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This is the BEST article I’ve read about the recent demise of some of this countries largest financial institutions.  It is so well researched and written that anything I may add would only detract.  So here it is, in it’s entirety.  Thanks and credit go to Jeff Corbett with Agent Genius!

September 16th, 2008

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Black Monday

Black Monday: The end of the financial world as we know it….

If you watch any of the financial TV shows one would think that we are on the verge of an epic economic implosion… Well, the world didn’t end, though you wouldn’t have known it by watching TV or reading the paper.  Pessimistic, drama laced hyperbole sells newspapers and drives up viewership ratings.  It also confuses people to what the hell is really going on.

Being that AgentGenius is a real estate professional centric community, the natural question is ‘What does this mean to the real estate and mortgage markets?‘

The Bazillion Dollar Question

Long term, that’s a tough question that can’t easily be answered. If I could, I would be a Bazillionaire, own many private islands and wouldn’t be writing this article.

Short-term, it probably means lower interest rates as investors shift their assets out of some huge equity brokerages and into cash and/or more stable bonds.  What are ‘more stable bonds’?  Ironically: Mortgage Backed Securities, especially since the Treasury backed Fannie Mae and Freddie Mac.

However, lower rates do not mean faster, looser underwriting standards and it will probably take longer to close a loan due to the uptick in mortgage applications.  With all the staff cuts in the industry, an uptick in business will bog down most mortgage lending operations. Patience is a virtue that is wisely practiced in today’s market.

Back In The Day

Mortgage qualification has moved to ‘back in the day’, where borrowers

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The latest results from the Case-Shiller Home price indices show that Denver is the TOP PERFORMING area of the 20 cities studied. The Denver Housing market showed a 1.5 percent gain, from May to June, to lead the way!

The Rocky Mountain News reported,

The Denver area showed a 1.5 percent gain in that period. Boston, with a 1.2 percent increase, was the only other metropolitan area to show an increase.

The average percentage change in that one-month period was a loss of 0.5 percent for all 20 cities, and a loss of 0.6 percent for 10 of them.

Denver and Boston have shown three consecutive months of positive returns.

To view the full RMN article, click here.

photo credit: TW Collins

Once you feel comfortable that you have a mortgage professional who can advise you, here are some secrets for shopping effectively.

First, just like anything else IF IT SEEMS TOO GOOD TO BE TRUE, IT PROBABLY IS. No one has a commodity on rates- interest rates all come from the same places, and if the rate sounds really unbelievable, ask a few more questions. Is there a prepayment penalty? Are there extra fees? What is the length of the lock-in agreement? If fees are discounted, is it built into a higher interest rate?

Second, YOU GET WHAT YOU PAY FOR. If you are looking for the cheapest deal out there, understand the risks, especially with the recent credit crunch you need a TRUE PROFESSIONAL on your side someone who is checking guidelines and is up to speed on the market changes. We have all heard the horror stories from friends and family about missed closing dates, or surprise changes at the last minute on interest rate or fees…usually due to working with discount or internet lenders who may have a serious lack of experience. Remember, the cheapest rate on the wrong strategy can cost you thousands more in the long run.

Third, MAKE CORRECT COMPARISONS. When looking at estimates, there is more to it than just the bottom line. You must compare apples to apples the Lender fees are the only costs that the Lender controls all other fees are third party costs. You may be familiar with the term “junk fees”. All Lenders have a fee to process your loan- simply the cost of doing business. Many Lenders have both a processing fee and a funding fee, typically these fees together do not exceed $1,200. If you see a number of other Lender fees listed I would ask your Mortgage Professional for more information.

A Lender is responsible for quoting the other fees associated with a mortgage loan such as title insurance, hazard insurance, appraisal, days of interest., ect.. Keep in mind since they are third party costs – they are often under-quoted up front by a lender to make their bottom line appear lower. Keep your eyes out for these discrepancies and be sure to ask questions about fees you do not understand.

