Investing in Real Estate 3 - Rental Condo or Rental Home This blog will discuss a type of real estate investment, rental condos or rental homes, in the Lone Tree area in Denver.   What this investment is:  Purchase of a residential property to be rented out to tenants, usually on a 6-12 month lease term.  This is how most new landlords get started.  You can hire out all of the property management functions, but in many cases you will do many of them on your own.  There are smaller down payment requirements than for larger rental buildings.  The purchase process and financing process is very similar to what you experienced buying the home you live in now.  It's a great way for beginners to get started.   Equity needed:  Currently 20% - 25% Downpayment.  In some cases you might be able to... 12/29/2008

Investing in Real Estate 2 - Assignments This blog will discuss a type of real estate investment, assignments, in the Lone Tree area in Denver.   What this investment is:  An investor who is interested in Assignments gets a property under contract for an attractive price then assigns the contract to another buyer, usually another investor.  The first investor will be paid a fee for the work.  If you don't have much equity to work with, and/or if your credit power is limited, assignments can be a way to get started in real estate investing.  You will need to have a strong "sales" personality to succeed at it, though.    Equity needed:  None, just earnest money.   Importance of credit:  Not important, since you are not purchasing the property yourself.   Importance of experience with cont... 12/29/2008

Take a look at the first page, for AUN (Aurora North).  Note these positive market trends this year:-          number of active listings steadily declining-          average list price pretty stable (finally!)-          U/C up dramatically-          Number of sales / month up (partially seasonality)-          DOM dropping-          Stability in average sold prices and sold price as % of list-          Sold price as % original price UP a lot - banks are getting better at pricing-          Number of expired listings down Every indicator is improving this year in AUN.  You will see the same trends in DSW (southwest Denver  County), but not as marked an improvement as AUN. By contrast look at DSE (southeast Denver County).  -          listings are up (they should be - seasonality)-         ... 12/29/2008

Colorado Mortgage Broker Licensing In response to the troubled national real estate market and Colorado's high volume of home foreclosures, efforts have increased to make higher caliber professionals involved in real estate. Licensing, rules and regulations have become more stringent for agents, appraisers, title companies and mortgage brokers.  In regards to mortgage brokers, the below items are mandatory.  No longer can someone open up the Yellow Pages, claim to be a mortgage broker and then be compensated for placing a loan --- what a novel concept.  Before committing to a mortgage broker, please make sure that they are licensed in Colorado by searching for them on the following link:  http://eservices.psiexams.com/crec/search.jsp LicensingAll mortgage brokers conducting business in ... 12/29/2008

Lone Tree Homes and Real Estate - Heritage Estates Nov 08 No homes sold in Heritage Estates Luxury Homes community in November and no homes are currently under contract. Yet there are 12 homes for sale in Heritage Estates. 11 out of the 12 homes have been on the market for over 100 days. Two homes has sold in Heritage Estates in the last six months. Only 5 homes have sold within the last year. No new listings came on the market in November. The price range of the available homes varies from $999,999 to $3,490,000. The price per square foot ranges from $256/sf to $538/sf. The days on the market range from 61 days to 684 days (total days on market). There are approximately 160 Luxury Homes in the Heritage Estates gated community. All homes are residential homes. The community also feature... 12/13/2008

Park Meadows Mall Holiday Shopping HoursThere is still time to shop for the holidays! Whether you have already done most of your holiday shopping (that is excellent!) or just getting started, Park Meadows Mall has extended shopping hours for you. Expect to see many shopper scurrying around at the mall, as it is a tremendously popular shopping mecca.Park Meadows Mall has a plethora of shops and stores so you should be able to satisfy even the pickiest gift requests. They also have a great food court and areas to sit down and take a breather - this is no time to stress out. Have fun and enjoy your holiday shopping at the Park Meadows Mall in Lone Tree.Park Meadows Mall Blog PostPark Meadows Mall WebsitePark Meadows Mall8401 Park Meadows Center Dr.Lone Tree, CO 80124h a p p y h o l i d a y... 12/13/2008

Lone Tree Homes and Real Estate - Heritage Hills Nov 08 In November two homes sold in Heritage Hills in Lone Tree. Two homes are currently under contract. One of the homes sold was a cluster/patio home in the Enclave of Heritage Hills The winter months are typically slower in terms of sales  and new listings coming on the market (specifically November and December). November 2008 #1 #2 Average Orig. Listing Price $518,500 $944,900 $731,700 Net Sold Price $514,785 $875,000 $694,893 % of List Price 99.3% 92.6% 96% Price per sqft (psf) $283/sf $263/sf $273/sf Days on Market (DOM) 20 178 99 DOM = Days on Market ~ Residential Homes only Currently there are 37 homes for sale in Heritage Hills. It is quite rare to find bank owned homes in Heritage Hills and the few that have been available hav... 12/13/2008

