Living Colorado Springs » mortgages

You Can Afford More House Than You Think in Colorado Springs

Rick Van Wieren — Mon, 25 Oct 2010 15:56:44 +0000

I showed a house in Colorado Springs to some clients yesterday that was priced at the same level it was sold for, brand new, in 2002. Coupled with interest rates quotes that started at 3% for a 5 year conventional ARM, it struck me how much of a bargain homes are right now. In 2002, a $300,000 mortgage at 6% would have been a bargain (the average was 6.5%), with a PI payment of $1,798.65. With 8 years of landscaping, decorating (and yes, some wear and tear), the 3% rate would be only $1264.81. The same house!
In 2005 we bought a rental property with a 5 year ARM at 5.875%. If someone qualified for a $500,000 property with a $400,000 loan in 2005, their payment would have been $2366.15. In todays market, the same mortgage would be 3% or $1686.42. Or, keeping the payment about the same, they could buy a house for $650,000. Which in 2005 might have been closer to $800,000 or a $1 million!
While not every price range has been affected the same way with price drops, the drop in interest rates makes every house a bargain right now. Now if we could just come up with some more jobs for people so they can qualify

Low Interest Generating Low Interest?

Rick Van Wieren — Fri, 11 Jun 2010 15:48:09 +0000

Mortgage interest rates came close to hitting a record low last week. All the junk going on in Europe with Greece and Hungary’s financial situations has made US mortgage backed securities more attractive apparently, and the result is some incredibly low mortgage interest rates.
But not as many buyers are taking advantage of them. There are a couple of factors.

The tax credit programs that expired at the end of April ‘borrowed’ some buyers from the summer market, as people made decisions based on the deadline. They aren’t in as much of a hurry now, although this should be a temporary factor, being less of an issue as the mid summer months arrive. Most people do not move based on tax credit type incentives, and that is especially true in relocation, where a lot of my work is.
The pool of eligible buyers has shrunk because of the soft job market. People are more income constrained, and cautious, when unemployment is high. Here in Colorado Springs unemployment is 8.2%, not horrible, but not great.
The pool of eligible buyers has shrunk because of tightening lending rules. Interest rates can be 2%, but if the rules preclude someone from getting a mortgage, what can they do? Example: John and Mary Smith want to move up to a bigger house, but they currently own a home. In past years, they could rent the existing home and still make the move (if they have enough for the down payment), with the lender counting 75% of the rental income as an offset against the current house payment. The new rules require the existing home to have at least a 1 year rental history in order to count the rental income at all, eliminating the ability to move without selling for many homeowners (who are often underwater on the mortgage). This is just one example, there are LOTS of rules that have tightened, thereby shrinking the buyer pool.
Home ownership and the prospect of appreciation has lost some of its shine. Buyers are no longer as confident in the house going up in value as they have for the last 60 years. There are MANY reasons to own your home besides appreciation, but appreciation has certainly become less of an automatic. Of course when the stock market recently dropped 1,000 points in 1/2 hour, it does raise the question, what IS automatic?
At least in Colorado Springs, the supply of homes for sale is increasing very rapidly. We are up to 5,700 unsold homes from 4700 in March, giving buyers the perception that there is no hurry, there will be more for sale tomorrow, and they might even like them better.
There is a little bit of ‘chicken and egg’ going on, in that lower demand for mortgages actually brings rates down. Fewer borrowers will have at least some impact on rates, pressuring them downward further.

Conventional wisdom had interest rates heading up by this time. But life happens, and it will be interesting to see how the whole picture unfolds!