Lately we have seen hidden discounts fees that are NOT included in the bottom line estimate. This hidden fee will appear in small print typed at the bottom of a good faith estimated “X” discount point to be charged ect… again- if it seems to good to be true it likely is.

Fourth, UNDERSTAND THAT INTEREST RATES AND CLOSING COSTS GO HAND IN HAND. A good way to view loans is either Cost, No Cost or Shared Cost– if you are looking for a no cost loan understand that this comes at the expense of a higher interest rate- there is no free lunch. It all depends on what your goals are.

For instance:

How long will you be in the property?

Are you close to retirement?

Is this your primary residence, 2^nd home or an investment property?

What’s more important to you right now cash on hand or a lower monthly payment?

Do you have any life changing events coming up a baby or kids leaving for college?

Is the seller paying any of your closing costs?

A professional advisor will be able to offer the best advice in terms of the balance between interest rate and closing costs that correctly fits your personal and financial goals.

Sample Analysis:

$250,000 Loan with 1% Origination Fee = $2,500 at 5.875% = $1,478.84 principal & interest payment

$250,000 Loan with 0% Origination Fee = $0 at 6.125% = $1,519.03 principal & interest payment

Difference of $40.19 per month divided by $2,500 = 62.20 months or 5.18 years to recoup my costs

Fifth, UNDERSTAND THAT INTEREST RATES CAN CHANGE DAILY, EVEN HOURLY. This means that if you are comparing Lender’s rates and fees – this is a moving target on an hourly basis. In order to have an accurate comparison – you must get these quotes within less than an hour of each other. Be sure the terms are the same- product and program. You also must know the length of the lock you are looking for, since longer rate locks typically have slightly higher rates.

As this is likely one of the largest financial purchases you will make- be smart, ask questions, and seek the advise of a professional advisor not just some one who will quote you the lowest rate out there.

New Wholesale deals coming early next week.  I’ve identified 5 that look great on paper.  I am going to look at them and shoot some pics over the weekend, and will present the ones that are actually worth buying Monday or Tuesday. 

I hope all 5 will be worthy of our presentation, but that’s why we screen them for you!

Check back next week, or better yet subscribe and be notified automatically!

Have a great weekend!

Well it depends on your motivation, you may not need an agent. 

If you’re looking for a better deal, you can negotiate the commission into your pocket in the form of a price reduction, right?  Well No, you can’t.  In Colorado, all major builders are members of the BRC (Builder Realty Council) and part of this agreement is that builders will market their properties to consumers at the same price, regardless of whether you are represented by an agent.  If you don’t have an agent, the money flows to their bottom line.  Remember, a builder will not sell a home to you for less than what they have sold homes to others in the neighborhood.  They would have a revolt on their hands.  All the other new homeowner’s would be placing signs in their yards and screaming about the builder screwing them!

Bottom line:  Whatever deal you can get on your own, the same deal can be had while being represented.  In fact, a knowlegeable agent can probably get you a better deal, since they will have a better idea of how the builder is doing in the market place at any given time.

The builder has an on-site sales person to take care of me.  Yes, there is an on-site person, but their job is not to take care of you, it is to get you to buy a home, at the highest possible price, with as many options as possible.  The on-site person works directly for the builder, and is responsible to the builder, NOT YOU!

Bottom line: Having someone on your side is a huge plus!  Your agent can advise you to picking a lot, or not picking one that the builder needs to move because no one else wants it.  They can also help with options and upgrades.  Many of these options will cost a ton of $$$$ and add very little value to the home.  Wouldn’t it be nice to make an informed decision when choosing your upgrades?

One thing to remember.  On your first visit to a community, you need to have your broker/agent present, or at a minimum hand their card to the on-site person.  Without this, the Builder may not honor your decision to have representation (they actually will allow you to represented, they just won’t pay for it.)  If you are thinking about buying a new build, contact us first.  We have first hand knowledge of all the local builders and will be happy to discuss the pros and cons of each. 

So, it doesn’t cost anything to be represented, you will get the same deal, if not better, and you will get an objective opinion about lot location, upgrades, etc….I retract my opening statement.  There is NEVER a reason to buy direct from the builder without an agent on your side.

