Housing Market - National verses Local

Reports on the condition of the real estate market at the national level are painting a very distorted picture. A housing market is far more local than national. So much so, that two subdivisions several miles apart can experience differing market trends.
It is very refreshing to hear that the Denver market is doing far better than the national levels. From May to June of this year, home values in the Denver area rose by 1.3% and June to July’s the increase was 0.8%. We did see a 0.7% decrease in values when comparing July 2006 to July of 2007, but the national average for this same time period was 3.9%. Historically, we are counter-cyclical to the rest of the nation. Home prices in Denver peaked in 2001, while most of the nation continued in an upward direction, Denver’s growth rate slowed. Due to the fact our market has been flat for so many years, it should recover faster than other areas that, until recently, saw a huge run-up in prices. It appears from the report produced by S&P and Yale University economist, Robert Shiller; the Denver housing market is in an upward swing. We have enjoyed four consecutive months of beating the national percentages, but also have been encouraged to see if this trend continues before announcing we are totally out of the woods.
Not long ago, Denver was considered the most expensive housing market in the nation without a beach. Now, due to the flat market over the previous six years, the price of a home in Denver is being referred to as a bargain. It would be easier for companies to relocate here than in many other areas of the country. This alone could strenghten the economy of Denver and further spur an upward swing for our housing market.
Colorado is on pace to see more than 37,000 foreclosures filed this year, a 30% increase from the record set last year. We are rated in the top 10 worst areas in the country for foreclosure rates. This will cause “intense pain” for the lower end of the housing market, but the higher-end homes and many pocket areas are very strong showing no decrease in values due to the “sub-prime” crisis that is devastating many areas of the country.
No, I don’t believe all is “peaches and cream” in the Denver housing market, but it is NOT in a major crisis, nor has it fallen into the “black hole” of doom and gloom that is being presented by the national media.

Academy National Mortgage
Denise Wing C.E.O.
Certified Mortgage Lender
303-987-0622

Home-Buying Tips

The process of making home ownership a reality can be the most exciting and at the same time an overwhelming experience; its been described as an emotional roller coaster ride. With a bit of planning and organization, you can reduce the stress and negative emotions you will encounter by following a few basic tips.

Get pre-qualified for a mortgage before you start looking for your “dream home”. By doing this you will know, in advance, what price range you will need to stay within.
Take inventory of your financial situation and credit history. Pay off small debts so that you will be in as strong a financial position as possible.
Make a list of your housing needs and clearly set them apart for your wants. The need for adequate bedrooms and bathrooms far out weigh the want of a 900 square foot deck with a hot tub. For a free wish list form, contact Academy National Mortgage at 303-987-0622.
Seek out as much information as possible on the home buying process. If you know how it works, you will know what to expect. Contact a reliable real estate agent; use the internet to obtain information on the home buying process. Use whatever source available and don’t be afraid to ask questions; this is not a time to be timid or shy.
Once you choose a realtor, make sure he/she has a clear understanding of your needs and the price range you need to stay within. Discuss this with them before making your choice of a realtor. You don’t need added frustration, because the realtor is showing you homes out of your price range and/or lacking the needed amenities for your family.
Make notes on each property you inspect. Note what was good, what stuck out in your mind, and what was bad. This will help you in deciding the best home for you and your family. For a free home shopping list form, contact Academy National Mortgage at 303-987-0622.
Understand that finding and purchasing a home takes time; don’t be in a rush. Give the realtor and the mortgage broker time to do the best possible job on your behalf.
Once you have chosen your “dream home” get a home inspection completed on the property.
Do a final walk through of the property no later than two days from the closing date. This will give you assurance that the condition of the home is acceptable and all the appliances and fixtures are still intact. Sellers have been known to remove items that the buyer assumed was part of the sale.

