Conventional or FHA Loans, Which is Best For You?

If you are thinking of purchaing a home with the next twelve months, consider talking with a loan officer prior to your home search to make sure you know how much you can afford and where you are comfortable with monthly payments. Craig Anderson of Rivercity Mortagage provided me with this helpful insight on loan programs and comparing FHA and Conventional loans.

FHA is increasing it’s monthly mortgage insurance premiums in April so it is time to compare both mortgages to see what works for your own situation.

Determining factors

Credit.  If you have a good credit score (ideally over 740), a conventional loan may make more sense than an FHA loan due to the fact that the monthly mortgage insurance premium will probably be lower than FHAs.  If your credit score is under 700, especially under 660, it will probably make more sense to go with an FHA loan as both the mortgage rate and availability of mortgage insurance for the conventional option will make the FHA option more affordable. 

Income. For a conventional loan, the limit on debt to income ratios is 45% and ideally 41%.  For an FHA loan, you can have higher debt to income ratios – usually a maximum of 50%.  Both options are going to require that the income be deemed stable and likely to continue.

Down payment and reserves. A conventionally insured loan will allow for a slightly smaller down payment, but is going to typically require that the borrower have at least two months worth of housing payments in reserves after closing.  An FHA loan will allow for a higher percentage of contribution from the seller to help pay the borrower’s closing costs and pre-paid items which may come into play on a smaller purchase price.

Interest Rate. The interest rate on FHA loans tends to be lower than that of a conventional loan, however FHA requires that the borrower pay a 1% funding fee that can be financed into the mortgage.  Often this addition to the loan amount will offset the monthly savings that the lower interest rate produces. 

If you know you have good credit and you have the ability to make a down payment of at least 5%, you may want to ask your loan officer about using a conventional mortgage instead of FHA. 

To contact Craig Anderson you can reach him at the office 952-908-3420 or on his cell phone 612-964-6620. Otherwise you can email him with questions or to get preapproved canderson@RiverCityMortgage.com

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Shakopee Townhomes Values

Shakopee townhomes for sale have gone on a bit of a roller coaster ride over the last 20 years, they might as well have gone to Valleyfair.  I have analyzed numbers very thoroughly and from a town that had as few as 8 Shakopee townhomes sell back in 1992, to 445 Shakopee townhomes sold in 2005 the townhomes for sale in Shakopee have leveled slightly.

We have seen a lot of new construction in Shakopee after the highway 169 Bloomington Ferry bridge was built in 1996. Up until 1998 Shakopee townhomes had seen only 135 townhomes sold in the previous six years per the Minnesota MLS statistics. Then in 1998, 159 townhomes sold representing almost 35% of the total Shakopee homes sold that year. The average sales price for a Shakopee townhomes in 1998 was $107,890. Average market times were only 60 days and average square footage was for those townhomes in Shakopee was only 1027 sqft, making the average price per sqft to be $105.05.

The Shakopee townhome market exploded from this point on as many more townhomes were to be built. The city temporarily thought about a moratorium of townhomes in Shakopee being built, but then decided not to impose. The number of townhome in Shakopee built in 2001 rose to 249 homes sold representing almost 38% of the total market. Average sales price had climbed to under under $150,000 and the average days on market fell to just 24 days. The boom was definitely here and sqft increased to an average of 1338 per townhome.  The Shakopee real estate market and Shakopee townhome market peaked in 2004-2006. 2004 led to a high of almost  49% of all homes in Shakopee sold that year on the Minnesota MLS to be townhomes. 2005 brought an all time high of townhomes in Shakopee sold through the Minnesota MLS, 445 townhomes. In 2006 values had peaked, with average sales prices just over $192,000, meanwhile average days on market increaseing  48 days more days from the previous year to 107 average days on the market. Through these three years the average price per square foot had almost tripled from 1992 values of $42.57 per sqft, to just over $125 per sqft.

Come 2008, much fewer Shakopee townhomes were selling and bottomed at an eightyear low of only 201 townhome in Shakopee sold that year. Average sales prices had significantly decreased since their peak of just over $192,000 to an average sales price of $161,403. This was over $25,000 less in just a years time than the 2007 average sales price of $186,687. Most assumed this was the worst however Shakopee townhome values again plunged the following year even worse, decreasing on average over $33,500! This brought the average sales price of a Shakopee townhome to $127,782.

We saw signs of hope in 2010 with Shakopee townhome values finally increasing for the first time in three years after a rapid decrease in values to an average of $132,533, but so far in 2011 it appears as though we are seeing a double dip in pricing.I had put together some numbers from the Minnesota MLS and so far in 2011 23 townhomes in Shakopee had sold with an average sales price of $109,718. Days on market had steadily increased over the last 10 years and reached close to the average days on market of 1992 with an average time of 152 days. Per per sqft has dropped to $72.90 per sqft, close to values in 1995-1997. Although we have not had average sales prices fall to those points, our townhomes are much larger today.

