Owning a rental in Colorado these days can be profitable

The vacancy rate for apartments in a sample of Colorado cities has continued to drop, driven by the fact that more people are renting and few new apartments are being built. A new report from the Colorado Division of Housing notes that the recent vacancy rate is the lowest since the first quarter of 2001, when the rate was 4.3 percent.

"Three years ago, there was a craze that everyone should own their own home," said Gordon Von Stroh, a University of Denver business professor and the report's author. "We are past that. We are a lot more realistic now."

Von Stroh said wages haven't gone up and that the customary down payment on the purchase price of a home is 20 percent, a significant increase from two years ago. He said many can't afford the down payment.

"The American family is strapped," Von Stroh said. "Costs are going up. To buy a new home today is a significant chunk of money."

This report, though defined by the Division of Housing as "statewide," is based on a handful of Colorado cities. Ryan McMaken, Colorado Division of Housing spokesman, said that although there were small increases in vacancy rates in a few places, the state is moving toward fewer vacancies.

"The Denver area and northern Colorado have some of the tightest markets right now, and not surprisingly, in those areas we're also seeing some of the most sustained growth in rent in recent quarters," McMaken said. 

The average rent in Colorado increased 2 percent from the second quarter of 2010 to the second quarter of 2011, rising from $862 to $877. Von Stroh said there haven't been significant rent increases in the past decade. With demand for rentals going up — some apartment communities report vacancy rates of 2 percent to 3 percent — owners of these investment properties are making a profit by hiking rents.

If you would like to speak with an industry expert about your ability to secure financing for a purchase, refinance or simply to see if you would qualify to do so, please contact Glenn Dooley or one of our many licensed mortgage professions at MAC5 Mortgage.  Glenn can be reached at gdooley@mac5m.com or at 720-407-6338.  You can also inquire for more information on our contact us page and/or fill out an online application.  By doing so, you will be able to receive an no cost, no obligation review of your credit profile and we will be happy to demonstrate our team's ability to earn your business.

Reasons buying a Home now makes sense

If you’ve been waiting to buy a house for the right time, the next few months may be the best time to buy. Waiting for both housing prices and interest rates to fall may not be a good strategy for potential homebuyers since analysts don’t expect any more significant declines in these two most important home-buying factors. Here are several reasons you should get into the housing market sooner than later.

The Lowest Housing Prices in Years

Nobody knows when the housing market will hit complete bottom, but prices are at their lowest in several years and may soon start inching back up again. So buying now or in the near future may be the right time. An abundance of bargain-priced housing is now available because of the recent foreclosures and falling prices.

Interest Rates are expected to Go Up

As the economic recovery gains momentum, interest rates are expected to increase, making mortgages more expensive. Even a half-percent increase in mortgage interest can add a hundred dollars or more to your monthly payments, depending on the amount of your loan.

Low Down Payment Mortgages Available

Low-down-payment financing through FHA-insured mortgages is available as an additional inducement to buy a house now. Down payment minimum requirements also fluctuate and may increase as the market heats up, so potential buyers with less cash to consummate a deal may be well-advised to buy now.

If you would like to speak with an industry expert about your ability to secure financing for a purchase, refinance or simply to see if you would qualify to do so, please contact Glenn Dooley or one of our many licensed mortgage professions at MAC5 Mortgage.  Glenn can be reached at gdooley@mac5m.com or at 720-407-6338.  You can also inquire for more information on our contact us page and/or fill out an online application.  By doing so, you will be able to receive an no cost, no obligation review of your credit profile and we will be happy to demonstrate our team's ability to earn your business.

How HARP 2.0 can help - giving you the chance to refinance when in trouble.

 

For homeowners who want to refinance but owe more on their mortgages than their homes are worth, the wait may now be over. Borrowers can now find a wide range of lenders offering refinances through HARP 2.0, a program that allows borrowers to refinance regardless of how deeply underwater they are. In some of the places that were hit hardest by the housing downturn, these homeowners have been waiting to refinance under this updated program for months, as it is their only chance to refinance at a lower rate.

HARP 2.0, a revamped version of the Home Affordable Refinance Program, was announced months ago. Until now, only a limited number of borrowers had access to it. Although a few national lenders have started to offer HARP 2.0 refinances to their own customers this year, most lenders were waiting for Fannie Mae and Freddie Mac to update their automated underwriting systems with the program's new rules. These updates were completed as of March 17, 2012.

Now, borrowers be able to get a HARP 2.0 refinance from their mortgage provider.

Who is eligible for a HARP 2.0 refinance?

