Our national priority is to "Fix Housing First" and insure that never again will homeowners be lured into enticing but dangerous loans. Having a home is important to people but it must be affordable and must be responsibly financed. In plain English, this means good candidates for home ownership right now are people with steady income, good credit, and down payment funds in hand. FHA recently made two announcements to facilitate these goals.
FHA Great News: Loan amounts have been increased by HUD in many areas! In the Denver metro area, the new limit is $406,250. This means the benefits of FHA (lower down payments, lower credit score requirements, make-sense underwriting, etc) will be available to more homebuyers! (note: this number is not right) This new higher FHA limit means that a qualified buyer with a 3.5% down payment could finance a home up to this amount.
FHA Not Great News: Minimum credit score requirements. Most of the major FHA lenders will be requiring a 620 credit score starting 3/2/2009. Recently, the minimum credit score has been 580. For first time home buyers hopeful of using the $8,000 home buyer tax credit good through December 1. 2009, this means some quick analysis of the credit report is in order. While major credit score killers like bankruptcy, foreclosure, repossession, and a long history of delinquent payments can't be fixed quickly, some other areas can be improved in the short term. A person can make sure that all information on the report is correct, make sure payments are on time, and pay down credit cards so that only 30% of the limit is in use. If a potential homeowner takes these steps, he might be able to improve his score by 30 points in a few months - a good move for qualifying for financing from FHA or any other lender.
Our BandyHomes website has many helpful tips for buyers, as well as many affordable properties in Aurora.
Marianne Bandy
Whoever invented the phrase "Catch 22"must have been thinking of homeowners' insurance. You have to have it to get a loan but the insurance company might not want to insure your home due to age or location or past claims. You might be worried about catastrophic losses caused by earthquakes or floods, but the insurance company considers those acts of God and if it is willing to cover these hazards, wants an ungodly sum to do so. If you use your insurance at all, you are on thin ice; if you use it multiple times, you are at risk of cancelation.
Because some companies have stopped writing policies in certain states or in certain areas, a homebuyer who needs insurance may need to contact a few companies to find one that is accepting new clients where their new house is located. For first time buyers, a good place to start looking for a carrier is the company who carries renter's insurance. Many times this company will offer coverage to current clients even if they are not offering it to new people.
Policyholders who have made a claim within the past three years are likely to be offered a policy on a new home if they stick with the same insurance company, but another company might turn them down. For multiple claims, the company could refuse to renew the policy, refuse coverage on a new home, or add a surcharge on the policy.
If you choose an older home that may have issues of not meeting modern code requirements, you may want to consider an upgrade rider that will update the home to meet modern codes in case of catastrophic or total loss.
So what does all this mean for homeowners, especially new ones? First of all, when looking at a home, it's wise to ask your insurance provider whether there might be any issues getting insurance on it. If you're absolutely in love with the house, well, we all do crazy things for love. If there are several homes you like, it might be wise to consider the more insurable property.
Second, if you're looking at an older home where old systems might pose an insurance issue, consider your options. Do you have the resources to replace the roof or bring the electricity up to code within a short time frame? If you qualify for the $8,000 first time homeowner tax credit, you might be able to work out something. You can always negotiate with the seller for a price concession to cover part of the cost.
Third, you might consider buying a policy with a higher deductable. This will give you a lower premium but make you responsible for small incidents - i.e., you will call the company if a tornado blows off your roof but not if a summer storms dislocates your downspout. Unless you have an unlucky streak with major claims, this approach should save you insurance dollars and keep your insurance company happy enough to keep you covered.
At Bandy Homes, we help new Denver buyers work through the many issues that arise as you buy your beautiful new Parker home. The Bandy Home Team is here to serve you.
Marianne Bandy
Recent statistics released by the National Association of Realtors (NAR) show great news for buyers and sellers. The inventory of available homes fell in January to a two year low across the country. This means that buyers will still have plenty of homes to choose from, yet sellers will have a better shot at making their home stand out to local buyers.
Median home prices are down an average of $57,000, nationwide, from what they were in 2006, so homes are becoming more affordable for people. Some sellers may long for the good old days of higher prices, but when they step out as buyers to purchase their replacement home, they will enjoy the new affordability as well.
Spurred on by the $8,000 new homebuyer tax credit, renters who have never owned homes or former homeowners who took a break from ownership have an incentive to buy before December 1, 2009. The estimate is that the stimulus will lead to 900,000 additional home sales this year.
