Archive for the ‘Financing’ Category
Friday, June 25th, 2010
By Ulrich
I had the opportunity last week to represent the Steamboat Springs Board of REALTORS at the National Association of REALTORS (NAR) Resort and Second Home Symposium (RSPS) held concurrently with the Western Mountain Resort Alliance (WMRA) semiannual meeting held on June 13-18 at Lake Tahoe. Besides being able to enjoy the beautiful Lake Tahoe area I found the Symposium and meeting educational and interesting.
During the two day RSPS Symposium there was several opportunities to speak with various persons from NAR including the President Elect, Ron Phillips. Ron comes from a six person firm in Rhode Island. Ron is a third generation REALTOR and quite available to his constituency. Throughout the Symposium members of WMRA spoke out about the lending issues that are plaguing all of our resort areas. As President of WMRA Dennis Hanlon would later state “NAR finally gets it”!
This became evident as during his opening remarks Mr. Phillips stated that a leadership team from NAR would be visiting all five major lending institutions within the next month to urge them to increase their lending practices. He informed us that 20 years ago the major banks conducted less than 10% of the national mortgage business. Now the big five hold 73% of all mortgages. NAR is also working on Congress to extend the June 30 deadline to close on a first time homebuyer’s tax credit property. There are currently 180 thousand properties nationwide that are at risk of missing this deadline.
We were also given a presentation by NAR’s Chief economist Lawrence Yun. There are several economic indicators that point to a slow but steady recovery. He pointed to items such as the GDP growth along with job market stabilization and recovery of the Stock Market. Having said that there are still 8 million jobs that need to be absorbed as well as high Real Estate inventories. The forecast is for this process of job and property absorption to take up to four years to fully recover. During most strong economies the United Sates will average about one million housing starts per year. The current forecast for 2010 is less than half of that. California seems to be leading the way with several areas showing raising prices and inventory dropping.
He forecast that the interest rates will remain low and stay between 5% and 7% over the next five years. When asked about inflation Dr. Yun’s opinion was that this was currently not a credible threat. The dollar is viewed as a strong and stable currency and worldwide is used by countries as currency stabilization. As long as the confidence in the dollar remains he does not see any significant sell off which would lead to inflation.
The Western Mountain Resort Alliance will continue to spearhead the effort to get some legislation passed to change Freddie Mac and Fannie Mae’s rules to allow for condo financing and/or ask for a temporary exemption like they allowed in various counties of Florida. The biggest hurdle is the perception that the legislators are simply clearing the way to allow second home and investment lending for the already rich. In the meantime we are also working through NAR to get the lending institutions to be more responsive to condominium lending. As I pointed out the issue is not just that we have well qualified Buyer’s who wish to purchase but also that some of the Seller’s of these properties HAVE to sell.
We have been very fortunate in the Yampa Valley in that our distressed properties consist of less than 1% of our market. The owners of these properties have been able to survive but now need to sell. I would suspect that the last thing that banks want is another wave of delinquencies.
I enjoyed my stay as well as the Symposium but I have to tell you there is nothing better than arriving back home in Steamboat.
