September 2011 Archive

04Sep
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Learn the Top 10 Questions that VA home buyers ask Pink Realty Agents

With Colorado Springs houses County, Colorado being home to Fort Carson, Peterson Air Force Base, Schriever Air Force Base, Cheyenne Mountain, the Colorado Springs Air Force Academy, and countless military contractors who heavily recruit retired military personnel, VA Mortgage Loans are not only a common loan type, but local market driver. Because of the demand for these types of mortgages in Colorado Springs, we at Pink Realty want to answer the Top 10 questions that military and retired military home buyers have about VA mortgages.

Question 1: What is the VA Mortgage Lending Limit?

According to our in-house lending specialist, Tammy, the VA mortgage lending limit is $417,000 in Colorado Springs. While this limit is set for most areas of the country, the VA lending limit can be as high as $1M for other parts of the country that have higher average home prices, such as Washington DC, California and Hawaii. Additionally, while the VA sets their limit, this does NOT limit the veteran to a house priced at $417K or less. For example, let’s say you want to purchase a home priced at $500K. That’s $83K higher than the VA guarantee limit of $417K. If your VA eligibility is $417K and you qualify for the higher loan amount from your lender, you can purchase the $500K home with a down payment of 25% of the $83K difference ($20,750) and your lender will lend you the other 75% of the difference or $62,250. Therefore, your loan amount would be $417K, plus $62,250 or $479,250.00. As long as you qualify for the higher loan amount and have the cash for the down payment, you can buy that $500K house.

Question 2: What is the VA Funding Fee?

The VA charges a VA Funding fee of 2.15% of the mortgage amount to first-time users who do not put pay a down payment on the home. This fee covers the cost to operate the VA loan program. After the first VA loan, the funding fee is increased to 3.3% of the mortgage amount if the veteran does not pay a down payment. This fee does not have to be paid by the veteran out of pocket. It can be financed into the loan along with other closing costs, so there is no down payment required and no out of pocket expenses to the veteran.

Question 3: Can the VA Funding Fee be waived?

Did you know if you are discharged from service with at least a 10% disabled status you can get the VA funding fee waived? That’s right! Nearly 70% of the veterans today are discharged with at least a 10% disabled status. This not only gets the veteran a tax free check every month, but also allows them to purchase a home without having to pay the standard VA funding fee!

Question 4: Is my eligibility lost if I file Bankruptcy?

Filing Bankruptcy does affect your VA eligibility, but depending on what type of Bankruptcy you file, your VA eligibility is affected differently. If the veteran files Chapter 7 Bankruptcy, which is a total liquidation of their debts, the veteran must wait 2 years before they can qualify for another VA loan. If, however, the applicant files Chapter 13, which is a re-organization of their debts, the VA will consider lending to the applicant for another home purchase in as little as 12 months into the bankruptcy if the applicant receives permission from the bankruptcy court and can show they have paid 12 months of payments on the bankruptcy in a timely manner.

Question 5: Is my eligibility lost if I lose my house in foreclosure or sell my home as a short sale?

There have been a lot of foreclosures in Colorado Springs in the past couple so Pink Realty agents get this question quite a bit. Whether a veteran looses their home in a foreclosure or sells their home as a short sale, if the VA suffers a loss, they do not forgive or forget the loss. However, this does not mean the veteran loses their eligibility. The amount the VA loses on your home, whether via a foreclosure or short sale, gets subtracted from your total eligibility. What this means is if you were elegible for a VA guarantee of $200K and the VA lost $100K on your loan, your VA eligibility is reduced by the amount of the loss and is now $100K. If the deficiency is repaid to the VA, the veteran’s eligibility is fully restored.

Question 6: Can I use my VA eligibility more than once?

Yes! Veterans can use their VA eligibility as many times as they want but only on one house at a time. To use the eligibility again, the veteran must pay off the previous loan and provide proof to the VA, and your Pink Realty agent can help you with this. When a veteran has a VA loan on their home and they sell it, they must notify the VA that the home has sold and the mortgage has been paid in full. This restores the veteran’s VA eligibility so that it can be used again to buy their next home. If the veteran allows his VA mortgage to be assumed by another eligible veteran (and this is never a good idea) and the assuming veteran is not willing to substitute his own VA eligibility to the original veteran, the original veteran’s eligibility is reduced by the amount of the loan that was assumed. Once the assuming veteran pays the loan in full, the original veteran’s VA eligibility is restored.

Question 7: What kind of properties can I buy?