We can provide you information on any local builder, simply contact us!

Just when I think the Media is too out of touch to save, they surprise me.

A Time Magazine article by Dan Kadlec, in the Right on Your Money section tells us that the sky is not falling!  Wow, how about that, a guy who gets it. 

His premise is when prices are falling few people have the discipline to use that money to buy other assets, and those who pull the trigger now, will benefit in the long run.  He cites a great example of a very likely scenario;

“Consider a typical home that sells for $218,900. You put down 20% and get a 30-year fixed-rate mortgage at today’s rate of 5.5%. Monthly principal and interest come to $994.31. Let’s say that 12 months from now the same house goes for 10% less, or $197,010. But by then the recession is history and the Fed is jacking up rates to stem inflation. If mortgage costs rise a point, to 6.5%, your monthly payment would be $994.94 and you’d have saved nothing. Meanwhile, home prices might steady and sellers might become less willing to negotiate. And you have spent a year living someplace you’d rather not be!”

This articulates the point we’ve been driving here, THIS IS A GREAT TIME TO BUY!  Check out the full article here.

To further the argument,  on March 6th, the Rocky Mountain News published an article by John Rebchook regarding the state of the local market.  Home sales are up 4% for the month of February and 4.9% year to date.  Check out the full article here.

The bottom line is:  What are you waiting for?  This is the perfect storm for buying right! 

Denver has less than a 1% risk of declining values.  This from third quarter data released from the Office of Federal Housing Oversight.  Only twelve of the largest 50 metropolitan markets have such a low risk. 

The areas of greatest risk tended to be those with large price increases over the past 3 years. 

Recently the Rocky Mountain News also reported the Denver area is stronger than many others.

Contact the Get Home Denver Team for more information!

So where is the Denver real estate market headed?  I’ve attached an informative video featuring Steve Murray of Real Trends.  Real Trends is a research and market trending analyzer.  They have been providing research and data, specifically for the residential real estate industry for over 20 years!

In this short video, Steve comments about where he see’s the market, both local and nationally, is headed.

For more information, or to put the video in perspective, please contact the Get Home Denver Team!

SOLD!

22214 E. Glasgow Place

Saddle Rock

15% Discount!

• Price $475,000
• 5 Bedroom
• 4 Bath
• 3312 Sq. Ft.
• Bank Owned

Click here to go to the Full Disclosure Information on this property. Including, Investment Analysis, and Market Analysis!

There are basically 3 types of people buying these properties currently.

1. Those looking to take advantage of this market and invest in real estate.

a. We have had people buy individually, and form small groups to buy through an LLC. (if you want info on how to do this, please let us know. We are happy to give you any info you’ll need to get started.)

2. Those looking to take advantage of this market and Move into a new home.

a. One caveat, if this is the category you fall in, you must be willing to keep your current home as an investment. These deals can NOT be contingent upon the sale of a property.

3. First Time Homebuyer’s

a. This is the best time in over 20 years to buy your first home. We have special mortgage arrangements such that the first time home owner, can purchase with little or no money down!

SOLD!

6461 S. Zeno Ct.

The Farm at Arapahoe County

28.5% Discount!

• Price $350,000
• 5 Bedroom
• 4 Bath
• 3141 Sq. Ft.
• Bank Owned

Click here to go to the Full Disclosure Information on this property. Including, Investment Analysis, and Market Analysis!

There are basically 3 types of people buying these properties currently.

1. Those looking to take advantage of this market and invest in real estate.

a. We have had people buy individually, and form small groups to buy through an LLC. (if you want info on how to do this, please let us know. We are happy to give you any info you’ll need to get started.)

2. Those looking to take advantage of this market and Move into a new home.

a. One caveat, if this is the category you fall in, you must be willing to keep your current home as an investment. These deals can NOT be contingent upon the sale of a property.

3. First Time Homebuyer’s

a. This is the best time in over 20 years to buy your first home. We have special mortgage arrangements such that the first time home owner, can purchase with little or no money down!