Tag Archives: Mortgage

Denver Mortgage Loan Limits for FHA

As government tries to grapple with the economic crises the FHA loan limits have changes 3 times in recent months.  Once they were decreased and twice they were increased.  At the present time the FHA Mortgage Limits in Denver are at $406,250 and the new 1-family limit for Boulder County is $460,000.  Limits are higher for 2, 3, and 4-family properties.

FHA provides a website with the current Mortgage Loan limits for each county in the country.  You can find it here.

The Scoop on Obama’s Refinancing Initiative

Lately the most difficult problem facing home owners who wish to refinance their homes its their lack of 20% equity in their home.  Many home owners find themselves in this position because they:

  • purchased with little or no money down
  • neighborhood values have depreciated or remained flat
  • borrowed or refinanced recently

Actually any or all of the above reasons could be blocking the home owner’s ability to refinance at today’s very low interest rates.

There may be a solution!

Obama’s Housing Stimulus Plan has a provision that may help home owners in this situation, if they meet the following criteria:

  • must have conforming loans which are guaranteed by Fannie Mae and Freddie Mac
  • Owe up to 5% more than their home is worth
  • must be “credit-worthy” or “responsible” homeowners

If home owners meet the above criteria, they can refinance into a 30- or 15-year, fixed-rate loan based on current market rates.  The refinanced loan, however, cannot include prepayment penalties (yeah!) or balloon payments.

For many families, this low-cost refinancing may help reduce their mortgage payments by up to thousands of dollars per year.

At the time of this writing, details about this initiative will be released at a future date – including what, if any, credit score requirements will be included.

If I Were a First Time Home Buyer

If there ever was a perfect climate for a first time buyer to purchase a home, it is now. Why is that? Because there are bargains in both home prices and available financing terms! A combination like this allows a first time buyer to obtain more of a home for their money at less of a price.

Let’s take a look at home values. The Metro Denver real estate market has many neighborhoods offering great values in homes. Some homes are foreclosures or short sales and others are being offered by the owner. It’s very reasonable to expect to get a newer home priced in the low to mid $200′s. A few years ago that was not possible.

Your Pot of Gold at the End of the Rainbow

Your Pot of Gold at the End of the Rainbow

Just recently Uncle Sam offered to lend first time home buyers their down payment for homes up to $250,000 using a tax credit. This means the buyer must initially come up with the down payment, but will be able to deduct it from income taxes.

If the buyer doesn’t actually have the down payment, but has a relative willing to lend them the money, FHA will allow a 2nd lien to be attached to the property. This would allow the buyer to borrow the money from the relative and pay it back within a year.

There are additional rules, the tax credit is for the lesser of 10% of the purchase price or $7,500. It has a 15 year recapture rate. The income restrictions allow the first borrower to earn no more than $75,000 a year. For joint buyers they can make up to $150,000 combined.

This scenario works best with a home purchase of $250,000 or less.

Some buyers don’t have wealthy or helpful relatives but they don’t need to feel left out. The Colorado Housing Finance Authority also known as CHFA can step in and lend a hand.

CHFA makes loans to buyers who do not own any other property. The best thing about CHFA’s loans is the low downpayment. Qualified buyers can get into a home with only $1000 of their own money. Their interest rates are competitive and sometimes slightly higher, but they are the only institution that will allow a buyer to create a mortgage with so little down.

CHFA does have income guidelines, but they are quite generous. The maximum loan amount is $417,000. The biggest catch is the borrow(s) must attend a Home Buyer Education Class BEFORE executing a contract! The Home Buyer Education Classes offered are free and can be taken onsite or online.

If I were a first time home buyer, I’d…

make an effort to investigate my home ownership options. There may never be a time better than the present moment to become a homeowner!

If you would like to discuss your options, please call me. I welcome your call, with no obligation, no high pressure sales pitch. Just information the information you need to know to make a decision. The choice is yours, what would you like to do?

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Denver Real Estate ~ Upside Down Mortgage

Denver Homeowner are you Up-Side-Down with your house?Homeowners who need to sell their property right now are finding they owe more than the home is worth. This is a tough problem to face. How can it happen?