Colorado Springs Home Buyers With Little Cash Still Have Options

Rick Van Wieren — Wed, 12 May 2010 15:17:54 +0000

With all the tightening of mortgage rules and elimination of ‘creative’ financing options, it was refreshing for me to attend a seminar last week by the Colorado Housing and Finance Authority (CHFA or CHAFA) on low down payment options for 1st time homeowners.
I am not going to be able to cover all of the ins and outs of these programs in this article, but here are some of the highlights of their most popular program, the FirstStep Program:

You have to be a first time home buyer to participate. Technically, that means you cannot have owned a home within the prior 3 years. They have other programs for those who have owned homes previously.
In El Paso County, the purchase price limit is $236,800
You can’t make too much money. The income limits in El Paso County are $56,800 for a household of 1, $71,000 for 2, and $81,600 for 3 or more.
You have to take a class, although they have an online version of this if you are not able to make a class fit your schedule. These classes are rumored to be excellent basics on home ownership and money management, they are free, and are worth attending even if you don’t either buy a house or use a CHFA loan.
You have to have at least $1,000 of your own money (not gift or borrowed) in the transaction, so it is NOT a completely zero down program
The CHAFA assistance is 3% of the purchase, which does not quite cover the full 3.5% FHA down payment requirement, so more down payment may be required than just the $1,000, although not much.
These are OWNER OCCUPIED properties only, so this is not a program for investors

So if you didn’t get in on the tax credit program, not to worry. There are still ways to own your own home without having a big down payment saved up. If this program sounds interesting to you, please visit the CHAFA website directly, or call Rick Van Wieren at 888-568-6784 or email me at rick@ricksellscolorado.com.

Days Like These are What Makes Colorado Springs So Popular

Rick Van Wieren — Sat, 30 May 2009 16:59:00 +0000

Since our wet Memorial Day weekend, we have had close to perfect weather here in the Springs. Glorious sunny warm days (around 80 again today), cool nights, a thunderstorm here and there in the afternoon, wildflowers blooming, even the snow is still on Pikes Peak!
I’ve been a little busy to write this week, as we’ve been getting my wife packed out of her classroom, showing properties, inspections, what have you. Not to mention I’m still moving kind of slow after being sick. While it is still not as busy as in some past years, the pace has quickened a little, especially in light of interest rates starting to go back up. In addition, short sales are making a lot of unproductive work out of this business. I previously wrote about one that finally gave up after 3 months and found another house. Many short sale buyers just give up after the lenders (who we taxpayers just gave hundreds of billions of dollars to) sit on their offers for months. For anyone who wants a house in the normal 30-60 day time frame, short sales are just not an option, and a big waste of time. Foreclosures will continue to be a problem until the banks get their acts together on this issue. In the mean time, it severely constrains the homes you can show for some buyers, and makes them feel cheated when a house comes up that looks great, only to find out they are a short sale. While only 9% of the 5079 homes in our MLS are indicated to be in any kind of distress, the actual percentage in many segments is significantly higher, and overall these are under reported, largely due to agents not wanting to restrict showings on their listings.
Interest rates jumped late this week, all the way to 5.25% That doesn’t sound like much, but when you consider it was 4.75%, that is a big jump. While we all hope it will go back down, all this government borrowing isn’t helping mortgage rates, and oil prices jumping again isn’t going to help consumer confidence much either.
I’m off to show some more homes today. Being such a nice day, I’d guess we might even sell one!
Got questions about living in Colorado Springs? Call me at 719-590-4768 or 888-568-6784!

FHA Loan Limits Finally Back To Reality

Rick Van Wieren — Sat, 28 Feb 2009 15:10:00 +0000

Colorado Springs has never been a town whose real estate prices were blown way up with speculation. Many of the sales here tend to be owner occupied, and either FHA or VA, which is the last real “low down” financing options out there. The trouble has been that FHA loan limits were reduced to only $271,000 late last year, really putting a damper on the low down (3.5%) financing option. The limits are now back up to $325,000 in El Paso County effective late this week, enabling thousands of buyers to look at homes that their down payments otherwise would not have provided for. Many areas of town don’t really have too many homes under $271,000, so this should be a big help for areas such as Briargate, where the average inventory is at $354,000.

Speaking of Briargate, I listed a nice home this week in the Wedgewood area of Briargate. Priced at $309,900, it has excellent views nicely updated, good sized at 4 bed 4 bath 3100+ sf finished, and very close the mall, Rampart HS, Parliament Park, Focus on the Family, etc. It has brand new Corian counter tops with molded sink, many new Pella windows, nice hardwood floors throughout the main level, and a huge master with a 5 piece bath. Here is a link to more information: 8330 Sutterfield Dr Please call me at 719-331-7675 if you’d like to see it!