Posted in Financing, Market Trends | No Comments »
Friday, March 26th, 2010
The following article was supplied by Joe Birkinbine of ATP Financial Services in Steamboat Springs: We’ve become accustomed to low consumer interest rates, and many people may be conditioned to see higher rates as something to fear. But it’s difficult to see much of a downside to the Fed’s move. The interest rate in question, the discount rate, is what the Fed charges banks for emergency loans. It’s not directly related to the interest charged on consumer loans, so the rates you pay for credit cards, auto loans, and adjustable mortgages aren’t likely to be affected. In announcing in February 2010 that it would raise the discount rate 25 basis points to 0.75%, the Fed also made it clear that it would not soon raise the federal funds rate, which has a tremendous influence over interest rates paid by consumers. When the Fed adjusts interest rates, the earliest and most visible effects tend to be psychological. By raising the discount rate, largely a symbolic gesture, the Fed managed to send a message without potentially dampening the prospects of economic recovery, some analysts say. Higher interest rates are indeed a concern for consumers, but they are also a good sign for the economy Signs of RecoveryIn 2007, the Fed began lowering the discount rate from a high of 6% to address problems in the credit markets that began to surface that year. Fear had gripped the credit markets, and lenders were reluctant to make loans. The Federal Reserve, working with other central banks, undertook several extraordinary measures designed to restore confidence. One of the measures was to lower the discount rate to assure lenders that they would continue to have access to marketable funds if other sources dried up. Raising the discount rate is the Fed’s first step toward removing some of the nearly $1 trillion in emergency stimulus that it pumped into the financial system. It is an indication that the Fed is confident lending conditions are stable enough that extraordinary measures are no longer necessary. Heading Off InflationOne of the common criticisms of the Fed’s trillion-dollar emergency intervention was that flooding the financial system with so much money was eventually going to spark inflation. Although this is a valid criticism, inflation is likely to remain low until the nation’s employment situation begins to improve. Indeed, weak employment, tepid consumer spending, and other challenges facing the economy are among the reasons why the Fed hasn’t yet moved to raise the federal funds rate. Nevertheless, the Fed faces a tricky task in removing its emergency stimulus from the system soon enough to avoid inflation but not so quickly as to stifle the recovery or frighten the financial markets, which closely watch the Fed for signs of confidence or fear. By raising the discount rate now, the Fed is helping to reduce the risk of future high inflation, which is good news for investors and consumers. Rates Will Eventually RiseThe Fed has signaled that it is likely to increase the federal funds rate as soon as economic conditions allow, which will likely cause consumer interest rates to increase. Most analysts don’t expect this to happen until late 2010 or sometime in 2011. What will that mean for your finances? Higher interest rates are generally a sign that economic activity is picking up, so although you may no longer be able to buy a car with zero interest, there are other benefits to living in a growing economy. Please call if you have questions about how to prepare for higher interest rates.
Posted in Financing | No Comments »
Thursday, March 25th, 2010
Calling all first-time homebuyers – deadlines are approaching, and there has been no talk of extending them.
Deadline # 1: April 30th
This is the deadline by which you will need to have a property Under Contract. “Under Contract” means that all negotiations will have been ironed out and the final sales price and terms of the contract will have been agreed to, and there will be a signed contract by both parties in hand. Typically negotiations will take a couple of days, and maybe even up to four days if buyers and sellers are going back and forth with the price or the dates, etc. If we allow four days of negotiations that means you’d have to make an offer on a property by Monday April 26th.
You should allow several hours to review the contract with your real estate agent. And it’s best to have a pre-approval letter from your lender to submit with the offer. To create that letter your lender will need to have met with you and had time to review your tax returns and run a credit check, so you’ll need to have had an appointment and gotten your initial paperwork together.
If not with the offer, at least within a couple of days of submitting the offer you will need to have an Earnest Money check ready to be handed over to the listing agent’s office or the title company. The check will almost immediately get deposited into a trust account, so you will need time to get the cash together for the Earnest Money deposit.
And of course before that you will have had to find the property you would like to buy. This can take awhile. You will also need time to decide on the price you want to offer. Your real estate agent can help you by running comparative market analysis of similar properties which have sold recently, but this too will take a little while.
The good news is that after you get Under Contract you will have time for due diligence, which means you’ll have time to have the home inspected, to review the HOA minutes and bylaws, to get a survey done, etc., so you don’t need to have that done beforehand.
Deadline #2: June 30th
This is the deadline by which you will need to have Closed on the property. “Closing” is the term used for when the title of the property actually changes hands from the previous owner to you. In Colorado Closings take place at Title companies, and that is when and where monies are also distributed. You’ll need to have your down payment money in the form of a Cashier’s check, and your lender will need to have their money to the Title Company by then too.
Since it typically takes two months for a loan to go through, and since you won’t be the only one trying to get a loan during that period (read: lenders will be swamped), I think April 30th may even be too late to get Under Contract if you need to close by June 30th.
Bottom line: Procrastinators the time has come! We need to look at properties this weekend.
Tags: , buying steamboat springs real estate, first-time homebuyer credit, tax credit deadlines
Posted in Buying Tips, Financing, Real Estate Opportunities, Taxes | No Comments »
Wednesday, December 9th, 2009
By Susana Field
The average 30-year fixed-rate mortgage dropped to a new record low of 4.71% this last week, according to Freddie Mac. The week before it was 4.78%, while last year the average for a fixed-rate, 30-year mortgage was 5.53%.
The first-time homebuyer’s tax credit has been extended through next spring, and it was expanded to include folks that have lived in their primary home for at least 5 years and wish to move up.
