Appraisal Issues in Denver front range real estate

With the rapid rise in Colorado Real Estate prices, appraisals are starting to become more and more of a concern as a condition to close. If you are either buying or selling and run into a situation where your appraisal is not at the sales price you have a few options to consider.

1. Dispute the appraisal - have your Realtor submit a list of comparable under contract or recently sold (no older than 6 months) homes that best justify your sales/purchase price. More importantly, find out why the appraiser did not use these comparable homes in their report.

2. Ask your lender if you can get a 2nd appraisal and this time make sure your Realtor, at minimum, educates the appraiser on the home as well as the comparable values in the area. Not all appraisers have the depth of knowledge for each specific subdivision.

3. Lower the price - Seller will have to adjust the purchase price to meet the appraised value.

4. Bring more cash - Buyer will have to come up with the cash difference between appraisal and purchase.

It is important that you have a licensed Realtor working for you to help you navigate this important step in process.

Short Sale vs. Foreclosure

We have clients who often ask us whether or not they should really seriously consider a short sale or just let their home go to foreclosure and just "walk away". For the most part, a real estate agent cannot play the role of an accountant as their are implications to both scenarios. We stongly urge all of our clients to communicate a legal and tax advisor before making any decisions with these. That said, we believe from the information we have gathered and the success that we have had with our clients that you are much better to successfully sell your home short rather than let it go to foreclosure. Here is a list of items that will help you understand some of the issues and current guidelines under both scenarios.


Issue - Can I get a Fannie Mae Loan in the Future?

Foreclosure - The current Fannie Mae Guidelines require you to wait 5-7 years before getting a new loan.

Short Sale - Current Fannie Mae Guidelines allow you to purchase another house after 2 years.



Issue - Can I get a future loan from any mortgage company?

Foreclosure - Any future application will require you to answer the question, "Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?" you'll have to answer that question yes.

Short Sale - You can state No because you short sold your home. You only have to say yes if the bank completes the foreclosure.



Issue - Credit Score Impact

Foreclosure - Your score is typically lowered by 250 to 300 points, or even more. This often stays on your credit score for over 3 years.

Short Sale - Only late payments show up. After a short sale, the mortgage is normally reported as "paid in full, settled." This lowers your score as little as 50 points if all other payments are being made. Oftentimes, this is off your credit report in as little as 12 months.



Issue - Will I owe the bank any money for the shortfall?

Foreclosure - Many lenders take 12-18 months to foreclose upon a property and resell it. This dramatically increases the loss and makes any deficiency judgment potentially bigger.

Short Sale - Few lenders ask for a promissory note on a short sale. When they do ask for one, they request the borrower repay them a percentage of their loss and can schedule to have that paid off under a long term schedule with no interest.


We hope this can open your eyes a little bit. We understand the stress that people are faced these days with the possibility of a foreclosure and most people just become paralyzed and dont do anything. We strongly suggest speaking with a seasoned/experiences short sale agent who has a system in place to make the possibility a reality. Do not just use any agent. Make sure you know they have had success with other clients.

We at HotSpot Real Estate, have a short sale system in place with a dedicated negotiation team to work with our clients that are faced with this possibility. If you are in this position, please contact us to discuss your options. Everything is 100% confidential and you are never obligated to do anything.

You can either call us at 720.488.4810 or go to http://www.hotspotrealestate.com/denver_short_sale_negotiators.htm

You can rebound from a short sale so please dont wait to contact us.

7 Reasons to Own a Home

1. Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage, your property taxes, as well as some of the costs involved in buying your home.

2. Appreciation. Real estate has long-term, stable growth in value. While year-to-year fluctuations are normal, median existing-home sale prices have increased on average 6.5 percent each year from 1972 through 2005, and increased 88.5 percent over the last 10 years, according to the NATIONAL ASSOCIATION OF REALTORS®. In addition, the number of U.S. households is expected to rise 15 percent over the next decade, creating continued high demand for housing.

3. Equity. Money paid for rent is money that you’ll never see again, but mortgage payments let you build equity ownership interest in your home.

4. Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.

5. Predictability. Unlike rent, your fixed-mortgage payments don’t rise over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will increase.

6. Freedom. The home is yours. You can decorate any way you want and benefit from your investment for as long as you own the home.

7. Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity

Denver is Nations 6th Best City for Business

The Denver Business Journal recently reported that Market Watch has ranked Denver as the nations 6th best city for business out of 102 major metro areas.

Read the full article here:

MarketWatch: Denver is nation's 6th-best city for business | Denver Business Journal

Looking for a Short Sale?

Excellent Short Sale Opportunity in Centennial, CO.
Already lender approved - a great investment.
Time is running out - goes to foreclosure in January.


http://www.hotspotrealestate.com/830oakwood/

• 

  Outdoor Lighting for Curb Appeal and Safety

  Well-planned outdoor lighting improves curb appeal, safety, and security for your home. Read

Visit houselogic.com for more articles like this.

