HUD announced this week several major changes for FHA loans later this year. Some of this items will not go into effect for several months but are worth noting.  Overall, HUD is doing the right thing to keep themselves in business and help consumers be able to purchase homes.

1. Up-front MIP will increase to 2.25%, to be announced in a Mortgagee Letter today; this will go into effect sometime in the spring (NOT effective immediately).

How this effects you: Currently up-front MIP is at 1.75% of the base loan amount. Example, on a $100,000 base loan amount, the amount that is currently added to that amount is $1750.00. This makes the total loan amount that is financed as $101,750.00.  The monthly payment (assuming a 5.50% rate) would be $577.73. Under the new change the new loan amount would be $102,250.00 ($500.00 more added to the loan balance) and the new monthly payment would increase to $580.56 ($2.83 per month more). Not a huge impact on the consumer but worth noting. The benefit is significant to HUD as it allows them to re-capitalize their insurance fund (which is low due to loan losses over the past several years) and continue to insure home loans will minimal down payments which is a good thing.

2. Borrowers with credit scores less than 580 will be required to put down at least 10%; effective early summer.

How this effects you: Although HUD/FHA has never required a minimum credit score, most investors have required minimum credit scores for quite some time.  Most have a minimum of 620 with a few down to 600 and even 580. This is not going to impact much currently as almost no investors/lenders are doing FHA loans with this low of a credit score. However this change might cause some investors/lenders to look at this market segment more seriously because of the significant down payment of 10% possibly opening more opportunities for more borrowers with lower scores and a down payment.

3. Seller contributions to be lowered from 6% to 3%.

How this effects you: This is VERY significant especially lower priced homes.   Currently on a $100,000 the seller is allowed to pay up to $6,000.00 (6.0%) in closing costs and pre-paid items (taxes/insurance). This change will reduce this amount to only $3000.00 (3.0%) in this example.  If your closing costs and pre-paid items happen to be$4,000.00, then you the borrower would have to pay that difference yourself ($1,000.00) due to maximum being now 3.0 percent. This means that your “funds to close” would be $1,000.00 higher than under the prior guidelines. Not a good thing on a cash strapped buyer.    

4. The waiver on anti-flipping requirements is effective 02/01/10, and a preliminary memo was sent out about that on Tuesday.   

How this effects you: This is very good news and means that there will be a better inventory of renovated property properties to chose from for buyers.  Let’s face it, there are allot of properties out there for sale but many of them are in very rough condition or in short sale situations where it is difficult for a first time buyer to either have to deal with renovations or wait for banks to approve the short sale. This new rule removes the “90 Day hold requirement” by sellers so that properties can be resold more quickly after a purchase.  This will help “fix and flip” investors by reducing their hold times on properties and provide more inventory to prospective buyers. One word of caution to buyers, “Beware of properties that were purchased and marked up with little or no renovation being done”. There are specific rules that must be followed in order for these properties to be financed.  Contact your qualified real estate professional for specifics.

As always, feel free to use me as a resource for your specific circumstances.

Andy Jorgensen

Sr. Loan Originator

Guild Mortgage Company

7951 E. Maplewood Ave. Suite 290

Greeenwood Village, CO 80111

www.taxcreditforeveryone.com

Mortgage Originator License #MB100011854

303-753-9135 or 888-333-6944 office

303-753-8747 or 888-999-3594 fax

303-810-1191 cell

Fuller Sotheby's agent Dan Polimino talks about this weeks market update for January 27th, 2010 in Denver Colorado. This week Dan tackles why sellers are jumping back into the market after the holidays and why buyers should as well. He also covers the upcoming changes from HUD regarding FHA loans.

Check out the video at http://www.youtube.com/watch?v=46zRpnYHOcU&feature=player_embedded

Last week, we started taking a look at a checklist of items that every buyer should focus on when getting a home. The priority list should include location, size of home and lot size. Why are those the first and most critical pieces to buying a good investment? Go ahead and reread Part One of this series at www.coloradodreamhouse.com/denverpost.

Today, I want to focus on the things that you could live without and probably could sacrifice if you are buying a home on a budget.

1) Condition: Believe it or not, condition of the property does not make the top three in the priorities list. The reason is simple and that’s because even the worst properties can be fixed up. Now, I know that you are buying a home on a budget and may not have the resources to fix it up, but it doesn’t have to be done all at once. A project can happen slowly overtime, and if you are even remotely handy, it can be done with some classes at a home depot, a small budget, and a little hard work. 

2) Garage: It’s always nice to have a big garage. These days it seems like the three-car garage is the norm and some people can’t even fathom living with a two-car garage or no garage at all, but it doesn’t make the priority list. If you have to make some cuts and you can’t get everything you want, think about sacrificing here. Would you want a smaller house, but a bigger garage? Or a smaller lot and a bigger garage, or even a three-car garage, but a bad location? The answer is no, no, and no. Location, lot size, and size of the home will trump a garage any day. 

3) Layout: I hear this more often than you would think, “I don’t like the layout.” Layouts for the most part can be changed as long as you are not attempting to move a load bearing wall. Plumbing, electric, HVAC, and yes, rooms can be changed or moved. 

Remember, stick with the big three priorities: location, lot size, and size of the home. If you did well in those three categories, you got a great buy and a home that will be a good investment. 

