Mark your calendar for 
the Grand Valley Open House weekend

Out in the open

When touring open houses next weekend, don’t forget to visit Red Rocks, a Pauls Corporation subdivision in the Redlands that has huge windows to soak in the amazing views. While views of Colorado National Monument to the south are normally dominant, the view of the Bookcliffs on a snowy morning in the springtime are also pretty spectacular.



040614_REW_GVOHPreviewRedRocks

When touring open houses next weekend, don’t forget to visit Red Rocks, a Pauls Corporation subdivision in the Redlands that has huge windows to soak in the amazing views. While views of Colorado National Monument to the south are normally dominant, the view of the Bookcliffs on a snowy morning in the springtime are also pretty spectacular.

If having your own plot of land somewhere out in the country is one of your goals, then be sure to check out all the open house listings during next weekend’s Grand Valley Open House Weekend. This is the view from our Mack featured property and there are plenty of other farm and small acreage properties that will have an open house next weekend.



040614_REW_GVOHPreview

If having your own plot of land somewhere out in the country is one of your goals, then be sure to check out all the open house listings during next weekend’s Grand Valley Open House Weekend. This is the view from our Mack featured property and there are plenty of other farm and small acreage properties that will have an open house next weekend.

Touring several open houses on a single day is a great way to determine what’s essential in your next home. If a large kitchen with views, granite countertops, plenty of storage and work areas is important to you, check out our Fruita featured property at 1776 Waters Lane next weekend.



040614_REW_GVOH_preview_Fruitakitchen

Touring several open houses on a single day is a great way to determine what’s essential in your next home. If a large kitchen with views, granite countertops, plenty of storage and work areas is important to you, check out our Fruita featured property at 1776 Waters Lane next weekend.

Touring several different houses in a weekend is a great way to compare features and trends. This bathroom, which is in the home of our Fruita featured builder, Sun West Construction, has double sinks and a large walk-in shower, but no large soaker tub. Although the big garden tubs look nice, many builders have discovered that home buyers would rather have a big shower with bench seating.



040614_REW_GVOH_PreviewFruitaGewont

Touring several different houses in a weekend is a great way to compare features and trends. This bathroom, which is in the home of our Fruita featured builder, Sun West Construction, has double sinks and a large walk-in shower, but no large soaker tub. Although the big garden tubs look nice, many builders have discovered that home buyers would rather have a big shower with bench seating.

Next weekend, April 12 and 13, Realtors will be holding open houses at more than 100 homes as part of the Grand Valley Open House weekend. If you’re actively looking for a new home or dreaming about someday buying a new home or perhaps thinking you’d like to try and sell your existing home, then touring a few homes should be on your weekend to-do list.

There will be homes in every category, so those looking for a starter home should be able to tour several all in one or two days. There are also townhomes, duplexes and other multi-family options, so those who don’t need the yard or want the yard maintenance also will have several homes to tour.

On the opposite side of the spectrum, those who’d like to spread out and settle on a few acres will be able to tour farm, ranch and small acreage properties during the open house weekend. From potential vineyard or orchard properties in Palisade and East Orchard Mesa to homes that currently have acreage leased to alfalfa and corn growers, there’s a wide variety of country properties from which to choose.

Of course, there are plenty of single-family homes of all ages in every part of the Grand Valley.

The beauty of touring several open houses is that it can help buyers pinpoint exactly what’s a deal-breaker and what type of amenities they’d be willing make themselves at some point in the future. Perhaps a five-piece master bath is a must, but those granite countertops can wait.

Some of the homes that will be open are brand new construction, which gives visitors a peek at the latest home remodeling trends. That can be helpful for homeowners who may be looking at remodeling their existing homes.

Homeowners who are thinking about listing their property at some point in the future may want to visit a few open houses in their neighborhood. That will help them determine how their house compares to neighboring properties and may help them determine what types of improvements they should make if they want their home to sell quickly. Attending open houses can also help homeowners learn about current market values so they’re able to price their property properly.

If you are a seller who wants to take advantage of the weekend, make sure your house is clean and tidy. Nothing says “this house has been neglected” like dirty dishes in the sink, dirty laundry on the floor and junk mail and knickknacks strewn all over the countertops.