Copyright 2010 NATIONAL ASSOCIATION OF REALTORS®

FHA - changing with the times

Announced FHA Policy Changes:


1.Mortgage insurance premium (MIP) will be increased to build up capital reserves and bring back private lending

◦The first step will be to raise the up-front MIP by 50 bps to 2.25% and request legislative authority to increase the maximum annual MIP that the FHA can charge.

◦If this authority is granted, then the second step will be to shift some of the premium increase from the up-front MIP to the annual MIP.

◦This shift will allow for the capital reserves to increase with less impact to the consumer, because the annual MIP is paid over the life of the loan instead of at the time of closing

◦The initial up-front increase is included in a Mortgagee Letter to be released tomorrow, January 21st, and will go into effect in the spring.





2.Update the combination of FICO scores and down payments for new borrowers.

◦New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA's 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%.

◦This allows the FHA to better balance its risk and continue to provide access for those borrowers who have historically performed well.

◦This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.





3.Reduce allowable seller concessions from 6% to 3%

◦The current level exposes the FHA to excess risk by creating incentives to inflate appraised value. This change will bring FHA into conformity with industry standards on seller concessions.

◦This change will be posted in the Federal Register in February, and after a notice and comment period, would go into effect in the early summer.





4.Increase enforcement on FHA lenders

◦Publicly report lender performance rankings to complement currently available Neighborhood Watch data - Will be available on the HUD website on February 1.

■This is an operational change to make information more user-friendly and hold lenders more accountable; it does not require new regulatory action as Neighborhood Watch data is currently publicly available.

◦Enhance monitoring of lender performance and compliance with FHA guidelines and standards.

■Implement Credit Watch termination through lender underwriting ID in addition to originating ID.

■This change is included in a Mortgagee Letter to be released tomorrow, January 21st, and is effective immediately.

◦Implement statutory authority through regulation of section 256 of the National Housing Act to enforce indemnification provisions for lenders using delegated insuring process

■Specifications of this change will be posted in March, and after a notice and comment period, would go into effect in early summer.

◦HUD is pursuing legislative authority to increase enforcement on FHA lenders. Specific authority includes:

■Amendment of section 256 of the National Housing Act to apply indemnification provisions to all Direct Endorsement lenders. This would require all approved mortgagees to assume liability for all of the loans that they originate and underwrite

■Legislative authority permitting HUD maximum flexibility to establish separate "areas" for purposes of review and termination under the Credit Watch initiative. This would provide authority to withdraw originating and underwriting approval for a lender nationwide on the basis of the performance of its regional branches

In addition to the changes proposed today, the FHA is continuing to review its overall response to housing market conditions, and continuing to evaluate its mortgage insurance underwriting standards and its measures to help distressed and underwater borrowers through FHA/HAMP and other FHA initiatives going forward.

VISIT http://www.hotspotrealestate.com/ and we can get you in touch with a preferred lender to answer more specific questions or call or email at 720.488.4810 - info@hotspotrealestate.com

Federal Housing Tax Credit Information

In case you do not know the guidelines for the First Time Buyer and Move-up/Repeat Buyer Tax credit, here they are at a glance.
$8,000 First-time Home Buyer Tax Credit at a Glance
• The $8,000 tax credit is for first-time home buyers only. For the tax credit program, the IRS defines a first-time home buyer as someone who has not owned a principal residence during the three-year period prior to the purchase.
• The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer’s principal residence within three years after the initial purchase.
• The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
• The tax credit applies only to homes priced at $800,000 or less.
• The tax credit now applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.
• For homes purchased on or after January 1, 2009 and on or before November 6, 2009, the income limits are $75,000 for single taxpayers and $150,000 for married couples filing jointly.
• For homes purchased after November 6, 2009 and on or before April 30, 2010, single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.
The $6,500 Move-Up / Repeat Home Buyer Tax Credit at a Glance
• To be eligible to claim the tax credit, buyers must have owned and lived in their previous home for five consecutive years out of the last eight years.
• The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer’s principal residence within three years after the initial purchase.
• The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $6,500.
• The tax credit applies only to homes priced at $800,000 or less.
• The credit is available for homes purchased after November 6, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, the home purchase qualifies provided it is completed by June 30, 2010.
• Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

Cherry Hills Village, CO - a good buy?

