Living Littleton

    Home loan rates for buyers in Littleton or Denver continue to drop.  FHA rates are about 4.25%, depending on the day you ask.  This is quite a surprise from what the experts were all predicting back at the first of the year.  If you remember, they were saying rates would start to rise in the second quarter because the Fed was going to quit buying home loans.  Most were saying rates could rise 3/4 to 1 % by the end of the year.  That would have us in the high 5’s, but we’re no where near that at the present time.  The Fed did quit buying home loans, however, there has been so much money pouring into Treasuries instead of stocks, that the price of Treasuries has been bid up.  They run counter to interest rates, so when the price of the bond goes up, the interest rate goes down.

    Today’s low rates, coupled with the supply of homes at bargain prices has made this a perfect time to buy a home in Littleton.  If you weren’t able to purchase by the end of April, to take advantage of the Federal Tax Credit, you aren’t left out in the cold.  The low rates will give you a return over what someone had to pay 5 months ago for their home loan, that will make up for the tax credit, over time.  

     Even with this perfect combination of rates and supply, home sales aren’t going through the roof.  I suspect that many wanna be buyers just don’t have the money.  If that’s your case, or you know of someone who’s faced with that issue, you may want to look at the attached loan comparison chart for a $200,000 home purchase, at the end of this post.  It’s the only Zero Down home loan available, outside of VA.  It’s a 30 year fixed rate loan that is always below market and doesn’t require any money down.  In addition to that, there are no closing cost, just pre-paids.  I’ve made reference to this loan in the past, however, I’ve never broke it out so people could see the benefits, when compared to FHA. . The first column is for an FHA loan, where the seller paid 3% towards paying buyer’s closing cost.  The second column is where the seller pays 3% to buy the rate down an additional .75%, to 3.25%.  Since there aren’t any closing cost, the buyer doesn’t need to have that money apply to his cost.  The third column is were the buyer elects to discount the price of the home by 3% and just go with the market rate on the Zero Down loan, which is 4%.

   If this is something you’re interested in, give me a call ASAP.  It takes a little longer to process these loans, as you have to attend a workshop, first, and they’re only held once a month.  I only make this loan available to my clients, so please don’t contact me if you have a relationship with another Realtor.

                                                                                    Loan Comparison

                                                                          Purchase Price $200,000

In their continuing quest to cut their losses by cracking down on sloppy underwriting for loans, Fannie Mae has instituted a new policy of ordering a second credit screening right before closing.  This last minute check will be to determine if the borrower has obtained, or even shopped for, additional credit.  It’s not unusual for Littleton and Denver new homeowners to shop for new appliances, new home furnishings, autos, new credit card, etc, however, opening these new lines  has the potential to stop the closing until the lender can do a full research and review on the borrower’s credit. 
Jerry Becker
jbeckerhomes@comcast.net

If you’ve actually taking out a new loan it may be large enough to put you over the top on your qualifying ratios.  This could kill the purchase.  Avoid the temptation to apply for a new credit when you go shopping for those home improvement items until after the home closes.  It’s OK to look, just make sure you don’t apply for credit so you’ll be ready to go when the homes closes.  Your lender can give you more information on this.

   As I mentioned in an earlier post, weakness in the Euro has caused an inflow of dollars into the bond market, resulting in some of the lowest home loan rates, ever.  Currently, Littleton lenders are quoting rates in the high 4’s for 30 year fixed rate loans.  In spite of these low rates, the number of purchase loans being applied for, is at a 13 year low.  I think much of this is caused by the market taking a breather after the expiration of the Federal Tax Credit.            
    As nice as these low rates are, no one can say how long they will last.  If our economy starts to pick up, as the talking heads all predict, we could see money leaving bonds to buy stocks.  When this happens, expect to see rates rise.
Jerry Becker
jbeckerhomes@comcast.net

Back around the first of the year, Littleton mortgage experts predicted a rise in home loan rates after the end of the first quarter.  This was all predicated on the fact that the Federal Reserve was going to quit buying mortgage securities.  The Fed had been buying billions in mortgages to inject liquidity into the loan market to help stimulate the housing market with the hope of getting many of the sliding markets to stabilize.

Well, the Fed did quit buying and rates did start to move up about a quarter point or so, but the good news is that rates have softened.  In fact, they’ve softened so much that they are as low as they have been this year, so you could say rates have gone in the wrong direction.  This all came about because of the weakness in the Euro due to the debt crisis and bail out for Greece.  Investors have started to worry about the value of the Euro so they have switched to buying dollars.  This influx of money, has caused our rates to stay low for the time being.  More money chasing our bonds which cause the price to get bid up.  With bonds, when prices go up, interest rates go down.

If you felt squeezed out of the home buying market because rates went beyond where you felt comfortable, this present situation may give you another chance.  No one knows how long this will last, but it change and go the opposite direction in a short period of time, so take advantage of it now, if you can.