While it’s not necessary to light candles, bake cookies so the smell of fresh-baked chocolate chippers lingers or play appropriate mood music, it is essential to make your home as inviting as possible. Open curtains, let the sun shine in and don’t neglect the curb appeal. It may be a little too early to plant flowers, but it’s not too early to cut back all the dead perennials, make sure the fall leaves are gone and clean the sidewalk.

If you’re visiting several open houses, don’t be afraid to take notes. You might even want to take a few photos to remind yourself what you liked and what you didn’t.

If you’re not already working with a Realtor, take a little time to get to know the ones you find during the open house weekend. If they’re manning an open house on a beautiful spring day, that’s a good indication that they’re committed to doing whatever it takes to match the right buyer with the right house, and that’s what you want in an agent.

April 15 is right around the corner. Put-it-off taxpayers have become edgy about the number of days remaining to hit the deadline, others have already resigned to an October extension while analysts handicap the chances of Congress making changes to near and dear deductions.

Three years ago, a team of Washington, D.C., housing reporters and industry analysts predicted there was a 75 percent chance that Congress would reduce the mortgage interest deduction (MID). The MID has been closely guarded by realtors and builders as one of the key incentives and reasons for consumers to buy a home.

While the perception of the MID is monumental, the actual impact of MID is not as far reaching as most assume. Only 42 percent of households currently benefit from the MID. Only 67 percent of households own a home, and, of those owners, fewer than 63 percent pay enough interest to justify itemizing deductions. In fact, 29 percent of homeowners, many of whom are retired, don’t even have a mortgage.

This year’s most popular pitch in federal tax code changes comes from Dave Camp (R-MI), chairman of the House Ways and Means Committee. According to the Tax Foundation, a tax policy research organization, Camp set out to help simplify the code while maintaining revenue neutrality. His plan includes reducing the mortgage interest deduction on new mortgages from $1 million to $500,000 over four years. Nothing was proposed on curtailing the MID on second homes or lines of credit.

Apparently, the Camp plan has generated little interest and the chance the MID would be reduced doesn’t even come close to the 75 percent predicted three years ago. More importantly, 2014 is a Congressional election year. And, historically, no major tax bill has passed in an even numbered year.

“I would say it has little chance of coming up for a vote in the House, much less in the Senate,” said William McBride, the Tax Foundation’s chief economist. “Democrats have not put forth this idea as a revenue raiser.”

The mortgage-interest deduction is not a dollar-for-dollar tax deduction; it reduces taxable income. Before 1987, mortgage interest on all residences could be deducted without limit. Since then, consumers with more than two residences are required to choose two “qualified” residences where mortgage interest could be deducted, but the selected residences are allowed to be juggled into the “qualified” category from year to year.

Sheila Crowley, president of the National Low Income Housing Coalition (NLIHC), constantly seeks creative ways to increase the number of rental units in this country and create new avenues to fund basic shelter. For years, she’s targeted incentives for high-cost homes, especially second residences.

“Second homes would have to be classified as a luxury,’’ Crowley said. “I mean, does anybody really need one? So, why not have a surtax on them? Can you image how quickly the home builders would move to get that notion turned around?”

Some accountants have jokingly referred to the concept of deducting interest on two homes as the “Congressman’s Rule” because some of our lawmakers have a residence in the nation’s capital and another in their home state. Accountants said that if the second-home mortgage interest deduction is ever threatened, taxpayers could choose to rent out their homes for a period greater than their personal use and change the second home’s status to an investment property.

“If you redirected the mortgage interest deduction from homes over $300,000, you could end homelessness tomorrow,’’ Crowley said. “How much of a home do people really need and to what extent should the government go to subsidize that home?

It’s often stated in flat-tax initiatives that eliminating mortgage interest would level the playing field for average families. In reality, a homeowner with a $250,000 mortgage with a 5 percent interest rate in the 25 percent tax bracket would probably pay $1,500-$1,900 more in federal income tax if the mortgage interest deduction were eliminated. That’s because a taxpayer would not itemize other deductions as well and they would simply take the standard deduction.

“People believe the mortgage interest deduction is their birthright,” Crowley said. “It’s an untouchable – just like Social Security. Suggest getting rid of the mortgage interest deduction and you’d better leave the room.’‘

Many of people in the room, however, may not even take the deduction.