To qualify for a HARP 2.0 refinance, you must meet these requirements:

• Your mortgage must have been sold to Fannie Mae or Freddie Mac before June 1, 2009.
• You must be current on the mortgage and have no late payments in the last six months. A late payment is defined as one that's more than 30 days overdue.
• You must not have more than one late payment in the past 12 months.
• This must be your first refinance through HARP. If you have refinanced under an earlier version of HARP, then you do not qualify.

If you would like to speak with an industry expert about your ability to secure financing for a purchase, refinance or simply to see if you would qualify to do so, please contact Glenn Dooley or one of our many licensed mortgage professions at MAC5 Mortgage.  Glenn can be reached at gdooley@mac5m.com or at 720-407-6338.  You can also inquire for more information on our contact us page and/or fill out an online application.  By doing so, you will be able to receive an no cost, no obligation review of your credit profile and we will be happy to demonstrate our team's ability to earn your business.

How do I know what mortgage I can afford?

1. Go to www.myhomeloandenver.com and complete the quick and easy 5 Step application.  MAC5 Mortgage will complete a no cost / no obligation review of your credit profile and will let you know (in advance) what you can comfortably qualify for. 
2. You can also calculate the monthly mortgage payment for a house in your price range. You can do the math yourself, use an online mortgage calculator (free to use at http://www.myhomeloancolorado.com/mortcalcsplus/calculators.php), or ask your loan originator to complete the calculations for you. Don't forget to add in the monthly cost of homeowner's insurance and taxes. If you plan to put less than 20 percent down on the loan, you must also factor the cost of private mortgage insurance into your monthly mortgage payment. 
3. Compare the mortgage payment to the rent or mortgage you currently pay. If the new mortgage payment is less than you currently pay and you can comfortably afford your current payment, it stands to reason that you will also be able to comfortably afford the new mortgage payment. The new mortgage payment can be more than you currently pay, so long as the increase in monthly payment isn’t deemed as payment shock which is typically defined as an increase that is 150% or more of your current mortgage or rent payment.
4. Lenders typically look at two pieces for debt to income ratios (DTI).  The front end ratio can be calculated by dividing your prospective mortgage payment (principle, interest, taxes and insurance plus any mortgage insurance) by your gross monthly income. For example, if you earn $2,900 a month and your total mortgage payment, including taxes and insurance, totals $800, your debt-to-income ratio would be 28 percent. All lenders have different preferred debt-to-income ratios but, in general, lenders prefer that your housing (or front end) debt-to-income ratio not exceed 32 percent (may be approved at higher levels depending on compensating factors such as higher FICO scores, asset reserves, etc.).
5. When looking at debt to income ratios the total payment DTI is typically the bigger part of the qualifying equation.  To get the total payment DTI, one needs to first add up your monthly debts (minimum required payment on revolving and installment credit lines) plus any other obligations that may not be tied to credit reporting such as child support, alimony, judgments or any other monthly payments that you are making.  The next step would be to calculate the total payments by dividing that number by your income, this will then present to you the total payment DTI (back end DTI).   For example, if you earn $2,900 a month and your total mortgage payment, including taxes and insurance, totals $800, and you have an additional $100 in credit card payments and a child support payment of $350 / month, your total payment debt-to-income ratio would be 43 percent. All lenders have different preferred debt-to-income ratios but, in general, lenders prefer that your housing (or front end) debt-to-income ratio not exceed 32 percent and your total payment (backend) to not exceed 45 percent (may be approved at higher levels depending on compensating factors such as high FICO scores, asset reserves, etc.).
6. Talk to you loan originator about how your income and expenses measure up. If your debt- to-income ratio and overall debt ratio fall within your lender's parameters, your lender considers you capable of affording the new mortgage payment.  Apply now for a no cost consultation with MAC5 by clicking here.

Tips & Warnings

• If your debt-to-income ratio or overall debt ratio is too high yet you have an excellent credit score, some lenders will make an exception for you. 
• Paying down credit cards and other expenses prior to applying for a mortgage can help you qualify by reducing your total debt load.
• Be sure to only work with a licensed loan originator that is authorized to operate in the state that you are seeking a loan.  To ensure your loan originator is properly licensed, you can go to http://www.nmlsconsumeraccess.org/ and simply type in the name of the loan originator.  

*All MAC5 Mortgage loan originators are required to maintain proper state and federal licensing, bonding and errors and omissions insurance, all to protect you, the consumer throughout the process.

When is the best time to finance a second mortgage?

When You Can Take a Larger First Mortgage


The best time to refinance a second mortgage is when you can get rid of it completely. If you can refinance both your first and second mortgages into one larger first mortgage, you will pay the entire balance at the lower rate typically reserved for a first mortgage. For instance, if you have a $200,000 first mortgage at 6 percent and a $50,000 second mortgage at 8 percent, and you wrap them into a single $250,000 loan at 4.55 percent, you save approximately $3,588 in interest your first year. Ensure, though, that you will not pay private mortgage insurance on the new loan. PMI typically comes into play when you owe more than 80 percent of the home's value and can eliminate your interest savings.