Anyone looking for luxury/high end real estate in the Denver front range, knows very well that one of the best if not THE BEST areas is Cherry Hills Village. Until recently this area has been a gem of an investment and a lifestyle that not many areas can provide. The lifestyle is still present, however, due to the economic crisis we are currently under, values have dropped significantly and sellers are feeling the blunt pain of those reductions to what was once market highs. Prices have not only reduced by $100's of $1000's but even by $1,000,000 at a time in certain cases... A very tough time to be a seller if you need your equity. However, there is always two sides to the story and that flip side is anyone in position to buy in Cherry Hills Village under current economic conditions would be wise to seek out the potential lows in the markets current value. There is no crystal ball, as we could still stir at this bottom for a while or possibly drop lower but most projections is that the economy is slightly improving and the Denver front range is under valued at this point and likely to rise in the near future thus posing significant potential gains in the short and long term. Always have a professional opinion before making such a leap of faith but in this bloggers/agents opinion, Cherry Hills is ripe for the picking.

Forbes Magazine Ranks Denver #1 real estate market

Denver is ranked #1 in America as the best city to buy a home according to Forbes Magazine and its latest ratings. “While the majority of the nation’s housing markets are still working toward a bottom, some cities are boasting fundamentals that make them good places to buy a home now,” Forbes reported recently.
Phoenix was ranked No. 2 on the Forbes list, followed by Boston, San Diego and Los Angeles.
The Forbes rankings seem geared more toward each market’s current and future potential as a place to buy a home, since some of the cities at or near the top of the list are among those hardest hit by the recession.
The report ranked the 25 largest U.S. metro areas on the basis of change in price per square foot, frequency of real-estate transactions, and how evenly distributed home-sales activity is in a metro area.
“Denver tops the list,” Forbes said. “It had 25 percent of its property sales occur within approximately 25 percent of the city’s ZIP codes. This means sales in various parts of the city were fairly evenly distributed, showing proportionate activity. The further a city deviates from the 25 percent mark, the less evenly distributed the market is in that city, and thus the lower that city ranks.”
Forbes also determined that average price per square foot of housing space increased 5.7 percent in Denver between February and March of this year, and that transactions decreased 8.4 percent between March 2008 and March 2009, less of a drop than many cities.
“Denver scores very well in terms of being able to bring people into a stable housing market,” the magazine quoted Moody’s economist Christopher Cornell as saying. “It has better growth potential than most cities today.”

Great news for potential buyers and sellers alike!!!

Short Sale Options to be considered

Broderick Perkins with Realty Times wrote - Now, mortgage modifications can include second mortgages -- not just first mortgages -- and cash incentives are sweetening short sale deals, thanks to new efforts by the Obama Administration.

The new efforts give some homeowners a second shot at a home-saving loan modification, especially if they were originally turned down -- or turned off -- because the second mortgage (piggy back, home equity loan or line of credit, etc.) impeded the process.
Other homeowners may now be able to take the short sale escape route from unaffordable mortgages that could otherwise wind up in foreclosure.
Second mortgage modifications
Loan modifications are designed to make the home loan more affordable, typically by reducing the interest rate, extending the term of the loan and, less often, by reducing the principal. They are not refinanced mortgages, which pay off the old mortgage with a new mortgage.
Under Making Home Affordable's new second-lien program, borrowers whose first mortgages are modified will automatically have payments reduced on their second mortgages as well, provided the first and second-mortgage lender participates in the program.
Twelve mortgage servicers currently do. Among them are large banks including, Bank of America, Wells Fargo, Countrywide, Citibank, Chase and others.
Eligible homeowners looking to modify their first mortgage must be an owner-occupant of the home; have an unpaid principal balance that is no more than $729,750; have a loan that was originated on or before January 1, 2009; have a mortgage payment (including taxes, insurance, and home owners association dues) that is more than 31 percent of their gross monthly income; and have a mortgage payment that is not affordable, perhaps because of a significant change in income or expenses.
Under the new second mortgage program, in addition to lowering the payment, lenders can also opt to erase a borrower's second mortgage in exchange for a lump-sum payment from the government.
New short sale incentives
Short sale incentives were among recent refinements to the Obama administration's housing rescue programs.
In a short sale, the lender closes the mortgage in return for whatever sale price the homeowner can net. However, the difference is sometimes considered income for which the selling homeowner may be taxed. It's important to include a tax professional's advice in the deal.
Under the new short sale incentive, lenders can receive a $1,000 payment from the U.S. Treasury for allowing the owner to sell the house for less than the amount owed on the mortgage and for accepting the proceeds as full repayment, rather than treat it as a short sale.
Lenders can also receive $1,000 for accepting a deed-in-lieu transaction, in which the deed is simply transferred to the lender instead of going through a costly foreclosure.
Homeowners who agree to short sales or deed-in-lieu deals can receive up to $1,500 in closing costs. To help stop second mortgages from blocking the deal, the Treasury will pay second lien holders up to $1,000 to relinquish their claims in such transactions.
To learn more about these options visit MakingHomeAffordable.gov