If You’ve Got Assets, You May Have Income Too…

Published May 31, 2024

We understand that the most popular time to look for a home is the weekend — after new listings have been published and weekend house hunting activities kick into high gear.  In support of this, we are available when you need us most and want to provide you with timely updates on the market to help you prepare for the weekend ahead.

·         Mortgage Rates1 – Memorial Day holiday on Monday left us with a short week.  Early in the week we saw rates move against us as global investors failed to gobble up the large amount of US Debt coming to auction.  This turned a bit with Q1 GDP readings that were revised down and Personal Consumption Expenditures (PCE) data that came in with some modestly positive inflation news.  Our benchmark rate remained at 6.990% (7.035% APR), but shifted over to a slight discount fee.

 

·         Weekly Market Data2 – Another week and another increase in active inventory.  A slowing pace of new listings (potentially due to the holiday weekend) was matched by fewer homes going under contract.  Ending the week with active inventory at slightly more than 8,300 listings, we are now solidly above peak levels of last year. Median Days on Market held steady at 9 days.  (Source REColorado, all DMAR counties, this past week – Thursday to Wednesday).

 

·         Columbine Team Insight – Our office had a similarly light week of offers, as buyers turned to other activities over the holiday weekend (seriously, could the weather have been any better?).  However, of the offers presented, all of them were accepted right around list price.  The summer months often see less competition for homes, which tends to lead to the percentage of accepted offers increasing, as well as a higher frequency of seller concessions making their way into the deal.  With inventory significantly higher than a year ago, you may find a great home at a great price!

 

·         Market Trends – For those homebuyers who have accumulated a significant volume of financial assets, there are ways to utilize your large investment and retirement account balances as a source of income.  Both Fannie Mae and Freddie Mac allow assets to be used as income, but they differ a bit on the calculations.

 

§  Fannie Mae – All eligible assets must be in a retirement account such as a 401K or IRA.  If you are under 62 years of age the maximum loan to value is 70%.  For those who are 62 or older, this increases to 80%.  To calculate the income that can be used, add the eligible assets minus any distribution penalties and then divide by the amortization term.

§  Freddie Mac – A combination of retirement and investment accounts are eligible.  At least one borrower on the account (and loan) must be 62 years of age.  To calculate the income that can be used add the eligible assets and divide it by 240.

NOTES:

(1)     The mortgage loan scenario presented assumes the purchase of a primary residence, excellent credit, an 80% loan-to-value (LTV), a loan amount of $480,000, a 30-year fixed interest rate of 6.990%, and a P&I payment of $3,190.  The Annual Percentage Rate (APR) is 7.035%, which reflects a discount fee of 0.216% ($1.037).  Monthly principal and interest payments, which will continue for the stated term until paid in full, do not include mortgage insurance, property taxes or homeowners’ insurance premiums and actual monthly payments may be higher.  Interest rates are current as of 05/30/2024 and are subject to change at any time without notice.  All loans are subject to credit approval.  Other terms and conditions may apply.  Not all loans or products are available in all states.  Regulated by the Colorado Department of Regulatory Agencies, Division of Real Estate.

(2)     Source: REColorado®, Inc for the period 05/23/2024 to 05/29/2024.   Data for Adams, Arapahoe, Boulder, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park counties. This representation is based in whole or in part on content supplied by REColorado®, Inc. and REColorado®, Inc. does not guarantee nor is it in any way responsible for its accuracy. Content maintained by REColorado®, Inc. may not reflect all real estate activity in the market.

We are excited to have the opportunity to work with you.  Don’t hesitate to reach out as you navigate the market, we’d be happy to help!

44 Cook Street

Suite 700

Denver, CO  80206

303.284.2592

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