There are signs of hope for those looking to buy while starting their home search and those looking to rent their townhome in Shakopee. Shakopee townhomes are priced so aggressive today I feel there is a huge upside potential. You can currently buy cheaper than you could rent townhomes in Shakopee. The rental market is great as well. With Shakopee being relatively close to shopping, Minneapolis, lakes and many activities more and more are moving to the area. Shakopee also has a lot of job opportunity in the area with large companies like Seagate, Mystic Lake, Canterbury, Valleyfair and more. Shakopee has a transit as well for an easy commute to downtown.

Still remain cautious because I see two potential problems we could see down the road. One deals with financing for future buyers, and the other deals with increased association dues. Many current owners who have moved to single family homes are renting their Shakopee townhomes. Some aassociations have become a bit more lenient with their covenants pertaining to how many townhomes can be rented.  Because of this and the increased Shakopee foreclosures and short sales, some Shakopee townhomes down the road may be hard to get bank financing. Lenders look at an area with high foreclosure rates and rental rates as more of a risk and may not offer some loan programs in those development, primarily those legally defined as a condo. Most developments with Shakopee townhomes actually are classified as a condo. If you own a Shakopee townhome, look at your legal description and if you see CIC, likely it is a condo. Those townhomes in Shakopee that have a lot and block, likely are classified as a townhomes. The other area for potential future concern would be  inflated association dues. Some associations are in great standing because they have not had many foreclosures. Stone Meadows one level townhomes for example I know are in great standing while keeping their dues low at $115 per month. Other townhome areas I know have increased their association dues above $200 per month when previously the average was in the $125-150 range.  Some association are charging extra month assn dues if you rent your townhome. I don’t think that is necessarily bad because some area have amenities like community park or pools and hopefully 10-15 years down the road the won’t need to get a bond to replace roofs or siding. Make sure when search for your next home or Shakopee townhome you talk to you local Shakopee Realtor and make certain you review the associations financials and covenants. In Minnesota you have 10 days to review all such documents per a condo/ townhome addendum your Realtor should add to the Minnesota real estate contract.

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Shakopee Utility Information

Electric Company

Shakopee Public Utilities 952-445-1988

www.ShakopeeUtilities.com

Gas Company

Centerpoint Energy 612-372-4727

www.CenterPointeEnergy.com

Water & Sewer

Shakopee Public Utilities 952-445-1988

www.ShakopeeUtilities.com

Garbage & Recycling

Dick’s/ Lakeville Sanitation 952-469-5161

www.DicksSanitation.com

Phone & Inte

Valleyfair Shakopee, MN

I have grown up going to Valleyfair and when I was young, we would get season passes and head out sometime multiple days a week. I just found out you can buy a season pass for $60, the same price we paid many years ago. Considering a day pass is $40, this is a great buy!  Their admission includes unlimited rides, water park and shows. 

In 2011 Valleyfair will be opening Planet Snoopy covering  3.5 acres and will feature over 20 Peanuts themed rides and attractions; including Snoopy Boutique and Planet Grill.
Valleyfair has a great user friendly website that answers all their frequently asked questions.

Valleyfair opened it’s door in 1976 and now is the largest amusement park in the upper Midwest eight roller coasters and over 75rides that span over 90 acres of land in Shakopee.

It’s funny when thinking of Shakopee real estate so many people say,”that’s where Valleyfair is”, I even got that comment in college. Shakopee has many entertainment options such as Canterbury Park, Murphy’s landing, Raceway Park, Mystic Lake Casino and many parks.

If you are thinking of moving to Shakopee and starting your home search make sure to talk to a local real estate agent .

Shakopee Foreclosure Homes

It seems so many homes I show now are Shakopee foreclosures that when you see a home with someone actually living there you are taken back. I showed a Shakopee foreclosure townhome today that was just listed and the bank had this place sparkling better than most Shakopee homes for sale. Shakopee bank owned homes are now taking it upon themselves to start painting, replacing carpet and make these homes ready for showings.

If you look at all Shakopee foreclosures and short sales there is currently a total of 137 homes for sale as of today. Total Shakopee homes for sale equals 293. Given those numbers, that represents a total of 46.8% of the total homes for sale in Shakopee to be Shakopee foreclosures or a short sale listing.

Breakdown those numbers further it appear more Shakopee townhomes are becoming Shakopee foreclsoures as 61.4% of all townhomes in Shakopee currently listed are Shakopee short sales or foreclosures. Only 35.5% of single family homes for sale in Shakopee are foreclosures or short sales.