We are also seeing more and more housing deals come on the market here in Steamboat Springs, Colorado. And buyers are taking advantage of this by gobbling up Steamboat’s housing opportunities.
This October Steamboat Springs saw 20% more deals close than a year-ago October. And although the number of deals was up, amazingly the total amount of money spent on those deals was down 33% this year from last. Twenty percent more deals, with a 33% price drop since last year!
November of 2009 saw 58% more deals close than November of a year ago, with a total price increase of only 17%.
Low mortgage rates, tax credits, and great prices! Maybe it’s time to… “Have yourself a Merry Little Christmas…” with a Steamboat house key under the tree. Give us a call and we’ll help you go shopping.
Tags: Mortgage rates, Steamboat Springs CO real estate
Posted in Financing, Market Trends, Real Estate Opportunities, Taxes | No Comments »
Friday, December 4th, 2009
Understanding all the aspects of a Real Estate purchase in Steamboat Springs is what we do well at Buyer’s Resource. From the inspection period to the title work and all the minor nuances are important aspects to appreciate and understand. One of the most important is, of course, lending. Even though interest rates are at historic lows there are still ways to save, possibly, thousands of more dollars through the term of the loan. One of these is through Origination points.
Origination points are often misunderstood. Points are nothing other than interest paid at the time of closing to obtain a lower interest rate on a loan. One point is equivalent to 1% of the loan amount. If you are going to borrow $300,000 on your loan, one point would equal $3,000. This generally generates 1/8 to 3/8 of a percent lower interest rate, depending upon the loan program. As always, current market conditions dictate what the best choice will be at the time you want to buy a home.
When deciding whether or not you should pay points, take into consideration where interest rates are at when you seek financing. Compare that to historical market trends. When interest rates are low it makes more sense to pay points, particularly if you think you will be living in the property for an extended period of time. When rates are higher then historical norms it probably isn’t prudent to pay for points because there is a strong likelihood that the interest rates will come down again will bring up the opportunity of refinancing. If you refinance too early then you would lose the money that you spent buying down the points.
Another strategy when negotiating the price of a property and you have reached an impasse is to pay a little more for the home and have the Seller buy down the interest points. This could be a win-win situation as the Seller gets the higher dollar amount while you, the Buyer, could save the extra money that you have paid for the property over the length of the loan. In some cases it may even help a Buyer qualify for a higher loan amount.
Being savvy with the entire purchasing process is what we pride ourselves in at Buyer’s Resource.
Posted in Buying Tips, Financing, Uncategorized | No Comments »
Friday, November 27th, 2009
Ever since this financial crisis has hit the financial institutions practices pendulum has swung completely the opposite direction, and perhaps rightfully so. While it was almost too simple to qualify for loans, pre crisis, with no income statements or tax returns needed, now it has become increasingly difficult to obtain mortgages on certain types of properties. Nowhere is this truer than in the second home or vacation property arena. The hardest hit products are fractional ownerships (simply no one is providing lending for this product type) and resort condos. The lenders theory is that should an owner come into financial difficulty they will quit paying on their secondary or vacation property prior to allowing their primary home to face possible foreclosure. Although the reasoning is sound it is not based in fact. This would be difficult enough but the lenders are now taking it to another level. Theorizing that these resort condos cannot be funded or refinanced and more will come under short sale or foreclosure status, the assumption is that entire projects will begin to fail as the Homeowners Dues will not be paid. To be fair to the lenders, Fannie Mae and Freddy Mac will not insure these loans.
We first noticed this disturbing trend with properties that provided amenities to guests such as shuttle service, swimming pools and on property check in desks. This has now spread to properties that have none of the above. The underwriters are getting on the internet and google the name of the project and if they find a certain percentage of short term rental units within that project they deny funding. I witnessed this first hand as a Quail Run unit that I had under contract was turned down for financing. Quail Run consists of approximately eighty two and three bedroom units. One common Hot Tub and playground, no shuttle, no on site check in but there happens to be seven units available for rent on a short term basis by Pioneer Ridge Management. Although the percentage is less than 10% the project was still denied for lending.
Due to this current practice Buyers either have to bring cash to the table or the Seller has to be willing to provide seller carried financing. Some projects are holding emergency HOA meetings to discuss the possibility of changing their regulations to not allow short term rentals thus allowing their units to be sold via financing. This will have an adverse effect on the owners who purchased the unit understanding the rules at the time of purchase to allow short term rentals.
