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Financing Options, Let’s Get Creative!

July 14, 2022 By Tayson Rockefeller Leave a Comment

Usual disclaimer: I am not a lender. Always verify information and available programs with your lender. I recently wrote an article similar to this one, but I’m going to try to use this article just to get down to brass tacks on financing options and ways to get creative to get the best rate, and to lock that rate in the event you are purchasing new construction and are in a holding pattern.

Rate Locks & Extended Rate Locks

Many people don’t realize that you can lock rates for an extended period of time. This is an excellent tool when purchasing real estate that is under construction. Lenders usually carry products to lock rates for 6, 9 or even 12 months. While these products may come with a slightly higher rate, they often have options to “float down” the rate in the event rates begin to decrease. This is the best of both worlds.

Temporary Buy Downs

Temporary buy Downs can be a great way to secure a loan for someone that might be pushing their limits in terms of a debt to income ratio, and need to get their payment a little lower for the first couple of years. This buy down can sometimes be negotiated with the seller to be paid at closing, and provides the buyer with a payment that is a little more manageable for the first two or three years.

Permanent Buy Downs

Nothing new with buying your interest rate down up front, but it is important to look at the payback depending on how long you intend to hold the loan. Typically a buying “point” (1% of the purchase price amount) will get you a 1/8% to 1/4% lower rate, but it’s always great to get a quote because sometimes a point can get you an even greater discount.

Adjustable Rate Mortgages An adjustable rate mortgage can be a scary thought, basically it’s fixed for a certain amount of time and can adjust up after the initial fixed rate period expires. However, below is an example of a comparison between a 10-1 adjustable rate mortgage and a 30-Yr fixed mortgage, roughly it today’s rates. Considering the average homeowner holds their mortgage or loan far less than 10 years, there’s quite a bit of protection as well as opportunity to refinance that loan during a decade long time span.

What You Need to Know About Buying Land!

January 31, 2021 By Tayson Rockefeller Leave a Comment

Though the market has changed throughout my career, the same questions always seem to come up. Here are a list of common Questions and Answers:

Q: Is there a time frame in which I need to build?

A: The short answer is, not that I’m aware of. I have seen special circumstances, however. For example, in the unlikely chance that a homeowners association might allow someone to build a guest house before a main house, they might require a home to be constructed within a certain time frame. The valley has a pretty poor track record of actually following through with these types of agreements, and most homeowners associations have caught on.

Q: Do I need to do anything with the land such as maintain it?

A: In general, not much. Most subdivisions have an active homeowners association. The HOA will typically take care of the road maintenance, fire pond testing, and other similar maintenance requirements and tasks. The most common exception is with respect to noxious weeds. While many developments have an agreement with a farmer for the open space or unused areas of the development, some do not. If you receive notice from the county, you may be required to hire a company to spray the weeds such as musk thistle. Even if you don’t, they will, and can assess your tax bill. Fortunately, the cost of weed spraying is usually pretty affordable.

Q: What are the holding costs like?

A: Here again, usually, pretty affordable. There are two primary categories of expense including property taxes and homeowners association dues with the occasional special assessment or local improvement district (LID) fee. The first two are fairly common and obviously vary depending on the location and amount of amenities within the subdivision. Fortunately, most websites (including ours) display property taxes and HOA dues on the listing detail page. Some properties take advantage of an agriculture tax rate in the event the property is being used for ag purposes (and is over 5 acres), in which case the taxes can be extremely negligible. Other fees such as the aforementioned special assessment, LID or other fees are rare, but can come about for road maintenance, utility improvements or other projects usually related to infrastructure.

Q: What can I do with the property before I build?

A: This depends, but the biggest determining factor is whether or not the property is in a subdivision with covenants and restrictions. A big one that comes up is whether or not you can camp on your property. While some associations may allow it, I would think it should be generally assumed that they do not. For properties outside of a subdivision there are still some regulations. I have written several articles that can be found on my blog website related to what you can do with your property, what it’s like to be part of a homeowner’s association in the area, and more.

Q: Tiny Homes, Rentals, Campers?

A: Here again, the subdivision layer is the first step to research. Most subdivisions have a home size requirement in the range of 1,800 square feet, but I have seen them as small as 0 to 600 SqFt and is large as 2,600 SqFt. HOAs can also restrict short-term rentals via the covenants and restrictions. Though the county’s position is subject to change, smaller homes are generally allowed so long as they are permitted and built in accordance with the current building codes. RVs and campers are always a contentious subject, so make sure to follow up with the county or city on that one. To summarize, It’s always a good idea to find a real estate professional that understands the local market. I’ve heard a number of stories about Buyers that didn’t have the resources, tools or professional insight to make an informed purchase and later discovered that the property or the rights associated with the property were not what was expected. We’ve been selling real estate for a long time in the area and have great resources available to our customers when it comes to information about developments, requirements and subdivision documents and would love to help!

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