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Are Interest Rates Going Down?

are interest rates going down

Mortgage rates play a huge role in determining the cost of a home loan. Recently, rates have been trending downward, creating great opportunities for affordable home loans. Here’s what you should know about current mortgage rates, along with some insight into what drives interest rates higher and lower over time.

How Low Are Current Rates?

A year ago, the benchmark rate of a 30-year fixed-rate mortgage loan was about 4.05%. Since that time, it has been trending downward in a big way. As we head into the third and fourth quarters of the year, rates are hovering at or below 3.5%. This makes now a great time to buy as long as you understand how interest rates affect the overall cost of your mortgage loan.

Why Do Interest Rates Matter?

When you buy a home, the listing price, down payment and closing costs are only a small part of the cost equation. One of the smallest (but most significant) numbers home buyers need to understand is the mortgage interest rate. The interest rate significantly affects monthly mortgage payments and determines the total amount you pay for your home.

In essence, the interest rate on your loan determines how much you are paying every year to your lender for just having the mortgage loan. Basically, lower interest rates mean a lower overall cost for your real estate investment.

For instance, consider a $300,000, 30-year fixed-rate loan with an interest rate of 4.5%. Over the term of the loan, you can expect to pay an extra $247,220 in interest on top of the initial $300,000). You can also expect monthly mortgage payments of about $1,520.

interest rates going downNow, if you were able to get a loan at 3.5 percent, you’d only pay $184,968 in interest, and your monthly mortgage payments would be about $1,347. Although it may not seem significant at first glance, that 1% difference in interest could cost (or save) you around $170 a month and more than $60,000 over the life of your mortgage loan.

In addition to saving you money on a loan, lower interest rates allow you to look at homes that might normally be outside your price range. This is why it’s so important to pay close attention to fluctuating interest rates and strike when an ideal opportunity arises.

How Are Mortgage Rates Determined?

Contrary to common belief, mortgage rates are not actually based on the 10-year Treasury note; they are based on the bond market, meaning mortgage-backed securities or mortgage bonds. Mortgage-backed securities are essentially mortgage loans that are packaged into bundles or groups of securities and then sold in the bond market. The price of these bundled debt securities is driven by global and national news events, which also impacts individual mortgage rates.

While that may sound complicated, it simply means that there are a lot of factors that influence the benchmark rate of 30-year fixed-rate mortgage loans. That said, just because national mortgage rates are low doesn’t mean you can expect to acquire a loan at an affordable rate. There are a lot of other things that work to determine the rate on each borrower’s loan. Individual lenders adjust mortgage rates based on how risky they judge a loan to be. The riskier the mortgage loan, the higher the overall interest rate.

When judging risk, lenders will consider how likely you are to fall behind on payments, and how much money they stand to lose if the loan goes bad. The major factors are loan-to-value ratio and credit score. Lenders may also charge higher interest rates for adjustable-rate mortgages, cash-out refinances and loans on condominiums, manufactured homes, investment properties and second homes because they are viewed as riskier.

Working with an Expert

When it comes to getting the best deal on a home, it’s important to take advantage of low interest rates. It’s also important to have an expert in your corner to help you make important decisions and navigate the complex home buying process.

With 60-plus years of combined real estate experience, The Wheaton Team specializes in residential real estate throughout Colorado Springs and all of El Paso County. Our considerate team of seasoned professionals can guide you through each step of the buying and financing process, so you can find the home you’ve always dreamed of. To learn more, contact us today!

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Does A Pergola Add Value to Your Home?

does a pergola add value to your home

Influenced by Pinterest and HGTV programming, more and more homebuyers are interested in pergolas which increase the comfort and enjoyment of outdoor living space. But do these features actually add value to a home? Here’s what homeowners should know.

Does a Pergola Increase Property Value?

Anytime you elevate your home in the eyes of buyers, you are essentially increasing property value. If a feature makes your property more enticing compared to similar inventory, it will allow you to command a higher asking price. 

Since outdoor living has become especially popular, the value of homes with pergolas has been on the rise. A safe gauge for a backyard improvement or deck is about 50% to 80% for your ROI. That said, to the right buyer, an alluring pergola could earn an even better return while providing the X-factor that attracts future buyers to your house.

Because they are open and airy, pergolas can help define your outdoor space without making it feel smaller or confined. Typically, the ground under the pergola is topped with some sort of flooring, whether it’s concrete pavers, brick flooring or even a deck, which combine with the pergola’s pillars and beams to further define your outdoor living space.

Pergolas are generally good investments because they effectively provide more “living space” outdoors. It’s similar to adding a gazebo or patio to serve as an exterior living room. While it won’t give you as much ROI as other hardscape additions, such as a patio or outdoor kitchen, a pergola can add value to your property. 

Getting the Most Out of Your Pergola

pergola add value to homeWhen it comes to maximizing ROI for your pergola, there are a few things to consider. While installing a pergola is one of the less expensive hardscape additions, the biggest factor affecting the overall cost is overall size and the kind of material used.

According to HomeAdvisor, the national median cost of a pergola is around $3,500. That said, you can expect to pay about $5,000 for a teal or ipe pergola, $3,000 for a cedar pergola and between $1,000 and $5,000 for an aluminum or fiberglass kit. If you’re an experienced DIYer, you can also opt to install a pergola yourself using a 10-by-10 kit that costs around $2,000.

Although wood is the most popular and beautiful option, it also requires more maintenance. You may have to repaint it, reseal it or repair hardware; and this could result in ongoing costs. With vinyl pergolas, on the other hand, you won’t have to worry about deterioration or maintenance. 

Vinyl pergolas won’t peel, chip, splinter, rot, warp, fade or become discolored when exposed to UV rays. Unlike wood pergolas, they can’t be infested by termites or other wood-boring insects. They also don’t require frequent maintenance or annual staining. 

