Is buying a home now, during this Coronavirus outbreak, a good idea?

With all the changes that have taken place in our daily lives today there is a lot of uncertainty about going through with our plans to purchase a house.  So, is it a good idea or not?  I want to look at some of the things we learned in the 2008 collapse and how that applies (or doesn’t) today.

First things first.  Colorado Springs did not get hit as hard by the 2008 collapse as many other places in our country.  Yet, those that bought in 2008 and are selling today will tell you it was an amazing time to buy.  Prices were down, demand was low, and most buyers got their dream home for a lot less than the 2006 market and have seen a huge appreciation over the last 12 years. When these homeowners look at selling their home today, they can realize a tremendous gain and either put the money down on their next purchase or use it in some other beneficial way.   It took us a while to recover from the 2008 crisis, but those who held their properties were glad they did.  

Today is different.  This time will pass in a relatively short period.  The huge benefit today is that the rates are so low that you can afford to buy a home and have a lot lower payment than just a few months ago.  And on a fixed rate mortgage, your payment will be a known factor in your budget.  If you can qualify for your payment today, then that payment will look even smaller when you get back to work full-time and the market picks back up.  Even though the market has slowed a bit and prices are stabilizing, it is still a great time to sell and take advantage of the appreciation realized in these recent years. 

How about all the competition when you place an offer in our local market?  Well, there is a lot of uncertainty out there right now and competition is certainly lower.  Builders are still staying on track with building (so far) so moving up to a new construction may be a great idea. 

All of us have a bit more time on our hands, or at least, more time on the laptop to do detailed research about buying a home, moving up, or selling your home.  I can run detailed market analysis’, send you complete lists of available inventories, and analyze your financing needs so that you are very well educated before making your next move.  I will send you a digital copy of my new book “Real Estate in Colorado Springs: Your extensive, professional guide to purchasing a home in 2020 and beyond” just for the asking.  Call, email, or text me and I’d be happy to help.

2020- Low interest rates, great market, good time to buy!

So, with the Corona virus scare at a high level, what is real estate going to be doing?

Interest rates are at a super low point and the available inventory is slowly, and I mean slowly , rising. It is a great time to buy. Considering selling or buying or both? You are probably at home due to the virus so why not consider all your options. How much is your current home worth? Are there loan options that can keep my payment low? These are both great questions that I would be happy to help you answer right now. Contact me and let’s look at your current situation and see what we can do to meet your housing needs. You have time on your hands, why not call? I’m here to help.

Inventory in Colorado Springs at an all time low!

It is great to live in one of the best cities in America but the demand for housing is causing a serious shortage in inventory.  Colorado Springs has a wide range of housing options for the potential home buyer but the supply of these houses has been decreasing to a super low level.  Multiple offers are happening on most reasonably priced homes.  Buyers need to be aware of the competitive market when they go shopping so that they are prepared to offer their best offer up-front and get that offer in quickly.  Buyer's need an experienced Realtor who knows how to write an attractive offer while still protecting the best best interests of the buyer.  Contact Darren today to see what the market is like in your price range and how he can help you get the home you are looking for.

Sellstate Awards—a night to remember!

We went to Denver with the Sellstate office for an enjoyable evening of fun fellowship and the handing out of much deserved awards! What an awesome reminder that I'm part of a five star, award-winning real estate team in the Colorado Springs area!

Interest-Only Mortgages Creep Back Into the Market

Once considered the riskiest type of loan available, interest-only mortgages are making a comeback in the housing market.

This time around they may not be as risky and definitely will not be as widely available.

After contributing to the housing bubble and causing it to burst, interest-only loans disappeared from the mortgage market after 2007. These loans allow borrowers to pay only the interest due for the first 10 years, after which they must finally start repaying the principal of the mortgage as well. Many lenders used these loans to help homebuyers qualify for homes they really couldn’t afford. When the interest rates started adjusting on these loans, most buyers were completely unable to make the new payments and widespread foreclosure was the result.

Now the second largest home loan lender (through brokers) Michigan-based United Wholesale Mortgage has announced plans to offer interest-only loans again. They promise that the same dangers will not be in play this time.