Loan Considerations for Buy and Hold InvestorsAs far as investment loans, little or no money down loans are impossible.  However, lenders do permit the use of Home Equity Lines of Credit or second mortgages from other properties owned by the borrower as a source of down payment.  Or, self-employed borrowers are using funds from business lines of credit to fund down payments or renovations (please note: there are asset seasoning guidelines for doing so and the debt incurred by accessing other credit lines must be accounted for against the borrower’s debt-to-income ratio). Thus, we have clients leveraging themselves with other homes they own in order to get in with little or nothing down.  There are exceptions, but practically every lender requires Full Income Documentation on any investm... 12/12/2008

Loan Considerations for Fix & Flip / Short-Term InvestorsSecuring conventional financing on a fix & flip or short-term loan is not recommended.  Most conventional lenders sell off their mortgages to investors on the secondary market.  If the loan is paid off early (before six payments are made), the investor has not recovered their initial investment.  The investor will attempt to recover their loss from the lender, who will ultimately come after the loan originator.  The loan originator would then be obligated to pay back any premium paid out by the lender.  If such activity becomes habitual with the loan officer, the lender can cease doing business with them and their firm.Furthermore, conventional loans require conventional appraisals.  The lender will require that the home is a) hab... 12/12/2008

Loan Considerations for Jumbo MortgagesFor the Greater Metro Denver area, any loan amount greater than $417,000 is considered a jumbo loan.  Fannie Mae and Freddie Mac assign different thresholds for various regions across the country.  For instance, $417,000 is not considered a jumbo loan in a high cost city like San Francisco, yet there will still be higher rates for going above $417K.  Due to the size of jumbo loans, they are considered greater risk for lenders, resulting in higher rates.  Rates have fluctuated greatly over the past few years on jumbos.  As of today, a 30 year fixed could range from 7% - 8%; a full point higher than the prime rate below a loan amount of $417,000.  Five year ARMs are popular on jumbo loans, as they typically price out a half point lower than fixed pro... 12/12/2008

Loan Considerations for Loan Amounts Between $200K - $417KWith all the doom and gloom publications that are mostly exaggerated, many potential borrowers believe that home mortgage lending options have dried up.  While underwriters and investors are scrutinizing files more closely, attractive rates and terms still exist for owner occupied purchasers seeking a conforming loan limit (under $417,000).  FHA and VA can still lend up to 100% LTV and conventional permits up to 97% LTV.  There are certain guidelines to meet when going to these high LTVs, but they are not impossible to surmount.Every home buyer should first ask themselves what payment they feel comfortable in committing to on a monthly basis.  Too many buyers over-extended themselves in recent years on homes they simply could not... 12/12/2008

FHA First-Time Buyer Tax CreditIn an effort to boost the sagging real estate market and overall economy, first-time home buyers are being offered a limited time tax credit when purchasing a primary residence.  The highlights of the tax credit are:•    The tax credit is available for first-time home buyers only. •    The maximum credit amount is $7,500. •    The credit is available for homes purchased on or after April 9, 2008 and beforeJuly 1, 2009. •    Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit. •    The tax credit works like an interest-free loan and must be repaid over a 15-year period. Due to the volume of questions that can be generated with the above, I would recommend clicking on the below link for ... 12/12/2008

Loan considerations for a first time buyerLending guidelines are changing on a daily basis for every type of loan: conventional, FHA, VA & commercial.  Nevertheless, there are still very attractive first-time home buyer options available.   If you are or will be a first-time buyer, it is critical to speak with a loan officer before looking at homes.  It is a crushing feeling to view a home, picture making it your own and then find out that you cannot qualify to purchase it.  A loan officer will pull credit, analyze debt-to-income ratios, review assets and income and determine what you can afford.  Presuming a pre-qualification occurs, the loan officer will then be able to provide an array of loan options.  Presently, FHA loans are the predominant loan for first-time home buyers as they ... 12/12/2008