First Time Homebuyers Can Use the Help

Rick Van Wieren — Tue, 17 Feb 2009 14:23:00 +0000

Ever since they did away with down payment assistance last fall, we’ve had an issue for 1st time homebuyers. While many here in the Springs are eligible for zero down VA financing, there is a substantial group that is not. FHA financing requires 3.5% down, which is not awful. Sellers have always been able to help with closing costs, and that has not changed either. Still, the new stimulus package makes it nice for buyers to be able to tap their tax payments for up to $8000 to make it happen, and the new provisions make it so that this does not have to be paid back. For people who have plenty of equity, this won’t be any help, but it does help some younger buyers ‘get into the game’ and may free up some ‘move up’ buyers who needed to sell their homes before they could buy something. We’ll see how much real impact it has, but I know I am working with some first time homebuyers who will definitely like the help!

Qualifiying For A Loan Is Not Always Easy

Rick Van Wieren — Wed, 11 Feb 2009 15:14:00 +0000

These days there are lots of misconceptions about how hard it is to get a loan to buy a house in Colorado Springs. But not all of rumors are UNtrue either. Yesterday we got burned by an issue that has hurt many a loan before – what will a lender consider as income.
It is commonly known that self employed borrowers have the toughest time getting a loan, because after all, small businesses are sometimes risky, and subject to lots of ups and downs. But some employees are being treated as if they were self employed these days, and that is where the ‘sucker punch’ comes from.
The test that the lenders use is simple. Is your income reported on a 1099, or is it on a W-2? If you get a W-2 that documents your income, congratulations, you win major bonus points for the It’s Easy To Get a Loan game. Assuming your credit scores are good, you don’t have a lot of debt, and the income that is documented is sufficient, you are a likely winner. But no matter how good your credit score, how high your income, how low your debt, if you are a 1099 person, you need 2 years of tax returns from the ‘business’ you are deriving your livelihood from before they will consider it real. Even if it is guaranteed by contract. Even if it is in a field of expertise you’ve been in for a long time. No exceptions. This can really hurt someone who is in any number of fields where in fact the employer simply does it that way to avoid some payroll taxes and insurance, like some truckers, some construction workers, some technology workers, etc.
What is the answer? In general, it is best to qualify and purchase before setting out in a new direction, even if it means taking a little less pay for a while in exchange for the security of the W-2. Once you have the house, it is far easier to make major changes in your compensation structure or even line of work. Otherwise, a co-signer is likely your only fall back. If you are considering going to work in a 1099 environment that should really be a W-2 (there are surprisingly many of these), consider negotiating a slightly altered deal, where the employer can recover some of the payroll processing costs in exchange for you getting paid with a “real” paycheck. It might make the difference between owning a home or not.

Rick Van Wieren — Tue, 07 Oct 2008 14:00:00 +0000

The implosion of the financial markets is predictably having at least some impact on the mortgage industry in Colorado Springs, if for no other reason than they both compete for the same funds. Generally when the stock market tanks, interest rates go down, however, this has not happened quite yet, as they are still hovering around 6% despite the Dow closing below 10,000. Mortgage guidelines continue to tighten, however, the new rules are not all unreasonable. They are simply bringing the rules back in line with what have been common sense rules historically. By paying attention to the percentage of income people are making in house payments, and requiring reasonable credit scores and documentation, it is a bit like closing the barn after the horses have already gotten out, but it has to be done. Most of these rules are not that strenuous, and will be good for the market longer term.

I am getting a chuckle (between bouts of nausea) out of the new court fight between CitiGroup and Wells Fargo over Wachovia Bank. Citi made a sweetheart deal with the backing of the FDIC, and Wells figured out it was worth a lot more than that, and moreover did not need federal funds to do it. Now CitiGroup wants a court to award them $60 billion to cover their “lost opportunity” to steal the bank. Is there no shame? As things like this develop after the passing of the “bailout bill”, on top of the millions in last minute bonuses at Lehman Brothers before it went under, is it any wonder that people are disgusted with the banking industry in this country?