Dan Polimino is a Realtor with Fuller Sotheby’s International Realty. He can be reached at DPolimino@fullerproperties.com and www.coloradodreamhouse.com/denverpost

Ok, so you only have so much money to spend on a new home. You are realistic about what you can buy with that money and after looking at quite a few places, you know that you are not going to be able to get everything you want. The question now becomes: ‘What things do you sacrifice and what characteristics are critical for a good investment?’

Here’s a quick checklist of how you should evaluate buying a home on a limited budget. I have broken it up into two categories, “Must have’s” and “Not Necessary.”

First, if you stick with these “Must Have’s,” you’ll never go wrong and your house will not only be an enjoyable place to live, but a good investment should you decide to sell it.

1)    Location, Location, Location: The critical things to look for are: Is it in a desirable neighborhood where people want to live? Are homes always in demand in this neighborhood? Is it in a good school district? Is it at the end of the cul-de-sac or a non busy street? Does it have a view: back to the mountains or a greenbelt? And how are the other homes in the neighborhood?
2)    Size: You should always be looking to buy the biggest home for your money. There is no such thing as too many bathrooms and bedrooms, but it is a problem when there are not enough.
3)    Land: Yard size is still a big deal. At least it is in Denver, Colorado. Everyone wants more yards and it’s hard to come by so get the biggest lot you can. If you bought a home that sits on a 3200 sq ft lot, you may have a tough time reselling that home.

There are a variety of things that you can live without and shouldn’t be a top priority if you are buying a home on budget. Next week, we’ll take a look at the checklist of items that you might consider sacrificing before buying a new home.

Dan Polimino is a Realtor with Fuller Sotheby’s International Realty. He can be reached at DPolimino@fullerproperties.com and www.coloradodreamhouse.com/denverpost

In recent months, I have spoken to quite a few people that are concerned with keeping their expenses low in this economic environment. After all, it’s a smart practice in case the economy has a relapse, you lose a job, or you have some unexpected expenses.

For most of us, our biggest expense is our home and more specifically, our mortgage. So it’s not surprising that I have had a lot of conversation with people looking to downsize. Many people have come to the realization that they really could do without all of the extra space. In fact, they say to me, “We don’t really need 4500 square feet. We could do just fine with 2700 or 3000.” What they’re really saying is, “I wouldn’t mind going from a $475,000 dollar home to $350,000 dollar home and saving a thousand dollars a month in mortgage. Again, it’s sound, smart thinking.

Usually, what holds them back from making the move is that they’re concerned about how much money they’ll lose on the sale of their home. Of course, we all know our homes aren’t worth what they used to be, but if you bought smart (location, location, location), maybe, just maybe, you won’t take a huge hit. I also tell potential sellers that you could make up what you lose on your home in the purchase of a new home. After all, someone will be buying your home low and you’ll be buying someone else’s home low. It may be a moot point.

Since this is the first week of the New Year, it’s definitely a good time to start thinking about smart financial planning. The middle of winter is also a good time to find a deal. Don’t wait until the spring when everyone comes off the sidelines and the competition is high. Make a deal in January, February, or March when traffic and competition for premium homes will be less. This also may be a good time to look at buying low on a fixer upper. Spend some sweat equity, do the improvements yourself, and move into a nice home with a nice low mortgage.

Dan Polimino is a Realtor with Fuller Sotheby’s International Realty. He can be reached at DPolimino@fullerproperties.com and www.coloradodreamhouse.com/denverpost

Wow, what a hangover. And I am not talking about the New Years Eve Party, but rather, the last year in real estate. I feel like someone hit me over the head with a lock box and I can’t take enough Advil to make the headache go away.

The good news is that it’s January and as my four-year-old son says, “Do Over Dad!” Yes, the New Year means “do over,” but let’s not do over 2010 like 2009. Really, could 2010 be possibly worse than 2009? I think not. Of course, I am an optimist and one who likes to look forward and not backward.

The New Year symbolizes a fresh start so let’s take my son’s advice and try a “do over.” But what does that look like for everyone?

For Sellers: If you are thinking about putting your home on the market or putting it back on the market after taking some time off, let’s make sure that we get started on the right foot.
·         Is it priced right?
·         Do you have the right agent?
·         Are you comfortable with the marketing plan?
·         Is your home “show” ready?
 
For Buyers: Yes, there is a game plan for you here as well. Even though the market is in your favor, let’s make sure that we have some details nailed down.
·         Do you know how much home you can afford?
·         Have you spoken with a lender and do you feel comfortable with him or her?
·         Have you started driving in neighborhoods or doing your homework on the internet?
·         Is your credit in good shape and your finances in order?
·         Make sure you have an agent to represent your interests.

For Realtors: The worst is behind us, but we still have to be smart in conducting business, helping people, and making a living. A good friend who has been in the business for 30-plus years said, “Dan, I have only one rule about clients and real estate. I only represent good people.” I’ve stuck by that philosophy and it has never let me down.

Here’s to a better 2010 for everyone! Cheers.
 
Dan Polimino is a Realtor with Fuller Sotheby’s International Realty. He can be reached at DPolimino@fullerproperties.com and www.coloradodreamhouse.com/denverpost