The VA does not lend on any property that is not intended to be used as the applicant’s primary residence. Should an applicant want to purchase a duplex, tri-plex or any 2 – 4 unit building as an investment, the VA will grant a VA mortgage loan as long as the applicant intends to occupy one of the units as their primary residence. The VA also requires that the home be in move-in and livable condition at the time the loan is made. The VA does not lend on uninhabitable properties, raw land, commercial property or any other property that will not be considered the applicants primary residence.

Question 8: Can I buy more than one property at a time?

The VA only issues mortgages on the veteran’s primary residence. This does not keep the veteran from being able to purchase other properties, though. If the veteran wants to purchase another property, such as an investment property, and they qualify for both mortgages, the veteran can secure other, non-VA financing to purchase other property. If you would like to discuss the other loan types that may be available to you, our in-house Pink Realty lender would be happy to help you. Just call our office at 719-393-7465 (Pink) and ask to speak to the lender.

Question 9: Who can apply for a VA loan?

VA loans are for military personnel and veterans. If a military applicant wants to include another person on their VA mortgage, the only acceptable co-applicants are the applicant’s spouse or another VA eligible applicant. Family members, friends, relatives and/or ‘significant others’ can’t be on a VA Loan with the applicant. If there are
credit issues with an applicant’s spouse, the applicant does not have to include the spouse on the application.
However, the debts of the spouse must be included so the VA has knowledge of the total liability at stake. Sometimes, the spouse’s total debt causes the debt to asset ratio to be too high to qualify for the loan. In this case, if the spouse works and has been at their job at least 2 years, the spouse’s income, up to the total monthly debt liability, can be included on the application to offset the spouse’s debt. This generally allows the debt to asset ratio to fall back in line for approval of the loan.

Question 10: What does my Credit Score have to be?

At time this article was written, the VA looks for scores of 620 or higher. (Please feel free to call Pink Realty at any to check to see if loan guidelines have changed. We are always here to help.) If the applicant’s score is a little lower than this, Pink Realty lender will work closely with the applicant to see what can be done to raise their score, and many times we can help a borderline applicant buy a new Colorado Springs home. The first item addressed is whether or not the credit report is accurate. More than 80% of the credit reports run today contain errors. Just removing the errors alone may raise the applicants score. Improving their credit score may also mean paying down a credit card balance so the outstanding balance is 50% less than the credit limit on the account or it may be as simple as paying a few low balance accounts off. Sometimes this is all that’s needed to bring the credit score up to the approval score limit. Remember that your credit score is very specific to you, and we would be happy to evaluate your situation for free any time. Just call our office at 719-393-7465 (Pink).

We hope this article answered some of your questions about VA mortgage loans so when you are in the market for a VA loan, you are ready. For more information on VA home loans, you can call a Pink Realty agent or lender at any time.Please stay tuned for more informative articles. Stop by the website regularly for new and updated information.

Posted by z4k!_xy in Colorado Springs homes and tagged with , , , , , , , , ,
04Sep
Off

Investors Trending to Snag the Keepers

While the economy has created a ‘buyers’ real estate market with home values plummeting and Colorado Springs foreclosures soaring, who’s buying up the properties that are for sale? While first time home buyers are on the decline and previous buyers are being turned down because of tight credit conditions, Pink Realty agents are seeing that those with cash are the ones bringing the deals to the table. And today, it’s typically the investors that have the cash! Per Lawrence Yun, Chief Economist for the National Associate of Realtors (NAR), “Increases in all-cash transactions, the investor market share and distressed home sales all go hand-in-hand. With tight credit standards, it’s not surprising to see so much activity where cash is king and investors are taking advantage of conditions to purchase undervalued homes.”

On February 23, 2011, Jon Prior of the NAR summarized the housing sales for January 2011. All-cash sales increased to 32% of all sales in January, which was up from 29% in December 2010. Additionally, it was investors that grabbed more of the market share by accounting for 23% of all buyers in January, up from 20% in December 2010 and up 17% from one year ago.

While many investor home purchases will result in a traditional fix and flip sale, the current rental market and trends are also providing a great profit opportunity for investors. The demand for rentals in Colorado Springs is on the rise because more people are being turned down for home loans and more people are being displaced because of foreclosure or selling their home on a short sale. Colorado Springs has become a hot rental area because of the number of military personnel in the city, but also because the economy and housing market has caused so many homeowners to lose their homes to foreclosure or because they had to sell their home as a short sale. All these people are in need of housing and looking for rentals. This demand has resulted in less than 1% vacancy in Colorado Springs. Traditionally in Colorado Springs, the 3 bedroom home was always the highest in demand and considered the ‘sweet spot’ in the rental market. The 3 bedroom homes were always rented, never vacant and there were never enough of them to meet the demand for them. The larger homes that were for rent were not in demand and stayed vacant.
However, today the demand for 4 and 5 bedrooms homes is increasing. As more and more middle class families are displaced, the need for the larger rentals increases. These larger rentals also bring a nice price point to the balance sheet. The current rental rate for a 3 bedroom single family home is $1140 per month and the 4 and 5 bedrooms are $1374 and $1789 respectively.

