Wednesday, October 26, 2011
Why can’t it be this simple?
Q: Do you have a job?
Q: Do you pay your bills?
My ideal world:
Banker: OK borrower, your self-employment status concerns us, but we have looked at your credit score of over 750 and have determined that by giving you this new mortgage at around 4% and the fact that you are currently paying between 6 and 9 % on 4 mortgages, that you are a safe risk. We think that if your payments are less than you are currently paying now, you will continue to make those new payments because they will be less. Therefore, we will refinance your 4 loans into one or 2 loans at a much lower rate.
Me: Thank you!
My real world:
Me: So why can’t I refinance then Mr. Banker?
Banker: Well, it’s not that simple, see you are self-employed and we have looked at your tax returns for the past two years and have determined that you just don’t make enough money to guarantee us that you will continue to pay your bills.
Me: But I do pay my bills! You see that by looking at my credit score right? See, no missed payments. And I make pretty good money, just lots of deductible expenses because my costs of doing business are much higher now and I had some unavoidable medical bills, and my kid costs a lot.
Banker: Well you have too many bills like those medical payments, child care, car payment for your business, high utility bills because you live where its cold in the winter etc. Your debt to income level is just too high, we can’t refinance you.
Me: Yeah, lots of bills, that’s why I’m here asking for help. My thought is, if you refinance me at say 4%, that will reduce my monthly mortgage payments from $2000/month to about $1400/month. Doesn’t that make sense that I’m low risk? I pay less with my new loans than I pay now and then I have $600/month to pay toward my other bills? And the best part is, if I want to sell my house I have some equity built up and go buy another house that costs less now than it did 6 years ago. What da ya think?
Banker: NO DEAL
I just have to ask why can’t it just be that simple? If you currently pay your bills and you want to pay less each month with a new lower mortgage payment, you get a new loan. Many believe we need to fix the economy and the housing market will fix itself. I believe we fix the housing crisis and the economy will fix itself.
The government can continue to dribble out mediocre solutions , but what I keep missing in all these articles I read
is, what if we are not under water on our mortgage, have a job, and pay our bills? We want to borrow some of this cheap money too.
The solution seems so simple - remove the obstacles as the Times article says. Loosen up on the debt ratios (because everything costs more these days) and bet on our past performance. I think you’ll see a lot of people in my situation who can and do pay their mortgage and bills, but can’t do so under the current tightened lending rules because our debt/income ratio is too high, or we are self employed and our tax returns just don’t fit the mold due to our deductible business expenses.
Until we meet in the middle somewhere between what lending standards used be and what they are now, I see a slow national recovery.
I’m thankful that our Steamboat Springs real estate market is local and for the most part not affected by this national crisis, but that being said, there are many here in my situation who could move forward with a change in the lending practices.
Thursday, October 20, 2011
Some mortgage lenders and brokers in the Steamboat Springs real estate market are seeing a resurgence of VA loans
Here are a few helpful tips:
VA provides up to 100% financing on the purchase of a primary residence
There is no monthly mortgage insurance!
There is an upfront funding fee that varies from 1.25% to 3% depending on service, down payment and prior use of the VA product. This fee can be financed into the loan.
A 41% debt ratio is required
A certificate of eligibility or form DD214 is helpful for the borrower to bring in when they come in to get pre-qualified.
Just released in the Steamboat Springs real estate market, prices are significantly reduced to close-out Phase I at First Tracks at Wildhorse. After 35 successful sales in the past two years, only 12 residences remain. Now’s the perfect time to purchase at First Tracks with great financing options and some of the best residences still available.
Studios now from to $99,000
1 bedrooms reduced to $169,000 (*only one remains)
2 bedrooms now from $229,000 ($70k reduction)
Contact me for more information todaySee more details about Wildhorse
Condo buying season in Steamboat Springs is here! Ski-in convenience with walk-to-ski value; rent your real estate to defray costs
Friday, October 14, 2011
I often am asked which condos rent the best in the Steamboat Springs real estate market. This is usually answered simply and overwhelmingly with ski-in ski-out. However, rental income for a ski-in condo will vary depending on the condition of the residence. A newer or recently renovated condo within walking distance to Steamboat skiing will cost much less and see higher rental revenues than a fixer-upper ski-in condo. I’ve had a couple of owners of slope-side condos recently state they barely covered their home owner association (HOA) and resort management fees last two seasons. This is due in part to the slow economy and increased inventory from a building boom in 2007, but is also due to the price point and the condo rating. Price conscious travelers in many instances are opting for a Trappeurs condo, such as Emerald or Bear Lodge, because they can get higher quality and another bedroom for the same price. Bear Lodge is about 2 blocks East of Gondola Square. At times, a 3 bedroom will rival the rental price of a 2 bed ski-in. Patio units with private hot tubs are popular as well. The quality finishes and convenient amenities like pools, hot tubs and fitness rooms add value. Many travelers will choose to walk a block to skiing for a 4 star or A-rated experience. A trend we are seeing near the slopes is older buildings taking on a new look. The West and The Phoenix, both within walking distance to the slopes, have beautiful new exteriors. The assessments were steep, but the payoff of the HOA special assessment (if not paid by seller already) can always be negotiated in a contract to purchase. For example, many condominiums at the West could use kitchen upgrades to boost rental demand; regardless, a studio condo netted an income after HOA fees, management fees and taxes. Depending on your personal use, its typical to see rental incomes offset those carrying costs before your debt service. Prices are around 20 to 40% off our high sales in 2007. Several condominium developments within walking distance to Steamboat’s Gondola Square and ski slopes are worth investigating before the winter sales season because they may be new, newly renovated or show consistent rental revenue from good management and marketing. Under $500,000 look to are The West, Phoenix and The Lodge at Steamboat. Over $500,000 but under $1,000,000, and for more bedrooms, look to Emerald or Bear Lodge at Trappeurs. If you don’t mind a short walk to the slopes and rental income is important to you, look past the slopes and you will certainly find more bang for your buck without sacrificing convenience. Contact me for more information today.