Jerry Becker
jbeckerhomes@comcast.net

     Everyone knows the real estate market isn’t as hot as it was five years ago, and everyone also knows that the types of home loans available are a fraction of what they once were.  You can imagine my elation, when I stumbled onto a great loan two years ago, that nobody knew anything about.  It was unheard of because they didn’t advertise and rely solely on word of mouth.  I thought that with this loan, I would have people lined up to buy a home, but was I ever surprised.  I’ve mailed out over 1,000 post cards, advertised in a publication that went out to 20,000 homes in the Littleton area, and placed numerous notices on Craig’s List, only to be amazed at how jaded we’ve become to print media.
      I guess I shouldn’t have been that surprised as I find myself tossing many things from my mail box into the “circular file”.  It’s probably also the fact so many lenders have shouted from the rooftops that they had the greatest loan since the invention of the wheel, only to have the public get sucked into some type of loan they wished they never signed up for.  I read once that as a society, we get hit with about 10,000 messages a day.  I think the number was actually higher than that, but since I don’t have the quote in front of me, I’m going to be conservative.  When one takes all that into account, one shouldn’t be that surprised at the perceived lack of interest.
   Oh, yeah, about that Best Loan in Littleton, here it goes with some of the highligts;
30 Year Fixed Rate                                                                       
No Down Payment Required
No Closing Cost; Just Pre-Paids                                   
No Private Mortgage Insurance
Always Below the Market Rate
Can Have the Seller Buy the Rate Down
   So what do you think?  Should a loan like that get people’s attention?  I always thought so.
Oh, by the way, today’s rate is 4.75% fixed and I can get most sellers to buy the rate down to 4% for 30 years. 
www.YesYouCanHomeLoan.com
Jerry Becker
jbeckerhomes@comcast.net

It was all over the news outlets how the latest reports showed an increase for year over year home prices in Denver and Littleton.  Of course, the report didn’t mention Littleton by name, however, it was included as being part of the overall Denver Metro market. 

According to the Standard & Poors/Case-Shiller home-price index, the Denver area prices increased by 2.9%  from January 1, 2009 when compared to January 1, 2010.   There were five major markets that did even better, and they were; Washington D. C, LA, Dallas, San Diego, and San Francisco at the top. 

What analysts read from these numbers, is that the market has stabilized.  No one seemed to be predicting a soon return to higher gains on a monthly basis as we had experienced in the past good times.  One thing I want to make clear to the reader is, these gains are based on averages of the cost of homes sold.  It doesn’t mean that every home went up in value 2.9%, but the “basket value” of all the home sales did rise.  Over the last several years, the low end of our market had been extremely hot with a high number of investors purchasing homes that they could spruce up and then rent out with a positive cash flow.  While this was happening, the higher price homes sat on the market for extremely long periods of time.  This heavy weighting to the low end helped to bring our averages down over the last couple of years.  The good news was that home values didn’t fall by the amounts of decline mentioned in the media.

Yes, our homes did loose value over the last half dozen years, but not to the degree some people think.  I still hear of people that are sitting on the fence waiting for values to fall further.  Baring any economic disasters, I think these people may be disappointed.  The question remains, ‘what will interest rates do and how will this affect the recovery?’  Great question and I wished I knew the answer.  The Federal Reserve has indicated they will stop buying mortgages which should have the result of pushing home loan rates higher.  I’ve heard experts predict they could go up from 30 to 150 basis points. 

Time will tell, but one thing we have in our favor, is that Colorado/Denver is still considered a great place to live and conduct business.  This quality of life has and still is attracting people and businesses to our area.

Jerry Becker
jbeckerhomes@comcast.net

Even though lending has supposedly gotten better, lately, it’s still not easy.  For young buyers, a good source of a home loan may be mom and dad.  With the fall in interest rates, these loans aren’t as common as they once were, however, may are still being done.  Our youngest son and his wife have borrowed money from his wife’s mother for their first two home purchases.  Yes, interest rates many be down but returns on investment vehicles are down, too, and that’s why these types of loans are still popular choices.

     There are companies, that for a fee, will set up the loan, create the promissory note, record it, do the payment processing, and annual tax statements.  They will also handle collections on delinquent accounts.  If your child defaults, and the percentages are very low, by having all the documentation done, you can also qualify for a tax loss under IRS rules.  

      I’m not going to go into all the pluses and minuses of this program, here, but I did want you to consider this as an option.  Do an on line search for “intrafamily loans”, to get additional information and companies that provide these services.

If you’re a low income resident of the City of Littleton and have a home that needs repairs but no money to do it, the Littleton Housing Authority is the place you need to go.  They have a rehab program that provides no-interest loans to low income individuals and families, so they can up-grade their homes for reasons of safety or just plain aesthetics.  The Rehab Program will provide loans up to $24,999, that are funded through Arapahoe County.  Payments on these loans can be  deferred until the home is sold or is no longer the primary residence.  If the home is structurally sound, money for improvements can go for things like a new roof, replacing an old inefficient furnace or windows, siding repair, replacing doors, or new carpet, just to name a few.  Littleton Housing acts as the bank and the general contractor so residents don’t have to take on the worry of lining up qualified fairly priced sub-contractors to do the work.  The whole goal of this program is to improve the City of Littleton’s housing stock, many of which are starting to show their age.  If you think this is a program you may qualify for, contact Kimberly Kingston at the Littleton Housing Authority by calling 303-991-5301.

    Presently, the main funding mechanism in town for buyers with limited funds has been FHA.  With the decline of the lending market, FHA has been hotter than ever.  Recently, there have been some changes that willaffect you, as a borrower.  First of all, the loan limit has been lowered to $368,000 for a single family home in the Denver Metro area.  Also, the amount required for a down payment has been increased from 3% ot 3.5%, although FHA will still allow this to be a gift from family members.  FHA now charges an up-front Mortgage insurance premium of 1.75%, which can still be added into the loan.  If you have questions about FHA financing, call me and I’ll put you in touch with several reputable lenders.

     Contrary to what you’ve been hearing, it’s still possible to buy a home with nothing down.  These are thirty year fixed rate loans with no Private Mortgage Insurance (PMI), and they are at market rate or below.  These aren’t only for first time buyers, either.  I’m one of the few Realtors in Denver that know about this program.  It’s not brokered through other mortgage brokers, so the odds are you lender hasn’t heard about it.  If you want to find out more about these loans go to www.toogoodtobetrueloans.com, then call me so you can take advantage of some of the great bargains out there.