Call Pink Realty today at 719-393-7465 (Pink) to talk to an agent and see what great deal is out there waiting for you!

There is no doubt the opportunity for investors to ‘snag the keepers’ is now.

While wholesaling and fix and flips bring fast and big profits, more investors are adding the right ‘keepers’ to their portfolio mix as rentals for additional long-term passive income. With the market trend shifting toward larger rentals, investors should also note that the larger homes with higher mortgages tend to get discounted more by the lenders when working a short sale. Many of these higher end homes are simply in need of paint and carpet. We have seen nice homes in the Stetson Hills area that needed as little as paint, carpet and linoleum flooring, but the homeowners couldn’t sell to a retail buyer because the buyers wanted a completely fixed home. Investors can buy homes for sale Colorado Springs for around $125K and get them turned into great rentals for about $10K. Cash flow on these short sales or bank owned properties would be very high.

If you call a Pink Realty agent, we would be happy to scour the market for you and find you a great property that will meet your needs.

Are you an investor who wants the upside of an investment property and today’s really cheap prices and huge cash flows but don’t want to at it alone?

The owners of Pink Realty are active, experienced investors and are always looking for partners on deals. Just give is a call at 719-393-7465 (Pink) and ask to talk to Russ or Monica about partnering on deals. We would be happy to talk to you. Just tell us what you want to bring to the table and we will see how we can work together.

• Do you qualify for the loan to buy the house? A common strategy investors are using now is to buy houses with cash, remodel the houses and then refinance the property with zero money out of pocket. We have investor friendly lenders ready to do these types of loans.

• Maybe you have a small amount of cash available and we can short a 2nd loan and bring the 1st mortgage current on a good property.

• Maybe you have a larger amount of cash available making 1% at the bank or in an IRA and you want to do something more productive with it but don’t know exactly how. We can find a really cheap house that we can buy, fix up, and rent.

Posted by z4k!_xy in Colorado Springs foreclosures and tagged with , , , , , , , , ,
02Sep
Off

10 Homebuyer Advantages for Buying a Short Sale Property

A short sale is when a lender agrees to allow a mortgaged property to be sold for less than what is owed on the mortgage. While lenders don’t like their mortgages ‘shorted’, they do understand the benefits. Lenders know the loss incurred from a short sale is far less than the loss they will incur if they allow the property to go into foreclosure. Foreclosure is very expensive process for lenders as it not only incurs expensive legal fees, but also adds the expenses of maintenance, advertising and selling, insuring the home and paying property taxes. Lenders are not in the real estate business, they are in the business of making loans, so they know that selling a property as a short sale definitely has its financial advantages.

Today, everyone knows the real estate market is depressed. The majority of Colorado Springs homes are distressed properties that are either advertised as a short sale or a foreclosed home. Property values across the country have fallen and lenders have tightened their credit requirements. The market has increased the competition between selling a home as a short sale and selling a home at a retail price. While this market causes distress for sellers, it creates prime opportunities for Pink Realty agents home buyers to find great discounted deals on properties for their clients.

The current Colorado Springs real estate market also allows home buyers to seriously scrutinize the price of retail homes. They aren’t willing to pay retail price for a home unless it is in perfect condition as there may be several other similar homes in the same neighborhood selling at a steeply discounted price. This increases the competition between the short sale and retail properties for sale, however many buyers want to shy away from short sale properties because of some negative stories they may have heard. We won’t sugarcoat the short sale process for you. It can take time and be frustrating, however, if you work with a Pink Realty agent who is experienced and knows and understands the short sale process, it helps. A real estate agent who has a good success record for getting deals done (and the Pink Realty team has closed hundreds of short sales) can make the short sale process appear seamless.

With that said, there are many advantages for buying a home as a short sale. If you are aware that the process can take longer than a retail sale, you can be prepared and plan ahead. Below are the 10 top advantages for purchasing a home as a short sale:

1. With so many distressed properties on the market, you have a huge inventory of homes in a wide variety of neighborhoods to choose from.