I am a sucker for mountain scenery. The top photo today is, of course, the famous Maroon Bells, near Aspen. The lower photo is Mount Sopris, taken at Carbondale. Both pictures are from Sunday, October 5, 2008.

Rick Van Wieren — Fri, 29 Aug 2008 14:05:00 +0000

Colorado Springs was not the showcase of the Democratic National Convention, but our near neighbor to the north, Denver, got some nice coverage out of the deal. Mile High is about 1 hour from here, and it is nice knowing that the Denver Broncos NFL football, Avalanche NHL Hockey, Colorado Rockies MLB baseball, and Nuggets NBA teams are all so close, and play in some really world class venues. Whatever your politics, it is fun to have some sports teams to root for.

Speaking of sports, the quintessential Colorado sport, skiing / snowboarding, celebrates a major pre-season milestone this weekend, with the major equipment and pass sales beginning. Lift tickets at most resorts are in the $85 range for one off visits, and season passes or 4 packs are the best way for Colorado residents to beat the high cost of riding. We’ll probably go with 4 packs to Copper Mountain this year ($119 for 4 visits), as gas prices and slow real estate sales will be putting a crimp on our families style. Normally a season pass for unlimited riding is $399.

We got a chance to check out the new emergency at Memorial Hospital North last night. My wife apparently hurt herself at the YMCA in a workout, and it flaired up badly on her late last night, so we drove the 1/2 mile to the ER (we could have walked, but she really was not feeling too good It is a beautiful place, and before I even got the car parked in the nearby lot, she was already being treated. If you have to spend the night at the ER, this is the place to do it!

We finally got a foreclosure property under contract yesterday. It took a full week, 3 or 4 rounds of back and forth negotiating, but I think the house will be a good one for this client, and it is by the cleanest foreclosure I’ve ever shown, with very little that needs doing.

We also had a closing delayed for a day as a result of miscommunication between lender and buyer (not my buyer or a lender I would normally use This could get interesting for the buyer, as he is scheduled to deploy to Iraq next week, and needs to be moving in this weekend. The processing department of your lender can make all the difference between a good purchase experience and a bad one, hopefully this will end up as just a minor inconvenience for the buyer and seller, but it is was another object lesson in using the best lender possible for your loan. I use Dana Hines at Adams Bank for this very reason, she never has these kinds of glitches.

Today’s photo is from the top of Copper Mountain this spring, we really enjoy taking the lift up and hiking down, and was the view looking back toward Frisco from Copper.

Rick Van Wieren — Tue, 15 Jul 2008 13:33:00 +0000

Mortgages are still pretty available, despite all the commotion in the financial markets. Ironically, it might actually bring rates back down if this keeps up (although we are in the low 6′s now, which is pretty good). With the stock market at such low numbers, it usually brings money into the bond market, helping rates.
We still have some pretty good programs too. I talk a lot about FHA, because with only 3% down, it goes all the way to $325,000, which buys a pretty decent home here. With 5% down, conventional loans go all the way to $417,000, which even includes some of our nicer new construction areas. And for jumbo loans (over $417,000), Wells Fargo has a program that allows you to combine a smaller 1st mortgage with a purchase money 2nd HELOC that avoids the stiff penalties of going to a true jumbo mortgage (although this is a 20% down program).
Last week we got a briefing on the new Sanctuary in the Pines development in D20 Black Forest. One of the signs that our market may be getting closer to a turnaround is new developments like this. Although prices will be starting in the $600′s pretty much for completed homes, these are 2.5 acre wooded lots in D2o, on a community water system, which is a first. I think this one will be a winner.
Another sign that things may be turning around is the supply of “spec” homes keeps shrinking. Last weekend I noticed the list of specs in Cordera in particular was very short. While the overall supply of homes is quite ample, there are definitely pockets where the only choice is start one from scratch. There sure are some great deals out there in resale homes!