Lonnie Glessner

Every fall millions of American families struggle with how to pay for college for their kids. This fall annual tuition for incoming freshman at CU Boulder ranges from $7,932 to as high as $11,782 depending on which school/major they will be in. WOW! On top of that, CU estimates that room and board, and other fees will total an additional $12,127. Total cost for first year of college is over $20,000 a year!

I graduated from college 18 years ago and tuition for my senior year was about $1500 and my room in a duplex was $120 a month. How times have changed!

I saw a statistic from Sallie Mae this week that said the average American family borrows 39% of the total cost for their kid's college expenses. WOW! That's about $8,000 a year they are borrowing for a grand total of $32,000 over 4 years.

Here are the traditional ways of borrowing to pay for college--student loans, student loans for the parents, and home equity loans. Unfortunately, many families don't have the equity in their homes they once had three to five years ago. Second, the ease of access to that equity is much more difficult today. For example, most banks won't do a home equity loan above 80% of their home's value. This third option may not be an option then.

Here's a fourth option for you. Buy a home or condo where your child(ren) will be attending college for the next few years. Your child(ren) will live in the home or condo and rent out the additional bedrooms to a friend or two or three and ask them to pay you rent instead of paying rent to the college. This will greatly reduce your monthly payment.

How much does it cost upfront? Here's the great news, FHA allows you to help a child buy a home even if they don't have a job and you just have to put 3.50% down! This also helps your child build a positive credit history with the best kind of debt possible--a mortgage.

Then, when your child(ren) are done with you can sell the home for a profit (hopefully) and use that money to repay any student loans you or your child have after graduation. Ta da! A new way to pay for college!

One final note--if your child has not owned a home in the last 3 years they will qualify for the $8,000 first time homebuyer tax credit even if you as the parents are on the loan and on title. But, they must close on a home by November 30th. Ta da! Another new way to pay for college!

Last Friday I blogged on the topic that the Denver real estate market may soon become a Seller's Market instead of a Buyer's Market. Why? Inventory is dropping especially on homes priced under $200,000 where inventory is under 3 months.

A second great reason to buy a home in 2009 is the exceptionally low mortgage rates we have this year. They are not as low as they were in the first 5 months of the year; but rates in the 5's are hard to complain about. My wife and I bought our first home in 2000 when rates were above 8%.

There have been 2 primary reasons why mortgage rates have been so low. First, is the recession we have been in. Normally, during every recession bond yields and mortgage rates drop as investors seek "safe haven" investments with a fixed return on their investment.

But, the second reason is more important as the Federal Reserve has taken never before seen actions to help our economy recover. One action has been the purchase of mortgage backed securities or mortgage bonds. They have purchased nearly $800 billion of mortgage bonds this year! Their plan is to purchase $1.25 trillion this year. This "temporary" demand has caused bond prices to rise and thus rates to fall. This "temporary" program ends in December.

A second action by the Fed has been their purchase of the Treasury's new debt issues such as 10 year T-bills and 30 year T-bonds. The Fed last week in their Meeting Minutes reminded the market that their purchase of the Treasury Securities will end in October with no plan to extend this "temporary" program.

Everything else being equal when the Fed quits buying the Treasury's new debt in November it is expected that Treasury yields will have to RISE to attract new buyers. Remember the Law of Supply and Demand? If supply stays the same and demand drops, what has to happen to prices? Just as with flat screen TVs, cars, and other consumer goods, prices MUST DROP. And with bonds when prices drop, RATES OR YIELDS RISE.

Thus, I expect in November mortgage rates will rise by 1/4% to 1/2% at that time. Come January, people smarter than me are estimating that mortgage rates will rise by 1% or more from today's super low rates. Ouch!

On a $200,000 home, your payment just increased by $123 a month if rates rise 1%! I will end with this maxim, "time is money". In this case taking your time could cost you a lot of money.

I read this week on-line that in June 47.5% of all home purchases in Denver were with a FHA loan. WOW! I was astounded by this number. Three years ago I bet only 4-5% of all purchases were consummated with a FHA loan here in Denver. I definitely helped increase that percentage then.

You see when nearly every other mortgage professional was closing sub-prime loans I was closing FHA loans instead. In 11+ years I have only closed 6 sub-prime loans! Unless the borrower was already under contract on a home, I would instruct them on how to obtain a FHA loan whether it took 3 months or 3 years as I KNEW the sub-prime loans had trouble written all over them. I know I lost a lot of deals doing that in 2004-2006; but I had to do the right thing. Thankfully, by the grace of God I am still here doing the right thing.

For the last 2 years in my industry I have seen hundreds of offers, emails, and mailers about how to become a FHA Expert as if they were some brand new loan. Each time I receive an offer to become a FHA Expert I quietly think to myself, "I already am a FHA expert, I could teach that class or seminar in my sleep." You see FHA loans have been around for decades and they are great loans and I have closed hundreds of them.

Who are you going to trust with your client's FHA loan? Someone, who thinks they are a new type of loan and who is still "cutting his or her teeth" on them? Or someone who has closed hundreds of them for 11+ years?

The National Association of Realtors or NAR reported 2nd quarter statistics for over 100 metro areas today. Nationally, the median home price increased 4% in the 2nd quarter from the first quarter. The national median home price as of June 30th was $174,100, which is down 15.6% from June 2008.

NAR also reported that 36% of all home sales nationally in the 2nd quarter were distressed sales. What's a distressed sale? It's the sale of a property by a bank or a seller who owes more than the house is worth; otherwise known as a short sale. On average distressed properties sell for about 15% less than a privately sold home which drags down the median price from above.

For Denver our median price increased a whopping 16% in the 2nd quarter from the first quarter as our median price increased by over $30,000 to $223,700!!! That is a HUGE increase. It even surprised me by the size of the increase.

More and more reports are pinpointing the bottom of our real estate market to have been March 2009. The vaunted and highly publicized Case-Shiller Index also points to a bottom in March.

Remember the saying "buy low, sell high"? NOW is the time to buy.

I am currently reading Jonathan Manske's great book titled "The Law of Attraction Made Simple". Now some of you may be thinking "hogwash!" over this book title or the main idea behind it. When I first started learning about this Law 2 years ago I was very skeptical too; but, I have come around and I have found a lot of value in this book.

One of the principles of this Law is that in order to get what you want (whatever it is), you have to be able to receive it. Let me explain. For many years I have seriously downplayed my own successes and compliments from others. I have had trouble accepting other's compliments of me I believe out of false humility. Just now I am finally learning to really appreciate their compliments and just say "thank you". Basically, I stunk at receiving compliments for the first 40 years of my life; thus I did not receive as many compliments as I wanted. I did not get what I want (compliments); because I did not receive them well out of my false humility.

Jonathan in his book notes that money is another form of compliment. By my dodging of compliments I was also dodging more money and more success from coming my way. WOW! Another reason to start receiving compliments more genuinely.

Next, Jonathan states that referrals are compliments as well. How many of you have on your business card or email stationary, these words, "Your referrals are the greatest compliment I can ever receive"? Do you really mean it? If you are like me and don't receive compliments well, then you are not going to receive many referrals either. Another WOW!

I will end with this quote from Marianne Williamson-"You are a child of God. Your playing small (not accepting compliments well) does not serve the world. We are all meant to shine, as children do. We were born to make manifest the glory of God that is within us."