When Your Fixed Rate Is Too High


If your second mortgage carries a high interest rate, refinancing to a lower rate, especially if it is fixed, can save you a great deal of money. Although a second mortgage will almost always have a higher rate than the advertised rates for first mortgages, you may still be able to save money.

When Your Credit Improves


Mortgage rates typically track your credit score quite closely. The worse your credit, the higher your rate. Conversely, if your credit improves, you should be eligible for a loan with a lower rate. If your credit score has significantly improved, look into refinancing with your new qualifications.

When You Have an Adjustable Rate

If you have a mortgage with an adjustable rate, your payments may fluctuate as the index changes to market conditions. If rates go down, your payment will go down, but if the rate increases, your payment will go up. As of March 2011, interest rates remain near all-time lows, meaning that when rates move they will be much more likely to move up than down. Refinancing your mortgage to a fixed rate will protect you from these likely future rate increases.

You Never Know Until You Ask

Many borrowers today are terrified about the economy and the position that they are in. Many think that with all the changes and headaches in today’s current mortgage industry, that it doesn’t even make sense to ask the question. Now more than ever it is time for all to act as we have never been in a rate environment like todays. Many economists predict that the end of low rates is soon to come. With our no cost / no obligation rate quote, you can’t lose for asking the question ‘what can I qualify for’. Our mortgage professionals can guide you to a lower rate and/or give you a road map to get yourself set up to achieve your financial goal of a purchase or a refinance. To apply today go to the Secure MAC5 Loan Application and take 10 minutes to fill out the online application and start saving money today!

How Do I Determine My “Mortgage Income”?

Here are some basic things you should know when trying to determine your “Mortgage Income:”

Proof of Income
Informing your lender of your annual income often isn't enough to qualify for a mortgage loan. You must provide proof of your earnings through copies of your most recent pay stubs or a letter from your employer detailing your annual earnings. You can also provide your mortgage lender with copies of your most recent W-2s and tax statements.The types of income your mortgage lender will review when evaluating your application isn't restricted to employment earnings only. You can also use federal benefits, such as Social Security payments, alimony, commissions or investments when qualifying for a new mortgage loan.

Debt Ratio
Even if your income is substantial, the amount of debt you carry could disqualify you from a mortgage. Lenders compare your income to the debt payments you must pay out each month to other lenders and creditors. Your car payment, credit card payments and other loan payments detract from the amount of disposable income you have available to make payments on a home loan. All lenders' policies differ but, in general, a mortgage lender wants to see that your combined monthly debt liability -- including your new mortgage payment -- total no more than 36 percent of your total monthly income.

Down Payment
In addition to earning enough money each month to prove you can comfortably meet your debt obligations, you also must have set aside funds to make a down payment on your purchase. The down payment reduces the amount of money the lender provides and partially pays down the total purchase price of the home. The higher your down payment, the greater equity you hold in the home. This protects the lender. In the event you default, the lender is more likely to recover its full investment if you made a considerable down payment.

Find Out Today What You Can Qualify For

With our no cost / no obligation rate quote, you can’t lose for asking the question ‘what can I qualify for’.  Our mortgage professionals can guide you to a lower rate and/or give you a road map to get yourself set up to achieve your financial goal of a purchase or a refinance.  To apply today go to the MAC5 Secure Loan Application and take 10 minutes to fill out the online application and start saving money today!

Resources

• The Federal Reserve Board: Looking for the Best Mortgage; December 2007
• American Bankers Association: Do Your Research When Choosing a Mortgage; 2011

30 year mortages - a thing of the past soon?

There is much concern about how the industry may change if the federal government shuts down Fannie Mae and Freddie Mac.  The standard 30 year loan that we have become accustomed to as a standard, could in fact become considered a luxury product, according to experts on both side of the political fence.

Rates would almost surely rise for most borrowers, but urban and rural residents with see much sharper rate increase that those of us living in the suburbs.  Lender might charge for some of the features we now are used to; extra fees to "lock in" loan rates a few weeks for a sale.

While this seems to be the goal for both side of the political fence, nothing like this can happen soon, so do not worry. It would take years for Congress to agree on a plan, and the housing market would also have to have a long period of adjustment to recover from the prior dependance on the older financial backing.

The long term effects are both good and bad - abuses in the industry would continue to be reduced by this measure, and it might help to improve the availability of loans to middle class borrowers - supposedly. This will definitely be a hot issue to watch in the year to come - and the mortgage industry is watching to see what will happen - with a very cautious eye.