Pieces Fall Together in the Steamboat Springs Real Estate Market; Seller Financing Option using a Wrap.
Sunday, October 9, 2011
Colorado Group Realty brokers worked together to complete a “remarkable” and “extraordinary” deal involving multiple properties, owners and buyers at the end of September in the Steamboat real estate market. With one deal dependent on the other, four homes involving five homeowners were bought and sold in a three-day period at the end of September! It’s especially noteworthy given today’s real estate market and lending climate.
From Steamboat Today
From price negotiations, home inspections, appraisals and financing, everything had to happen smoothly for the deals to close.
However, offers relying on a contingencies being met don’t always work out as smoothly as in the above transactions. As an example, an owner has an offer contingent on the buyer selling and closing their home in order to purchase, but it doesn’t work out as planned and the buyer doesn’t see an offer by the contingency deadline - is there another option?
If the home buyer has some equity in their home and an acceptable down payment to cover the seller’s closing costs, the seller could consider owner-financing the real estate purchase without paying off their existing mortgage using what is called a wrap-around mortgage, or “wrap” for short. When the home buyer eventually sells, they pay the seller, effectively allowing a much longer time for the buyer to sell their home.
The seller takes enough down to cover closing costs and cover any risk of the buyer walking while the buyer makes payments to the seller who in-turn pays the existing mortgage. Of course, terms all have to make sense to both parties.
Also, there are legal matters to consider, summarized in this article.
if the seller owes on an FHA-insured (post March 1, 1988) or a VA-insured (post December 15, 1989) note and deed of trust, wrapping either of those types of loans is considered improper - possibly even fraudulent - by HUD, and is not recommended.
Since I’m not a real estate lawyer, please see the above article for more ideas about this type of transaction.
I’ll help you find the home and Oliver can help us with the details of the “wrap”.
Call me or contact me for a list of homes where the seller is willing to finance or trade.
Colorado Group Realty, Broker/Owner
Friday, October 7, 2011
Second home buyers paying cash are helping the Steamboat Springs real estate market buck the national trend of a very slow housing recovery. But reluctant lenders are stalling a full recovery in some niche Steamboat markets.
Lawrence Yun, chief economist for the National Association of Realtors says
There are more willing buyers of foreclosed properties than there are foreclosed properties coming onto the market… [and this is] part of the national healing process.
So true here. In the immediate vicinity of downtown Steamboat Springs. including the Mountain area, Fish Creek neighborhoods and West of Steamboat’s Heritage Park, Steamboat II and Silver Spur, there are just 2 bank owned single family homes listings today!
Everyone starts their search looking for a bank owned home (that’s perceived as the best deal, right?). There were 50 single family homes that sold in these areas since June 1st, 2011 reported by our local MLS. 15 of those are recent newly accepted contracts listed as Pending Sales.
But, holding back a full recovery, Yun says, are banks.
Right now, banks are not taking any risk. People who qualified in the past don’t qualify today.
Consider New Hampshire or the Seacoast area with 15 to 20 percent additional sales today if underwriting standards went back to normal. But this is holding back the housing market recovery.
In Steamboat Springs, my single family sales would be up by 1 or 2 if banks would loosen up a bit and my condo sales would easily be up by 5 to 10! These are not high risk for the banks because these buyers typically have 10% to 20% down and they have a job and good credit. But qualifying for a condo loan is a delicate and frustrating process, and I’m finding the buyer often can’t qualify even though under previous standards they would be considered “low risk”.
Part of the free market system is that you don’t have to take too high a risk, but still, you need to take risk
says Yun. But banks are able to borrow at near zero cost from the Federal Reserve, and earn a small risk-free return by buying treasuries. The banks just don’t want to take on any risk by loaning money to any entity but the U.S. government.
Most of the Steamboat market are looked upon as Condotels and Fannie Mae and Freddie Mac won’t buy those loans; as is the case with banks, they don’t want to and don’t have to take any risk. Therefore, buyers are left to portfolio lending from local banks. The rates are higher by about a point or more, the terms are usually variable after 3 or 5 years and a higher down payment is required. We would see a huge boost in sales of Steamboat condominiums if the banks would just loosen up a bit with all the government money they have been handed and lend to these lower risk buyers.
Do you have cash and looking for a deal on a condo? Contact me as there are plenty! Do you need a loan for a condo? Then call a lender first to see if it’s even possible, then Contact me and I’ll help you find a condo that qualifies.
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Wednesday, October 5, 2011
THE NEXT 2 BEDROOM RESIDENCE AT EDGEMONT TO GO UNDER CONTRACT, BEFORE NOVEMBER 15th, WILL COME FULLY FURNISHED! At your choice, the developer will either deliver the real estate fully furnished or give a $50,000 allowance towards a furniture package at closing. Your ski-in / ski-out Steamboat Springs residence will be prepared in time for the New Year so all you need to worry about is what your are going to do during your trip to Steamboat.
Saturday, October 1, 2011
Aaron Gulley from Outdoor Magazine visited Steamboat Springs, self proclaimed Bike Town USA (mirroring its Ski Town USA winter monicker) during the week that brought the USA Pro Cycling Challenge here.
Bike Town USA is definitely a marketing initiative, but it’s refreshing to find a place with the soul and the cred to back up the claims. There are over 500 miles of trail in the vicinity of Steamboat, two boutique bike manufacturers in town (Moots and Eriksen) and a well-subscribed weekly road and mountain bike race series in summer.
Read more over at WELCOME TO BIKE TOWN USA