The Bottom Line

When it comes to any home renovation, it’s important to consider all angles of the investment. If you’re looking to enhance your home’s outdoor space, there are a lot of good reasons to purchase a beautiful and durable pergola for your patio. In addition to boosting property value, these functional additions make your home more enjoyable while you’re still living in it. 

Bear in mind that how you choose to pay for your pergola will also affect your ROI. For instance, if you choose to finance the pergola with a loan, you will incur interest charges that may offset any potential increase in property value. So, it’s important to weigh the costs and benefits before purchasing a pergola for your home. 

It’s also important to remember that while a pergola could help you increase the asking price on a home; the increase isn’t going to be especially substantial. In some cases, it could increase the value of your home by a few thousand dollars. This depends on whether the pergola is part of a more extensive renovation that either extends your outdoor living space or defines it in a way that makes it more beautiful and more accessible.

If you’re planning to sell your home, The Wheaton Team can help. We specialized in residential real estate in Colorado Springs, Monument and the entire El Paso County. Let us help streamline the complex selling process and help you sell your home for a price that meets your expectations. To get started, contact us today!

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9 Tips for First-Time Home Buyers in Colorado Springs

first time home buyers in colorado springs

Colorado Springs is a great place for buying a new home. Unfortunately, purchasing a home for the very first time can be a stressful experience. Here are some tips for streamlining the process so you can find the home you’ve always dreamed of. 

 

  1. Hire a good agent. There is a lot to learn about the home-buying process and plenty of complex paperwork to go through. An experienced real estate agent can help make the process a lot easier and a lot more affordable. 

 

Since you will be working closely with your agent, it’s important to find someone you get along with well. The agent should also be highly skilled, motivated and extremely knowledgeable about Colorado Springs and the surrounding area. This will help you target the right home in the right neighborhood. It will also help keep costs down, especially if the agent is very familiar with the local market and available home inventory. 

 

  1. Know what you can afford. Before you begin looking for your dream home, you need to have a clear idea of your price range. Use a home affordability calculator to help you determine how much you can safely afford to spend without taking on too much unwieldy debt.

 

  1. Get pre-approved. Sellers typically will not accept an offer unless you have a lender’s letter stating you can acquire the financing required to close the deal. Having a pre-approval letter makes you look more serious to sellers, giving you an advantage over buyers who have yet to take this key step.

 

  1. Look into local financing programs. Even if you have your finances in order, you may still have trouble coming up with a down payment. Fortunately, there are a number of first-time homebuyer programs available locally and statewide. 

 

Before you start browsing for homes, check to see if you might qualify for a first-time buyer program available through El Paso County. You should also look into one of the following programs available to qualified first-time buyers looking to purchase a home in Colorado Springs and other Colorado communities. 

 

 

  1. Budget for closing costs. In addition to securing money for a down payment, you will need to budget for closing costs. This will generally run between 2% and 5% of your loan amount. 

 

  1. Pick the right neighborhood. Even if a home is perfect, the actual neighborhood could be a bad fit. So be sure to:

 

  • Research local schools, even if you do not have kids, since schools affect home value.first time home buyers
  • Look at local crime and safety statistics.
  • Map the nearest pharmacy, hospital, grocery store and other amenities.
  • Explore the neighborhood at different times on various days to check out noise, traffic and activity levels.

 

A good local agent can help give you invaluable input about specific neighborhoods, but only if they specialize in Colorado Springs real estate. 

 

  1. Stick to your original budget. Since it’s easy to fall in love with an overpriced home, it’s best to only look at properties that cost less than the amount you were approved for. Although you may be able to afford your preapproval amount, it won’t account for other monthly expenses that come with homeownership. Shop with a firm budget in mind to avoid getting in over your head. 

 

  1. Don’t just buy a home for today. It’s easy to focus on properties that meet your existing needs. If you plan to start a new family or expand your existing one, however, it may be better to buy a larger home you can grow into. Always consider your future wants and needs when deciding between available properties.

 

  1. Act fast. Colorado Springs real estate moves quickly in many areas because of limited inventory. It’s best to check out any newly listed homes that interest you as fast as possible. If a property is listed on a Monday, don’t wait until Friday to look at it. If you hesitate, you risk losing out to a more ambitious buyer.

 

If you’re thinking of buying your first home, contact The Wheaton Team. Over the past decade, we’ve established a well-earned reputation for specializing in residential real estate throughout Colorado Springs and all of El Paso County. Let us help you find the home of your dreams.

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Buying or Selling During A Pandemic

While it may only be temporary, the COVID-19 pandemic is touching everyone’s life in one way or another. If you are in the market to buy or sell your home, this can be a frightening time. With calls for social distancing and many businesses temporarily closing their doors, there is a great deal of uncertainty when it comes to real estate. If you are trying to buy or sell right now, here are some tips to help you make it through!

 

 

GO DIGITAL

Instead of opting for an open house, see if you can do a guided tour via Facetime or video marketing.

SANITIZE

If you are still allowing tours of your home or attempting to tour homes, make sure you are taking all sanitary precautions. Offer hand soap for your home tour and ensure you are sanitizing all surfaces a potential buyer may come into contact with, such as door knobs and counter tops. If you are touring a home, make sure you maintain social distancing practices with the agent and avoid touching anything you do not need to.

DOWNSIZE

Instead of having an open house, consider having only scheduled showings for your home or only participating in scheduled viewings if you are looking to buy.

STAY CALM, STAY SAFE

While there are still many options to buy and sell right now, stay calm and trust your agent. This is their specialty and they know the best course of action during this time. If they can offer digital options, they will let you know.

If The Wheaton Team can answer any questions please call our office, we’re here to help in anyway.  719-536-4581