"We expect the program to be an incredibly popular option for well-informed borrowers, and in turn, a significant boom for mortgage originators," said United Wholesale Mortgage CEO Mat Ishbia. "The purpose of the program is not to enable a consumer to afford a larger house; it's for savvy borrowers who can regularly afford a house on a 30-year fixed mortgage, but choose the interest-only option to save additional discretionary income."

Borrower requirements will be much stricter this time around, according to UWM. Borrowers will have to have minimum FICO credit scores of 720 (the highest echelons of creditworthiness) and 20 percent down payments will be mandatory. Additionally, borrowers will have to have a 42 percent debt-to-income ratio and the loan must be underwritten at the higher, adjusted interest rates rather than at the initial low rates. Back in the housing boom, borrowers could put no money down on these loans and only be able to afford the starter rates. They were available to all homebuyers, especially those who did not understand what the terms truly meant. UWM uses these loans mostly with wealthier borrowers on jumbo loans, those who know how to utilize the upfront savings to their financial advantage.

"I think it's opening the door back to responsible lending, giving people choices," Ishbia reiterated. "These people can afford these mortgages. They're savvy homeowners," said Ishbia. "We're giving them the choice. It is no more risk to us. We actually think it's less risk."

Still Fannie Mae and Freddie Mac believe them to be too risky to buy from lenders. Lenders making these loans must hold them on their own books or find private investors to take them. The government-backed loan corporations will not touch them. In fact, the government has called interest-only mortgages “toxic” as recently as 2013.

Even though interest-only loans are still considered dangerous, the fact that they are returning at all may signal a loosening of lending standards and a general improvement in the housing market since the mortgage meltdown back in 2006.

Buying Foreclosures: Strategies and Considerations

Educate the buyer of foreclosures on financing options, multiple offer situations, viewing and looking at the investment analysis by way of comparable sales.

Getting our "ducks in a row!"

Financing is always the most critical issue regarding purchasing any property , but with foreclosures, it can be the most critical. VA, FHA, conventional all have minimum property condition requirements.  Let me help you with your options so that we can find the best financing up-front. Then when we view the property we can look for specific property condition issues that I know will affect if the deal will even go through. 

Viewing Properties

Bring a flashlight. Understand that the property probably won't have utilities on.  If it is cold outside, bring a jacket.  Be ready for some surprises, both good and bad.  Some folks get very angry when they leave a property and they can trash it.  Some —and I mean some banks will fix up the property before offering it for sale. Most don't.  Typically you buy the property "as is".  It is up to us to discover everything we can.  We have inspection rights and I will discuss with you how all of this works.  They can be a great deal.

Making the Offer

Once we find the "great deal" we will place an offer.  Be ready to face a "highest and best offer" situation if the property is really a great one.  I know how to write an attractive offer for the bank while still protecting your interests and getting you a great deal.  I will run comparable property searches for you and help you determine the very highest offer that would work for you.

What you see is what you get!

Once your offer is accepted we will have an inspection and an appraisal.  If either one of these reveal problems, you might just have to back out and find another house.  Or, if the problems are minor, you take on the responsibilities for fixing it later.  If the property is way under current market in regards to value, you can put together an estimate to fix and still go forward as long as there is not a problem with the lender.   Once you move into the home and all appliances are up and running, problems can occur.  Home warranties can cover some of the items, but it is a house and sometimes problems don't reveal themselves until later.  If you saved lots of $$ upfront, then you still might be saving tons even after fix- up. 

A Really Cool Option

FHA has a special loan for dealing with property condition issues called the 203 K loan.  You can add the cost of repairs to the loan up-front and move into a near new looking home.  Some conditions apply so you need to speak with me about how this works.  I'll get you with a great lender so that you can get qualified.

Remember that the key to purchasing a foreclosure is to know what the market value is in the current market and if you are willing to take on some risk when you buy one.  

You can get a great deal but be aware of the process.  I am here for any questions you might have so contact me now and I'd be happy to help.