If you’re not yet a homeowner or don’t own any investment property, your real estate checkup is simple: Do I own real estate? If the answer is no, it’s time to start! The earlier you invest in real estate, the greater the potential for it to become a reliable source of retirement income. There’s no better time to get started than now. Connect with a Realtor® to create a plan and take steps toward your first purchase.
If you already own a home or investment property, here are a few key steps to include in your annual real estate checkup!
Request a market analysis from your Realtor
One of the remarkable aspects of real estate in our area is its consistent long-term growth in value. While there have been ups and downs along the way, the overall trend has been upward. For example, when I started my real estate career in 1978, homes in the Baseline Subdivision in Boulder were selling for under $30,000. Fast forward to 2024, and those same homes now start around $750,000. As a homeowner, it’s wise to update your home’s value annually and incorporate it into your financial statement. This information is invaluable for planning and shaping your financial future, whether it’s related to real estate or other investments.
Check your insurance coverage on your real estate
As noted above, it’s important to keep track of your real estate values. This is also an excellent time to review your insurance coverage to ensure it aligns with current replacement costs. Rebuilding costs have risen significantly since the Marshall Fire, making adequate coverage essential. Additionally, reflecting on events like the 2013 flood, now is a good time to evaluate the need for flood insurance, sump pump failure insurance, and other relevant protections.
Check your loan balance on your home and/or your rental properties
Mortgage insurance removal
For this discussion, mortgage insurance refers to the type that protects your lender by covering the loan if you default. There’s also another type of mortgage insurance, similar to life insurance, which pays off the loan if you pass away, ensuring your loved ones are not left with the burden of mortgage payments.
Knowing your loan balance is key to determining if you can eliminate mortgage insurance. Many homes were purchased with low down payments, leading to Private Mortgage Insurance (PMI) being included in monthly payments. With rising property values and principal reduction, you might now qualify to remove PMI and lower your payment. Contact your lender to see if the insurance can be removed or if refinancing is necessary. Even if it’s not possible right now, you can create a plan to work toward removing it in the near future.
Check your interest rate
Over time, we often forget the interest rate on our home mortgages. Rates were higher in 2023 but have decreased somewhat in 2024, making this a good time to check in with your lender. If you have a 5-year-old, 30-year loan, refinancing could reset your loan to a new 30-year schedule. However, ask your lender about a recast option, which allows you to keep the remaining loan term while benefiting from a lower rate. Alternatively, starting a new 30-year loan at a lower rate could significantly reduce your payment. If you can also eliminate Mortgage Insurance, you may be pleasantly surprised by your new payment.
Decide on your loan term, if you refinance
If the idea of starting over on a 30-year loan doesn’t appeal to you, refinancing into a 15-year loan is another option. This can help you achieve faster principal reduction, though the payments will be higher, potentially making it harder to qualify. Some lenders may allow you to recast your loan with a new interest rate and a term that suits you. For example, if you’re 10 years into a 30-year loan, a lender could create a new loan at today’s rates, but with a 20-year amortization. This way, you could benefit from a lower interest rate and not extend your loan term by another 10 years.
Meet with your real estate lending professional and Realtor
Knowing the current value and loan balances of your real estate provides valuable insight when meeting with your lending professional and Realtor. With this information, you’ll understand how much equity you have, and if you have equity, you’ll have the opportunity to expand and grow your real estate portfolio.
If your family has grown, you may need a larger home. It’s possible to acquire that larger home while simultaneously building your real estate portfolio. You could explore refinancing your current home, renting it out, and pulling cash out for a down payment on your next personal residence.
If you’re happy with your current home, refinancing to pull cash out for a rental property could be an option. By consulting with your lending professional, you can assess whether you qualify now or create a plan to qualify in the future.
Get a home inspection
A home and rental property can be one of the largest investments a person or family makes in their lifetime. Like anything important to you, it’s essential to take good care of it. Scheduling a home inspection every so often is a smart idea, especially in the spring, when snow may have been hiding potential issues. When was the last time you checked your attic? You might find an unexpected family of raccoons! The value of a home inspector is that they can alert you to simple repairs and maintenance tasks before they become major problems. This helps you keep your property in good shape and plan for big-ticket items, like a roof or furnace, by budgeting accordingly.
Check into a home warranty
An independent Home Warranty Policy is often included in real estate transactions. These policies cover various components of the home, such as the furnace, air conditioner, water heater and more. Some companies offer coverage for homes you already own and live in. If the potential failure of a water heater or furnace could cause financial strain, it might be wise to explore the premiums, coverage, and deductibles of such a policy.
Start your real estate checkup today by reaching out to your Realtor, lending professional and home inspector!
Duane graduated with a business degree and a major in real estate from the University of Colorado in 1978. He has been a Realtor® in Boulder since that time. He joined RE/MAX of Boulder in 1982 and has facilitated over 2,500 transactions over his career. Living the life of a Realtor and being immersed in real estate led to the inception of his book, Realtor for Life. For questions, e-mail duaneduggan@boulderco.com,
call 303.441.5611 or BoulderPropertyNetwork.com.