Overall listing  inventory is down from that of last year, but I think you can expect listing inventory to rise being typically the market peaks in inventory in July and there will also be many Fannie Mae Homepath properties coming to the market over the next few months.

Parade of Homes in Shakopee

The Parade of homes in Shakopee is underway and that are many homes in Shakopee to choose from. This year ten builders have chosen to feature their homes in Shakopee in the parade. Contact your Shakopee Realtor for a showing, or if Pricing for homes featured in the Parade of Homes in Shakopee ranges from $209,900 -$555,000. The builders participating this year are:

Lennar

Lennar features many two story floor plans to choose from in the Valley Creek Crossing neighborhood. Their model is priced at $360,278 with other homes starting at $319,990.

GBI homes, Inc.

GBI features two model homes in the parade. A three level priced at $269,900 and a two story home priced at $365,900, both int he Valley Creek Crossing neighborhood.

Shamrock Builders, Inc

Shamrock offers one of the most affordable homes in Shakopee featured in the parade.  This multi level home has 2,118 sqft. and is priced at $232,900.

Key Land Homes

Key land homes has a  home in Shakopee near the high school in the Countryside neighborhood. The model is priced at $299,900 but others start as low as $195,000

Wensco, Inc.

With pricing starting at $190,000 an d their parade model home in Shakopee priced at $209,900 they are the least expensive new construction model in the Parade of Homes in Shakopee. This is a split entry home with just over 1,500 sqft.

Knoblach Builders, L.L.C.

Another home in the Countryside development of Shakopee. Knoblach Builders has a two story home in Shakopee priced at $319,900 with other homes in Shakopee starting at $244,900

Centex Homes

Centex homes features many models to choose from starting at $254,990. Their Parade of Homes model in Shakopee is currently priced at $361,764 with many upgrades. Located in Ridge View Estates accross the street from Eagle Creek elementary school in Shakopee, this development is a great location.

Mattamy Homes

Just East of the Centex development, Mattamy also has many model homes to choose from. Their Parade model home in Shakopee is priced at $339,900 with others priced from the $270’s.

Capstone Homes, Inc.

Capstone is in the Ridge Creek Bluff edition near the Centex neighborhood. Their model home is price comfortably at $314,900 and features almost 2,900 sqft on the upper two floors.

Hartman Homes, Inc.

An solid upper bracket home along the Shakopee and Savage border tucked in the Whispering Oaks development of Shakopee. Their model is priced at $555,000 and other homes start in the 300’s.

Rememeber there are also many great buys on exisiting homes for sale in Shakopee .  The average listing price of a two story home in Shakopee is  just over $288,000. Remember to compare the pros and cons of new construction if you are thinking of building to make sure you are choosing what is best for you and your family’s needs.

Shakopee New Construction Tips

If you are thinking of building one of the many homes in Shakopee on lots that are available you might consider weighing the positives and negatives of new construction homes in Shakopee.

Positives to New Construction in Shakopee

  • No one has ever lived in the home, clean slate
  • everything is new (roof, siding, mechanicasl, etc)
  • you have the entire history of the home
  • Many new neighbors and friends to meet
  • latest energy effient standards and code standards
  • new current design layouts
  • Taxes are not fully assessed yet

Negatives to New Construction in Shakopee

  • Window treatments needed
  • Landscaping needs to be finished
  • no mature trees typically
  • Might not have neighbors for a few years
  • Dust and messy neighborhood during construction

Shakopee new construction also tends to be more expensive overall. If you look at the current Minnesota MLS data there are 37 active homes in Shakopee with an average list price of $306,392 and an average of 2,331 sqft. Existing homes in Shakopee have an average sales price of only $261,297 for single family homes in which there are 125 homes in Shakopee currently on the market and those homes in Shakopee had an average of 2,434 sqft.

Looking at pending homes in Shakopee there  was even a lower average list price at$254,486 with 2,171 sqft for new construction, and an average sales price of $229,521 for the 32 existing homes in Shakopee with an average of 2,481 sqft.

Looking at the sold homesis hard to gage being many new construction Shakopee builders do not include their sold data in the Minnesota MLS. However taking the data from the Minnesota MLS we have, there were 86 new construction Shakopee homes sold with the last year with an average sales price of $259,297 and had an average of 2032 sqft. The 278 existing Shakopee homes in Shakopee that sold in 2010 averaged a sales price of $227,148 and had 2,333 sqft.

Finding PERFECT Shakopee Homes

If you are searching for the PERFECT Shakopee home I would be very picky. First off it is always best to find a good loan officer to get you preapproved before starting your Shakopee homes search. If you know where you are comfortable from a pricing standpoint your next step should be to contact a Shakopee Realtor to help with your home search. Typically in Minnesota the buyer agent, Shakopee Realtor, that would help you find a home is typically paid by the seller thus no cost to you. Many agents won’t make you sign a buyers contract until you are comfortable with their services.