Academy National Mortgage Corporation
Denise Wing C.E.O.
Certified Mortgage Lender
303-987-0622

Mortgage Schemes

When I first heard of the Macquarie Mortgage it piqued my interest. This loan program supposedly originated in Australia and promises the unsuspecting borrowers that they can pay off their 30-year mortgage in 12 to 13 years. I asked myself “how could this be, it sounds too good to be true?” When a person I know who had a 30-year fixed mortgage at 5.5%, refinanced into this program, I had to find out more.
The following is how this mortgage loan unfolds, and it is based on a $200,000 loan at 6% interest rate with an annual income of $100,000.

It is a 30 year Home Equity Line of Credit (HELOC) with the first 10 years being an interest only payment. The initial interest rate is approximately 7.00%, but the rate adjusts each month, it is not fixed.
The account is also used as your primary household account, but you do not earn interest on the money you put into it. The borrower deposits his payroll checks into this account and these funds are automatically credited towards the loan balance. This in turn lowers the balance of the HELOC and supposedly lowers the interest due on your required payment.
You would then write your monthly checks for bills, groceries, gas, entertainment and etc. These withdrawals are added back into your loan balance, raising the amount of interest owed.
You are not told directly that in order to pay off this loan in half the time, it would require you to pay up to 20% of your net income towards the loan balance each month and never withdraw any of that money. The term I saw being used on their website was savings. You are asked how much can you save in a given month, not how much you are willing to pay against the loan balance. Saving 10% of your net income would cut off 2.2 years; 15% reduces the pay off time by 10.7 years. If you were not able to save any money each month, you would owe the full amount of the original loan after the 10-year interest only period. Your monthly payment would sky rocket it order for the loan to be paid off in the remaining twenty years.
This type of loan is setting borrowers up for failure! Very few of us are able to put 20% of our net income aside and never withdraw any of it. Also, the temptation of knowing you can write a check against this HELOC account takes more will power than many of us have. I have a sick feeling that this is what the lender is counting on, so they can collect an astronomical amount of interest from just one loan. For the majority, this loan will not work.
A person would be far better off if they took 20% of their net income and deposited it into a saving account or invested it into mutual funds, stocks or bonds. Placing more into your 401K and taking advantage of the pre-tax status would also be more beneficial to you than the above mortgage loan.
Before getting yourself caught up in this, or any other designer loan, please call Denise Wing at 303-987-0622.

Academy National Mortgage
Denise Wing
Certified Mortgage Lender

FHA Downpayment Assistance

The Federal Housing Administration (FHA) announced it would no longer allow borrowers to use seller-financed down payment assistance programs from non-profit organizations. This ruling will go into effect October 31, 2007; shutting down nearly 200 organization nationwide that have participated in arranging assistance for lower income buyers. Due to an agreement signed in 1998 between FHA and Nehemiah, this non-profit organization will continue to offer down payment assistance for contract written and signed prior to April 1, 2008.
This is an overview of how the down payment assistance programs are structured.
· FHA requires a minimum down payment of 3% of the sales price. This can come from the buyer, gift from a family member, employer, state and local agencies, or a non-profit organization.
· A buyer makes an offer on a home with the stipulation that the sellers contribute the 3% to the non-profit organization the buyer has chosen. In some cases the sellers contribute the 3% plus enough to cover most, if not all, of the closing costs. For this service the non-profit organization receives a $500 fee that is also paid by the sellers.
· In most cases, the sellers raise the price of their home to cover this cost.
· The non-profit organization “gifts” the money to the buyers at the closing of the loan.
FHA is no longer looking at this type of assistance as a gift, but more as an incentive to purchase, which is not allowed on FHA loans. Also, they feel this type of arrangement has falsely inflated the prices of homes. Further study by the Government Accountability Office, showed that borrowers receiving assistance from these charities were more that twice as likely to default or become delinquent than other FHA borrowers.
This will put an additional squeeze on lower income buyers, but FHA still allows gifts from family members, employers, and state and local organizations. FHA offers programs to help the lower income buyers qualify for a home purchase. Their ARM loans are reasonable and safe for the borrower, and their Buy-Down program to initially lower the payment, is another option for homebuyers.
Call Denise Wing at 303-987-0622, for more details on FHA loan programs that can help you with your financial needs.