How can you improve your FICO score?To improve one’s credit score, it’s critical to understand the factors influencing a credit score.  The factors that contribute to a FICO score and the weighted percentages for each are as follows:•    35% — timeliness of payments •    30% — the ratio of used debt to allowable debt for consumer credit •    15% — length of credit history (the more credit history and showing proof of consistent timely payment, the better the score) •    10% — types of credit used  •    10% — recent credit inquiries and recent new credit The greatest driver behind a score is making timely payments on all accounts.  Scores will be adversely affected for any payment that is 30 days late or more.  Being late on a mortgage payment will not only crush one’s score, but will al... 12/12/2008

How does your FICO score impact your interest rate on your loan?Low credit scores are deemed greater risk for lenders since the likelihood for defaulting on the loan increases.  As such, lower FICO scores translate into higher interest rates.  Mortgage lenders will group credit scores in a range, usually in 20 or 40 point increments, with interest rates progressively getting better for each higher interval.  For example, a borrower with a middle credit score between 660 – 680 will have a higher interest rate (presuming all other variables being equal) compared to one with a 680 – 700 score.  Typically, when a borrower has a 750+ credit, they will be able to secure the best possible rate, assuming their income, assets, collateral and down payment are acceptable.For qualifying, underwrite... 12/12/2008

What is a FICO score?FICO stands for Fair Isaac Corporation, a company that created the most used credit scoring model in the United States.  An individual’s credit score is calculated through a statistical algorithm and is used as a factor in determining the likelihood of a borrower defaulting on a loan.  FICO scores are generally used for obtaining mortgages, car loans or consumer credit.  The scores are provided from the three major credit reporting agencies: Equifax, Experian and Transunion.  Typically, there is a variance amongst the scores since each agency has a slightly different scoring formula.  FICO scores range from 300 – 850, with higher scores being considered less risky.  For mortgage lending purposes, any score over a 680 is considered good and above a 750 is considered ... 12/12/2008

There are some signs of strengthening in our Denver market.  The metro area's inventory of available resale housing decreased 20% to 23,120 units in October from October 2007.  Some of this reduced inventory is attributed to homeowners taking their properties off the market in frustration because their property is not selling, but lower inventory implies a strengthening market.  Remember, the Denver area had housing inventory of 31,989 units in July 2006. Home sales rose 14% to 4,265 in September compared to the same month last year.  This is due almost entirely to the lower-end of the market (under $180K) selling like hotcakes. October's median selling price for single-family homes decreased 12% to $206,000 from the same month of '07, and was down 4.7% from September's median of $216,1... 12/12/2008

Loan Considerations for Buy and Hold InvestorsAs far as investment loans, little or no money down loans are impossible.  However, lenders do permit the use of Home Equity Lines of Credit or second mortgages from other properties owned by the borrower as a source of down payment.  Or, self-employed borrowers are using funds from business lines of credit to fund down payments or renovations (please note: there are asset seasoning guidelines for doing so and the debt incurred by accessing other credit lines must be accounted for against the borrower’s debt-to-income ratio). Thus, we have clients leveraging themselves with other homes they own in order to get in with little or nothing down.  There are exceptions, but practically every lender requires Full Income Documentation on any investm... 12/12/2008

Loan Considerations for Fix & Flip / Short-Term InvestorsSecuring conventional financing on a fix & flip or short-term loan is not recommended.  Most conventional lenders sell off their mortgages to investors on the secondary market.  If the loan is paid off early (before six payments are made), the investor has not recovered their initial investment.  The investor will attempt to recover their loss from the lender, who will ultimately come after the loan originator.  The loan originator would then be obligated to pay back any premium paid out by the lender.  If such activity becomes habitual with the loan officer, the lender can cease doing business with them and their firm.Furthermore, conventional loans require conventional appraisals.  The lender will require that the home is a) hab... 12/12/2008

Loan Considerations for Jumbo MortgagesFor the Greater Metro Denver area, any loan amount greater than $417,000 is considered a jumbo loan.  Fannie Mae and Freddie Mac assign different thresholds for various regions across the country.  For instance, $417,000 is not considered a jumbo loan in a high cost city like San Francisco, yet there will still be higher rates for going above $417K.  Due to the size of jumbo loans, they are considered greater risk for lenders, resulting in higher rates.  Rates have fluctuated greatly over the past few years on jumbos.  As of today, a 30 year fixed could range from 7% - 8%; a full point higher than the prime rate below a loan amount of $417,000.  Five year ARMs are popular on jumbo loans, as they typically price out a half point lower than fixed pro... 12/12/2008