Once you have both your Shakopee loan officer and Shakopee Realtor it is time to start your Shakopee home search. If you have narrowed your search to just Shakopee homes, you are so much closer that in you were to have multiple areas of interest. The hardest thing for client is find what area they want to be, after that the home search gets a little more simple. Shakopee is redrawing the school boundaries for 2011-12 so make sure you are within the Shakopee elementary school boundaries in which you prefer, and check where day cares boundaries may be also.

Some of the things I try to have clients find in the PERFECT Shakopee home pertains mostly to resale, here are some tips:

Shakopee Townhomes

  • End units generally sell well
  • One car garage homes are tougher to sell
  • townhomes with someone living above or below you can make it more difficult to sell
  • Try to find a home with a basement, large plus
  • Ideally find a townhome with a private master bathroom
  • 3 plus bedrooms always help with resale
  • If you are buying a 2 bedroom, try to also find one with a loft
  • proximity to public transit
  • If you assn has a pool that can help

Entry Level Shakopee Homes For Sale

  • If you can find a 3 car garage, do so
  • Master baths can separate your home from the competition
  • try to find 3 bedrooms on one level, great for families
  • Open floor plans
  • look at the updates. although your payment may be higher at least the 30k for windows, siding & roof won’t be an out of pocket expense.

Move Up Shakopee Homes For Sale

  • In my experience two story homes with 4 bedroom on one level sell better than those with only 3 up
  • many two stories will feature bonus rooms
  • In my opinion always find a 3 car garage, so many homes have been built now with three car garages
  • almost a must to have 1, if not 2 fireplaces
  • three season or four season porches are a plus
  • check mechanicals, windows and roof. these items could be getting towards to end of the life
  • think long term, would you prefer a rambler in 5 or 10 years? consider one now.
  • Main floor office space

Upper Bracket Shakopee Homes For Sale

  • Acreage can set your home apart
  • lake view, access or lake shore
  • custom builtins
  • most prefer walkout basements
  • extensive landscaping
  • outdoor living spaces (fire pits, outdoor fireplaces, pools)
  • Privacy, lot of trees

General Tips

  • most try to avoid backing to Highways and busy roads
  • power lines typically can turn buyers off
  • being close to apartment building can turn buyers off
  • being close to train tracks can stray future buyers

Shakopee Homes with Acreage

Shakopee homes with acreage can be hard to find and finding a perfect home on acreage can be even harder. Values of Shakopee homes with acreage have suffered just as much as any other Shakopee real estate, falling from an average sales price in 2007 of $519,188 to an average sales price of Shakopee homes with acreage to $378,362 in 2010.

Over the course of the last 4-5 years the Shakopee acerage market has remained somewaht stable in the number of active and sold listings in Shakopee hoovering between 20-25 homes sold per year over an acre.

2007 – 17 Shakopee homes on acreage sold with an average sales price of $519,188

2008 – 19 Shakopee homes on acreage sold with an average sales price of $432,019

2009 – 26 Shakopee homes on acreage sold with an average sales price of $396,823

2010 – 26 Shakopee homes on acreage sold with an average sales price of $378,462

The current Shakopee acreage market is looking better. There are currently 23 homes over 1 acre listed. 13 of those 23 are 2+ acres and only 4 are over 5 acres. The average list prices for those Shakopee homes on acreage is $445,527 hopefully showing a positive sign of increasing values. 6 homes on acreage in Shakopee are currently pending and waiting to close.

Shakopee Foreclosures

Digging through the Minnesota MLS this year may possibly be one of the largest year for Shakopee foreclosures to date. So far in 2011 there have been 28 foreclosure homes in Shakopee that have closed escrow.  36 Shakopee foreclosures are currently pending bring this years foreclosure total in Shakopee to 64 homes through only February. We are pacing over a home sold per day that is consider a Shakopee foreclosure! Now theoretically take that number and multiple by six, could that mean we are heading for 384 Shakopee foreclosures for the year?

Those Shakopee foreclosure numbers seem staggering being only 197 closed homes in Shakopee last year were foreclosures. We are heading for close to double those numbers and eclipsing the high of 331 set in 2009. Currently there are 54 homes in Shakopee that are active on the market and considered Shakopee foreclosures.

All of these numbers are only estimates being many Shakopee real estate agents often do not disclose the status of their Minnesota MLS listings or decipher if the home is a bank owned home, short sale or potential short sale. Why Shakopee real estate agent don’t disclose status can vary and it would be too time consuming to go through EVERY listing to get exact numbers

Although not perfect numbers you can see how the number of foreclosures in Shakopee have escalated since last year and how many buyers will have numerous opportunities this coming year.