As you might expect this issue is having dire consequences for people who need to sell their resort condos. From the lenders side it is a self fulfilling prophesies.
Posted in Financing, Steamboat Condominiums, Uncategorized | No Comments »
Wednesday, August 5th, 2009
What a great feeling of exhilaration one has when initially finding out that you are under contract. Be it your first home, a family getaway condo or your retirement property. It is a feeling of accomplishment and achievement. The process of working toward a successful closing is underway. The appraisal has been ordered from your lending institution and the home inspector has been scheduled. Your Steamboat Springs Exclusive Buyer’s Agent has prepared a detailed list of check list items like change utilities over to your name and secure property insurance. You’re comfortable in the fact that your Exclusive Buyers Agent will help guide you through the four to six week process. In fact you’re so comfortable that you decide to reward yourself and open up a new charge account and refurbish your wardrobe. Oops!
Our best advice is that during this process you develop a new relationship, a very close relationship, with your loan officer or mortgage broker. The entire lending climate has changed in the past year and is still in a mode of flux. Every week seems to bring new changes, stipulations and horror stories to the Real Estate world. Although your Exclusive Buyers Agent can use their knowledge and expertise to council you through a myriad of issues they are neither attorneys nor bankers. No matter how hard they try there is no possible way that they can keep up with all the changes occurring in the lending industry. Quite frankly even people who work full time in that industry are barely keeping their head above the knowledge waters.
While you are under contract the lending underwriters have you under great scrutiny. They are looking for anything even slightly out of the ordinary, constantly monitoring credit scores and recent transactions. Are you transferring monies from business accounts to personal accounts? Opening or even closing credit card accounts? Purchasing new vehicles or changing jobs? All are red flags that may impede and/or cancel the lending process that you have undertaken. Any significant financial transaction (and even some that you believe to be trivial) should be reviewed and approved by your loan officer or mortgage broker. We understand that this process seems to be tremendously invasive but for the four to six weeks that it will take to muddle through this process just be on your best behavior and tred lightly on those pins and needles of money management.
Posted in Buying Tips, Financing, Uncategorized | No Comments »
Thursday, July 9th, 2009
Where has all the money gone???
Back in December of 2008 congress acted swiftly to assure that moneys were available for Banks and lending institutions to allow the American people to secure mortgages. Sooo why is it so difficult to obtain these funds? Steamboat Springs Colorado is facing the same issues and problems that all other resort towns across the nation are facing. It seems like the lenders are making it as difficult as possible to pry the dollars out of their hands.
As is generally the rule of the pendulum the availability and rules to obtain funds has swung from one extreme to the other. Even one short year ago it was very easy and straightforward to obtain a loan and with historically low interest rates. Ever since the housing crisis (how can there be a crisis with less than 4% of the homes in the United States facing foreclosure?) many of the rules have changed.
One market segment in Steamboat Springs that is bearing the adverse affects is the Condominium market. Condominiums are America’s second homes. They are used for vacations and retreats and holidays as a specific place that the entire family loves to gather and enjoy. What a wonderful concept to purchase a secondary home and have someone manage all of the details like transportation to the ski area, cleaning and heating the swimming pool, cutting the grass, booking a nice dinner out for the family. All you had to do was show up check in at the front desk conveniently located on site. As an extra bonus, if you were not using the unit the Management Company could rent it out to guests and you would end up with about half of that rental fee. Suddenly this wonderful concept has become a burden. For some inexplicable reason lenders are no longer making money available for this market segment. So the question is why? Were there more condos that faced foreclosure than single family homes? Absolutely not! In fact HUD reports that less than 1% of condominiums are in foreclosure. So what gives?
The best explanation that I have heard is that the lenders are anticipating that if an owner is facing a financial crisis they will naturally allow the condominium to go into foreclosure prior to their primary home. Although the concept has some logic to it, the foundation is not based in fact. This has, currently, not proven to be the case and if there is someone who is facing a possible foreclosure the banks are making it impossible for the person to sell because whoever wishes to purchase the property CAN’T GET FINANCING!
Loan underwriters are now using the “Google” rule which means if they can find a nightly rental in a complex by “Googleing” that complex it will be considered a Condo-Tel and lenders are not making loans to Condo-Tels. We have several complexes in the Steamboat Springs Mountain area where the vast majority of owners are full time residents and work in the community and raise families. Unfortunately if an underwriter can find even one unit that offers nightly rental they often will reject the loan request.