Tom Kelly’s new novel “Cold Crossover” is now available in print at bookstores everywhere and in both print and Ebook form from a variety of digital outlets. Follow real estate agent and former basketball coach Ernie Creekmore as investigates the disappearance of his star player on a late-night boat. Check out the national reviews and put “Cold Crossover” on your list.

WASHINGTON —  When you’re raking in tens of billions in profits by helping credit-elite borrowers purchase homes, couldn’t you lighten up on fees a little for everyday folks who’d also like to buy?

That’s a question increasingly being posed to government-controlled home mortgage giants Fannie Mae and Freddie Mac and their federal regulators. Though most buyers are unaware of the practice, Fannie and Freddie—by far the largest sources of mortgage money in the country—continue to charge punitive, recession-era fees that can add thousands of dollars to consumers’ financing costs. This is despite the fact that the companies are enjoying record profits, low delinquency rates, rising home values, plus are protecting themselves from most losses with insurance policies paid for by consumers.

Critics say that by making conventional mortgages more expensive, these fees are partially responsible for declines in home purchases in recent months, especially among moderate-income, first-time and minority buyers. The add-on fees can raise interest rates for some borrowers from the mid-4 percent range to more than 5 percent. Since Fannie and Freddie operate under federal conservatorship and send their profits to the government, the fees amount to a federal surtax on homebuyers.

Last year, the two companies had combined net income of nearly $133 billion and pre-tax income of $64 billion. By contrast, the entire private mortgage industry—big banks, small banks, mortgage companies, brokers, servicers and others—had $19 billion in pre-tax income, according to new data compiled by the Mortgage Bankers Association.

Fannie and Freddie got into deep financial trouble acquiring and backing poorly underwritten loans during the boom years. But under regulatory supervision since 2008, they have improved their performances, primarily by severely tightening their credit standards. As part of that effort, they created a series of fees known as “loan level pricing adjustments” designed to charge borrowers more if they have certain perceived risks. The fees generally are added to the base interest rate paid by borrowers.

Small down payments, for example, get hit with higher add-on fees than large down payments. Applicants with low credit scores are assessed much higher fees than those with pristine records. Buyers of condominium units who make down payments of less than 25 percent get charged a hefty extra fee no matter what their scores. Fannie and Freddie also charge lenders fees to guarantee mortgage bonds—again ladled onto borrowers’ bills—and those have doubled since 2011.

But critics such as Mike Zimmerman, senior vice president of MGIC, a major private mortgage insurance company that does business with Fannie and Freddie, calls the companies’ add-ons “arbitrary” and excessive in view of current market conditions. For some borrowers, he says, the fees can increase the monthly cost of a 5 percent down payment loan on a $220,000 house by up to 7 percent, and lead to thousands of dollars of extra expenses. But since Fannie and Freddie are already insured against most losses on low down payment loans by private insurance policies, he argues, these add-ons are unnecessary, covering risks that are already covered.

Fannie and Freddie could save consumers a lot of money, say industry experts, by reducing or getting rid of the add-ons and deepening their mortgage insurance coverage. Zimmerman estimates that borrowers could see reduced interest rates of between one-quarter of a percent to nearly nine-tenths of a percent if the companies moved in this direction.

A spokesperson for the two corporations’ regulator—the Federal Housing Finance Agency—declined to comment on the issue of add-on fees. The agency has a new director, former North Carolina Democratic congressman Mel Watt, who has made virtually no public statements since he took over effective control of Fannie and Freddie in January. He is said to be studying options regarding key policy issues but is not ready to announce changes, if any.

David Stevens, CEO of the Mortgage Bankers Association, says the companies’ excessive fees are thwarting home purchases. “We’re seeing significant declines in purchase applications because we have priced out a lot of Americans,” especially in the under-$417,000 segment dominated by Fannie and Freddie.

“It’s a wonderful thing to be a duopoly,” said Stevens in an interview, but the two companies’ total fees are out of line with their real risks and are hurting homeownership.

Could all this change and borrowers get a break? It’s up to Watt and, at least for the time being, he is mum.

 

The Nation’s Housing is a nationally syndicated column about mortgage issues and the national housing market. Laws vary in different states and material presented in Real Estate Weekly may not reflect Colorado’s laws or the state of the local market.

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