There are several reasons why the mortgage on a home exceeds its value:

  1. Real estate values in the neighborhood have declined, due to an over abundance of homes on the market or a glut of foreclosures.
  2. The home owner has refinanced taking out a larger mortgage than the value of the home can support and/or incorporated closing fees into the mortgage, thus increasing the mortgage amount.
  3. Late fees and back payments have been added onto the mortgage and are also accumulating interest charges.
  4. A negative amortization mortgage was taken out on the home.
  5. Lack of maintenance

Homeowners who find themselves in a situation where values in the neighborhood are dropping, but they don’t have to sell their home really have nothing to worry about. Since most people plan to live in a home for many years, the market will rebound and values will increase. Sit tight and tune out all the negative press. Make your payments, enjoy life and when it comes time to sell you will be fine and probably save yourself a few gray hairs in the long run.

If you are a homeowner that MUST sell your home and are up-side-down with your mortgage vs. home value, you do have some choices.

  1. In a declining market you can price your home to sell and make up the difference with cash from your pocket at closing. Many homeowners do not like doing this, but will just to be able to move on to their next home. If the homeowner is lacking the cash, it might be possible to get a cash advance on a credit card or from relatives to complete the transaction.
  2. Rent the home out until the market improves. Sometimes this means only a couple years of renting until things look better.
  3. In the case of a home that has not been cared for, fixing the home might bring it up to acceptable standards to sell.
  4. Request the mortgage company holding the mortgage restructure your mortgage so you can sell. The balance of what is owned can be transferred into another note which you can make payments on until paid off. The mortgage company may or may not be able to do this depending on what type of lending institution they are. Of course the better the borrowers credit score the better the chances are of negotiating this type of deal.
  5. Short sale ~ ask the mortgage company to accept less than what is owed and write off the balance. This is a lengthy, not guaranteed process that could take up to 6 months. If the bank is willing to cooperate in a short sale, the amount of mortgage that was relieved could be subject to income tax. (please check CPA for details) Short sales have a negative impact on credit ratings.
  6. Some employers (as in the case of a transferee) might agree to absorb the amount short in order to get the employee settled in the new location.
  7. Deed in Lieu of Foreclosure ~ if there is absolutely no way to get the home sold and there are no funds, renters or family to help, giving the home back to the bank is an option. The best way to do that is to start a conversation with the mortgage holder to see how they would like to go about it.

There is really no “one size fits all” solution. Usually there is a way to salvage a situation if one tries. Homeowners in trouble have become the focus of many agencies, with the government looking for ways to help.

If you are a homeowner who is up-side-down and you need to get out of your home, don’t hesitate to call and ask for help. Start with your mortgage holder. If I can assist you in the Denver metro area, please feel free to call.

Knowing your numbers

Relocatingyourmoney_1 Our lives are filled with  numbers, phone numbers, speed dial, security codes, social and credit card numbers.  Those aren’t the only numbers important to know.  When you start to purchase a home it’s important to know your numbers … before you start looking.

Buying a home is a major investment and there are many things to consider.  The worst thing a buyer can do is go looking for a home before knowing how much he can afford (assuming the buyer is on a limited income, needing to use a mortgage to finance the home).  OK, cash buyers can stop reading now.  Please leave the room, we don’t want you to see the envy in our eyes!  :)

Home buyers who are the happiest are those that know their limitations.  When you know how high you can look, you don’t waste time looking at homes that will only discourage you from looking at the ones that fit into the budget.  It’s the old adage, beer vs champagne budget.  Start off with champagne and you are ruined for beer for good!

Start with a good lender

Most lenders these days can get a loan PRE-approved in a short time.  Be sure they know all the pertinent facts about you, don’t without any obligations, thinking what they won’t know won’t hurt you.  It will.

As the lender/loan officer asks you for information, s/he is building a file on you and your ability to pay.  They will review your credit report, and check your employment references.  Validating your file fully prior to you finding a home is really in your best interest.

Once the work is done, you are ready to start looking for a home.  Having a pre-approved loan puts you in a strong negotiation seat.  The time you took to get prepared should and will save you time and possibly money on your purchase.

Knowing your numbers, all of them is an investment in your future.