The silver lining is that this will have to be corrected at some point as the pendulum moves back to center. This also means that sellers are motivated to look at all offers including the possibility of owner financing.
This is just one small factor that is holding up the Real Estate market in Steamboat Springs from appreciating once again. Of course there are several more reasons that will take another blog, or two, or three. As always we would be happy to discuss these issues with you in person.
Posted in Financing | No Comments »
Thursday, June 18th, 2009
“Mustang Sally better slow that Mustang down!” Yes it’s time again for the 21st annual Ford Mustang Roundup. This weekend the streets of Steamboat Springs will be filled with 450 Mustangs of every year and model. A variety of events occur throughout the weekend but my personal favorite takes place on Saturday June 20th when Lincoln Avenue will be closed to traffic from 10:00 a.m. to 3:00 p.m. between 5th and 10th street allowing the Mustangs to show off their shine and grandeur. Strolling down the road seeing all of the classic and modern Mustangs and conversing with the owners is always an annual favorite.
Another Father’s Day favorite event is hiking up to the top of the Gondola and enjoying their tremendous brunch. From there my wife, Janet, and I will be joining our friends for our weekly “Sunday” round of golf. The winner is proudly presented with the winner’s jacket ala the Master’s tournament. Our jacket is passed on week to week and each winner is responsible in adding something to the jacket. The jacket itself is a rather hideous blue with gold piping. If you are looking to finance you may want to take a fresh look at FHA (Federal Housing Administration) programs. The FHA was created in 1934 and used extensively during the 40’s to help finance military housing and homes for returning veterans and their families. FHA funding has fallen out of favor in the past few years for a variety of reasons, one of which was a complaint that FHA appraisal guidelines were too stringent and the appraisers were too picky. The focus has shifted away from “picky” items like cracked windows and leaky faucets. The FHA is now concentrating on the overall valuation of the property. With the changes and streamlined features that the FHA has made there may be an opportunity to get better terms and better pricing then conventional loans. For more information on FHA programs go to: www.fha.gov.Happy Fathers day to all of you deserving Dad’s!
Posted in Financing, The Steamboat Lifestyle | No Comments »
Friday, June 12th, 2009
Sunshine! That precious commodity that we enjoy so often in Steamboat Springs has finally returned. For how long we are not certain but I can assure you that most locals will be out enjoying the sunshine while it lasts. June is, after all, supposed to be the driest month for Steamboat according to the weather service. My 33 years of occupancy disputes this theory as I believe September to be the driest month. So what is this eerie and unaccustomed sight of cloudy mornings and dark wet afternoons and evenings? The meteorologists claim that we are a victim of two massive storm fronts that don’t seem to be moving. One is anchored near the Aleutian Islands and another squatting off the coast of Greenland.
Whatever the reason I can tell you it is the main topic of conversation at coffee shops and grocery stores and all the other social gathering places. We are so accustomed to waking up to sun in the morning and not having to worry about rain that many of us don’t even own an umbrella.
Maybe the Sun is beginning to shine on the national economy also. International markets are showing positive signs as are the American Stock and Bond markets. Unemployment figures are declining and home sales are up.
Conversing with Colleagues in various parts of the country there seems to be a lot of people taking advantage of the $8,000.00 first time home buyers tax credit. What many people don’t understand is that a “First Time Home Buyer” is considered someone who has not had ownership interest in a home for 3 years or more.
Getting back to my weather theme today my analogy for Real Estate purchasing in the Steamboat Springs, Colorado area is akin to the perfect storm. We have great inventory, anxious sellers, historically low interest rates, Federal Tax credits and prices that reflect the market of two to four years past. Mix all of these ingredients together and you have the makings of a Buyer’s Tornado. The time and climate is right to take advantage of these ingredients. Now go out and enjoy the Sunshine!
Posted in Financing, The Steamboat Lifestyle | No Comments »
Order our FREE Buyer's Guide Now!
Click Here
Written specifically for Steamboat buyers to save TIME AND MONEY!
|
 |
|
Buyer's Resource of Steamboat
118 8th St. Steamboat Springs, CO 80487
Phone: (970) 870-8885
Toll Free: (877) 970-8885
|
|
|
