Mortgage & Finance

All signs point to the Denver Metro real estate market improving ahead of the national market.  There are several indicators that are very positive for the Denver Metro housing market and it might not be long before real estate in Denver is a seller’s market.  Inventory is drastically down, unemployment is down, homes under contract are up, and we are now seeing home prices increase.

The Denver Metro housing market has seen inventory levels drop for the last several months.  According to MLS the inventory levels are down 42% from a year ago and February’s inventory of unsold homes was only 10,086!! With 2,495 homes sold last month in the Denver Metro there is only 4 a month supply.  Metrolist also reported that 4,150 Denver Metro homes went

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                 Another Indication


The Housing Affordability Index was developed over thirty years ago to help consumers determine when it is a good time to buy a home. It's considered advantageous to the buyer when the index is over 100 because a median income family can qualify for a median price home.

Recent figures released by the National Association of REALTORS' economic department show that the 2011 index of 184.5 is the highest annual average since it has been calculated. The most recent month released, December 2011, was 194.9. The index is also broken down into four regions of the country.
The two major components that contribute to the index are home prices and mortgage interest rates which are lower than they've been in the

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Try this Financial Aptitude Test and see how you score!!

Financial Aptitude Test - Questions - True or False No Cheating by Looking at the answers! 

1. It is best to pay only the minimum payment due on a credit card bill each month rather than pay your bill in full.

2. Your credit report (your history of paying debts and other bills) can be a factor when you apply for a loan or a credit card, but will not affect your ability to get a job, get an apartment, or how much your car insurance will cost.

3. A debit card is a good alternative to a credit card for a young person because the money to pay for purchases is automatically deducted from a bank account, thus avoiding interest charges or debt problems.

4. There is no good reason to have an

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FHA will increase its annual mortgage insurance premium (MIP) by 0.10 percent for loans under $625,500 and by 0.35 percent for loans above that amount.  Upfront premiums (UFMIP) will also increase by 0.75 percent

The UFMIP will be increased from 1 percent to 1.75 percent of the base loan amount.  This increase applies regardless of the amortization term or LTV ratio.  FHA will continue to permit financing of this charge into the mortgage.  This change is effective for case numbers assigned on or after April 1, 2012.
Solutions & Options

Mortgage Options for Colorado Home Buyers & Owners

USDA Mortgage Loans in Colorado is a great loan program, however the property must be located in an eligible area.  USDA offers 100% financing with a 2% upfront

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Colorado FHA mortgage insurance will be increasing again shortly.  Obama’s new budget raises the annual mortgage insurance for all FHA borrowers by 10 basis points to 1.25%.  The increase in FHA mortgage insurance will increase Colorado mortgage payment by $200/year on a $200,000 mortgage.  The increase will only affect home owner’s refinancing to a new FHA mortgage or home buyer’s obtaining a new FHA mortgage. 

While the increase is not significant, FHA annual mortgage insurance in Colorado has already increased 60 basis points (70 basis points once these new mortgage insurance rates are in place) in the last two years.  The rise of FHA mortgage insurance has increased costs for Colorado borrower’s by $116/month or $1,400/year for a

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Great Investment
If you invest in a savings account, you'll make less than 1% and will have to pay income tax on the earnings

. On the other hand, contribute something extra to your house payment on a regular basis and you'll essentially, earn at the mortgage interest rate which is certain to be more than you're earning in the bank.

Making additional principal contributions on your mortgage will save interest, retire debt and build equity. An extra $100 a month in the example shown will save thousands in interest and short the term of the mortgage as well.

Reducing your cost of housing is another way to improve the investment in your home. Becoming debt-free is a worthy goal that is achieved with discipline and good decisions. Suggestions like…

Regardless of what a lender quotes on mortgage rates, the actual rate paid by a borrower is based on a number of variables.

Lenders determine whether to loan money and at what rate based on the risk involved with the transaction.

Factors that increase the risk that the loan will be repaid will proportionately increase the interest rate charged to the borrower. If the risk becomes too high, the loan will not be approved.

• Loan amounts - conventional loans for more than the conforming limits set by Fannie Mae are considered jumbo loans and generally have a higher interest rate.
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• FICO score - the lowest interest rate is reserved for the highest credit scores; the lower the score, the higher the rate borrower will pay.
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• Occupancy -

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Many loan officers in Colorado and throughout the country continue to make mistakes when helping their clients buy homes in Colorado.  While many the mistakes may only cause delays in the mortgage loan approval process and closing, some mistakes can cause a loan to be denied.  In fact, last year the National Association of Realtors showed the 59% of agents reported a failed transaction because of financing. 

When a transaction fails because of financing it usually costs the potential home owner $500-$900, money spent on property inspections and appraisals.   Understanding the most common mistakes that loan officers make can save you valuable time, money, and possibly your new home.

 

1. Pre-qualify vs. Pre-Approved:  Even though every mortgage

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While the main stream media continues to report mortgage loans are near impossible to obtain without a down payment of 20% or more, there are plenty of low/no down payment mortgage programs available in Colorado.  Here is a list of our Top 5 low/no down payment mortgage programs in Colorado.

 

• USDA Rural Housing Mortgage in Colorado:  USDA’s mortgage program offers home buyers the ability to purchase a home in Colorado with no down payment.   USDA mortgage loans are limited to designated “rural” areas of Colorado and have limited income restrictions.  USDA does charge an upfront guarantee fee of 2%, which can be financed in to the mortgage loan, and a 0.3% annual fee.   If are purchasing a home in Colorado that is eligible for a USDA

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Whether you rent or buy, you pay for the house you occupy. You must live somewhere and there's a price to pay for it. A simple analysis will show you whether it's cheaper to rent or buy.

 

Some people don't have any choice but to rent because they don't have the means to qualify for a loan. But for those who do have a down payment and good credit, they actually have a choice of whether to rent or buy. In some cases, owning will cost significantly less than renting.

Rentals are in high demand in many markets and rents are going up. People who have experienced foreclosures and short sales have increased demand. The first comparison a discerning buyer needs to make is whether the house payment is lower than what they'd have to pay in rent.

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