Even those who don't qualify for the stimulus will still benefit from low mortgage rates in the high four - mid five percent range for a 30 year loan - rates considered "historically low." Recent provisions of the stimulus bill have raised FHA loan limits to $406,250 in the counties making up the Denver metro area, so a buyer could conceivably buy a home with 3.5% down and finance it at great rates.
By year's end, NAR predicts that the supply of homes could equal an 8 month supply while the housing market in many areas will be stronger.
Denver sellers, prepare to meet your buyer! Denver buyers, get ready to find your perfect home! Call the Bandy Home Team today.
Marianne Bandy
Here is some disturbing news about home interest deductions from NAR regarding Obama's budget proposal released today. We need to notify our congress reps and senators to oppose this. We're just starting to see some life in the real estate market. This will not help at all.
Thanks,
Bob Bandy
The Bandy Home Team
Denver Homes and Real Estate
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| Dear Fellow REALTOR®, You may have seen news reports about President Obama’s budget proposal that was released today at 11:30 AM Eastern Time. A small section of the sweeping budget plan has the potential to become a major impediment to a recovery in real estate markets across the nation. NAR is 100% opposed to the provision that modifies the Mortgage Interest Deduction and is prepared to use its formidable array of resources against its enactment. As currently drafted, the plan changes the Mortgage Interest Deduction by reducing the amount of mortgage deductibility on families earning over $250,000. This proposed change in the Mortgage Interest Deduction will result in further erosion of home prices and home values. If this proposal is enacted it will lead to a new round of price depreciation, will cause greater distress on the balance sheets of banks as the collateral value of mortgage backed securities declines. A second credit crisis could emerge before the first one is resolved. As you read this NAR is launching a multiphase plan of action to eliminate this provision from the budget plan. In the next 24 hours, NAR will be expressing our concerns directly to President Obama, to all members of the United States House of Representatives and the Senate, placing advertisements in the publications read by Washington, DC decision makers. Additionally, NAR will be forming a coalition with other groups affected by this proposal. This communication is the first part of our response, we will continue to update you as the situation and events warrant. Sincerely, Charles McMillan, CIPS, GRI 2009 NAR President |
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It's in the job description of successful real estate agents these days: to be a cheerleader for the upside of the housing market. That job is now easier due to some encouraging signs in housing.
First, data collected by the National Association of Realtors (NAR) from Multiple Listing Services around the country and released as the National Sales Index, reports a 6.5% increase in housing sales in December, 2008 compared to one year ago. Some markets in the South and Midwest shot up 13%. The figures reflect home sales where contracts are signed but not yet in the closing stage.
The likely causes for this upsurge in sales activity are lower home prices and falling interest rates, according to NAE economist Dr. Lawrence Young. As we have reported here before, Denver home prices have stabilized over the last months. This makes buyers confident that the house they pay $300, 000 for today won't be worth 10% less in a few months. Foreclosures are also down, which improves general consumer confidence even though it does not directly impact buyers.
With the passage of the $8,000 tax credit, new buyers are expected to emerge, making spring buying brisk. Some critics have complained that there has been no run on real estate offices in the first week of the credit's existence; unless potential buyers had their down payment under the mattress and ready to use, the credit cannot be expected to have instant results. (Since the credit can be claimed in 2008 or 2009, some buyers will get a quick turnaround of the credit though, given that tax time approaches.) Time will prove this credit a motivator for first time buyers to make the move to home ownership.
Though the inventory of homes is shrinking a bit as buyers are grabbing them up, there is still a great variety of properties for buyers to choose from. Homebuyers can look at the Denver metro area or surrounding communities such as Aurora, Parker, or Castle Rock and find what they want and need at affordable price. With excellent Denver area schools, plentiful recreation activities, and lots to do, our city is an appealing location for families to put down roots.
The passage of the housing bill, right on the heels of the signing of the Stimulus Bill, assures that Fannie Mae and Freddie Mac will continue to stabilize mortgages, and at lower rates. For new buyers with stable jobs, good credit, and a down payment available, the new rates should insure minimal sticker shock when the payment is calculated.
Find your Denver dream home today. The Bandy Home Team is proud to be a cheerleader for the Denver housing market!
Marianne Bandy
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