Academy National Mortgage
Denise Wing C.E.O.
Certified Mortgage Lender


©Academy National Mortgage Corporation 2007

What is a Reverse Mortgage?

What is a Reverse Mortgage? It is a loan that converts your home equity into a line of credit that can be used to increase your monthly income, or pay off unwanted debt. This is an adjustable-rate mortgage and the interest rate is calculated off the one year U.S. Treasury Security. Any adjustment in the rate does not affect the amount or number of loan advances you can receive, but causes the loan balance to increase at a faster or slower rate.
Who is eligible? Any homeowner 62 years of age or older and occupies the property as their primary residence. The property can be a single-family home, condominium, townhome, or 2 to 4 unit dwelling. The home needs to be either owned free and clear, or have a mortgage balance that can be paid off by the new loan.
What are the requirements to qualify? The loan process and requirements are fairly simple. No credit report is required and the borrower does not have to prove income, assets, or employment. No monthly payment is required on this type loan, so verification that the borrower being “credit worthy” is not a consideration.
What are the benefits? The monthly payment you receive is not considered “income” so it does not affect your Social Security, Medicare, SSI, or Medicaid benefits. Since the source of these payments are from a loan, they are tax-free.
A reverse mortgage is a “non-recourse” loan. This means if the value of your home ends up being less than the amount you borrowed, neither you nor your heirs will owe the bank any money. You will never owe more than the value of the house.
You can either receive the funds from the loan in one lump sum, or opt to receive a monthly income that will continue as long as you live in your home, or a combination of the two. Since this is a line of credit, you can withdraw money at any time for unexpected expenses, even if you choose the monthly income option.
You can continue to live in your own home as long as you want. Staying in your own neighborhood and near the friends you have cultivated is both a comfort and rewarding.
What are the costs associated with this loan? There are closing costs, but the majority of these fees, such as appraisal, title, attorney, and origination, can be financed into the loan. The out-of-pocket expense would be in the vicinity of $300.
The borrower is required to continue maintaining the property, paying the real estate taxes, and hazard insurance premium while the loan is in place.
How is the loan repaid? Repayment of your loan is not required until you sell your home, or have not used the home as your primary residence for more than 12 months. If you die, your heirs can either sell the home, or use other assets to pay off the loan balance.

Academy National Mortgage
Denise Wing, C.E.O.
Certified Mortgage Lender
303-987-0622

FHA and VA loan Programs

In 1934 the federal government created the, Federal Housing Administration (FHA), to assist lower income families with purchasing a home. Up to this time, property ownership was not common except for the wealthy citizens. Then in 1944 the Servicemen’s Readjustment Act was passed and as part of it, the VA Home Loan Guaranty Program, was created. In recognition of the sacrifices given by our service men, the government sought to provide an avenue for the veterans and active-duty personnel to own a home.
Neither agency actually loans the money, but insures the loan against default; therefore, the lender is taking less of a risk for potential losses.

The benefits of a VA or FHA loan are:
Very low down payment requirements; 3% for FHA, which can be paid by the borrower, gift from a relative, or from a down payment assistance program. VA offers, for qualifying borrowers, programs with zero percent down.
Both offer low interest rates that are sometimes below the standard market rate.
If you qualify, you can refinance your present Conventional mortgage into an FHA or VA loan.
The federal government insures these loans, so lenders are more willing to grant credit to families with lower incomes.
Both FHA and VA loans are assumable to qualified borrowers.

FHA and VA offer an array of loan programs to fit the needs of many; from first time homebuyers to those needing to refinance into a more stable loan program. FHA is offering assistance, at this time, to borrowers who are delinquent or about to become delinquent on their Adjustable Rate Mortgages.
If you have any questions, or would like to explore the possibility of getting an FHA or VA loan, please do not hesitate in calling me at 303-987-0622.

Academy National Mortgage Corporation
Denise Wing, C.E.O.
Certified Mortgage Lender
303-987-0622