes to your status, the Rueth Team will guarantee your earnest money.

Sellers want the best experience selling so they can turn around and buy their next home. 

Tune in to this short and helpful episode. Learn more about this offer Nicole covers here >

Fact vs. Fiction - Housing Bubble - Colorado

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This is the one topic that has not only generated more calls to our office but to our agent clients, a crazy number of internet searches. People want to know - is the housing bubble about to hit? Let Nicole tell you how it is in Colorado. 

Fiction: an imminent collapse is coming.

Fiction: forbearance will lead to foreclosures, especially in Colorado.

Fact: Equity gain is our saving grace.

Fact: What's happening is leaps and bounds different than 2008.

Listen to this 10-minute episode to get the facts.

Fact vs. Fiction - Home Loans

The facts and fictions of Home Loans

As part of the continuing Fact vs. Fiction series, Nicole talks about the facts and fiction of home loans. Listen to this 7-minute episode, play again until it sticks.

A preview:

Fact 1 - call your lender first
Fiction 1 - assume the best loan for them is with 20% down or minimum down.
Fact 2 - you have the power to affect your monthly payment.
Fiction 2 - renting is not more cost-effective unless you are only looking at the immediate short term. 
You want to pay your OWN mortgage, not your landlord's.
Fiction 3 - getting a home loan isn't possible unless everything is lined up or perfect.

Fact vs. Fiction: Interest Rates and Long-term Investments

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After hitting low historical interest rates 14 times last year, let's set the record straight. The first piece of fiction is that Rate is King. This is not always exactly as it appears. Oh, and the one using your house as a method to save interest rates on credit cards. Be smart. Then we move into the fiction of long-term real estate investments. 

>A buy and hold strategy provides OPTIONS. But, just as with rates, options also bring misinformation, many times turning people away from a long-term wealth strategy that could open up possibilities for them and their families. Watch as I bust open some very common concerns that are fiction and go through why, even in today's market, real estate is queen.

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What is the purpose of a title company in a real estate transaction?

Sima Patel talks about title on The Double Comma Club

If you have ever been involved in a Real Estate transaction, you've dealt with Title. But what do we need to know about the title process and what should we ask our underwriters? Sima Patel from WFT National Title gives us pointers. Some of what she covers includes advice for those who have gone through bankruptcies or are buying a home from someone who has gone through BK, what you need to know about trusts, LLCs, and quick claim deeds to avoid legal disasters.

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