2. Unlike foreclosed or REO homes, you have the opportunity to talk to the seller of seller’s agent about short sale homes and to find out more information about the home. This allows you to determine what, if any, repairs may be required. In many cases, the repairs needed for a short sale property are far less than those needed for an REO property.

3. You can obtain a home for a substantial discount which saves you thousands of dollars and offers you great future equity.

4. Since the seller is trying to avoid foreclosure, they are cooperative and play an active role in the short sale process, which moves the process along faster.

5. Because the homeowners are involved, they generally see the process through to the end. As a result, they tend to keep the properties in better condition than a home that has been foreclosed on.

6. When you work with a Pink Realty agent that understands short sales and works with an experienced short sale negotiation team, the short sale process is streamlined and takes less time. Oftentimes, homebuyers work with a real estate agent that is experienced in the retail market, not the short sale market. If a homebuyer wants to put an offer on a short sale property, but is working with a real estate agent that is not familiar with short sales and the process, it can end up being a nightmare for the buyer.

7. Another way to minimize the time a short sale takes is to search for short sale properties secured by a FHA loan. The FHA pre-foreclosure sale program requires that the lender provide the minimum sales price and the minimum net they will allow. Therefore, you know what offer must be made and it shortens the short sale process tremendously as the ‘price haggling’ part of the process is eliminated.

8. Additionally, if you purchase the home as a qualifying FHA buyer, meaning you are receiving a FHA loan to buy the property, the short sale lender agrees to pay 1% of your closing costs saving you additional money.

9. If you are pre-qualified for a home loan from your lender or intend to purchase the property as a ‘cash’ deal, the short sale process also moves along faster.

10. Buying a short sale property also helps stabilize the market and improve the condition of the neighborhood you are buying in because it keeps one more property from being foreclosed. Foreclosed properties lower the value of neighboring homes more because they are vacant, less maintained and increase the risk of crime and vandalism to the vacant homes.

Pink Realty is known for its talented and experienced short sale agents. Our real estate agents know the Colorado Springs foreclosures and they know and understand the short sale process. Additionally, we work directly with an experienced short sale staff that has a known tract record for successfully negotiating short sale deals. If you are a home buyer in the market to purchase a home, contact Pink Realty at 719-393-7465 (Pink). Our agents will help you find the home you are looking for.

 

Posted by z4k!_xy in Colorado Springs foreclosures and tagged with , , , , , , , , ,
01Sep
Off

What You Need To Know Before Getting A Mortgage

Getting a mortgage is one of the most complicated steps in buying a homes for sale Colorado Springs or anywhere. Will I qualify for a home loan? What do I need to get pre-approved? What type of mortgage can I qualify for – FHA, VA, conventional, an ARM, fixed rate, …? What is the best type of mortgage to get for my situation? Should I go to my bank or find a Mortgage Broker? Learning more about what you should know is important. Preparing yourself and doing your homework will take some of the stress away and speed up the closing process for you once you’ve made an offer on a house.

In other Pink Realty blogs and articles we gave you a lot of information about credit score requirements and how you can best raise your credit score to meet the minimum requirements for conventional, FHA and VA loans. Referring back to some of this information or even calling Pink Realty at 719-393-7465 (Pink) and asking to speak to our in-house lender will let you know what to expect with your credit and what work you might have to do to qualify. If you think your credit may need some improvement, our lender will help you and will work with you for however long it takes and at no cost to you to build your score and get you qualified.

Lenders can either pre-qualify or pre-approve you. What’s the difference? Getting pre-approved or pre-qualified helps you know how much of a mortgage you can afford, but there is a big difference between being pre-qualified and being pre-approved. While these terms are used pretty loosely in the industry, generally when a lender pre-qualifies you, they run a credit check and base their determination on information you provide them about your work history , income, and available down payment either verbally or maybe with documentation but possibly not complete documentation for their underwriting. The bottom line is that a pre-qualification is largely based on what you tell them. It is possible that the pre-qualification results can mislead you on how much of a mortgage you can really afford.

When you get pre-approved, lenders check your credit report and verify all documentation similar to if they were submitting the application to their underwriting department. This essentially makes the only unknown in the transaction the property.

When you are ready to get pre-approved for a mortgage, be sure to call Pink Realty at 719-396-7465 (Pink) and as to speak to our lender. She would be happy to give you a good faith estimate of what she can do for you and earn your business.

If you are getting pre-approved before you begin house shopping, consider locking in your rate for a period of time, especially if the rates have been increasing. Once you have your pre-approval letter, it shows real estate agents and sellers that you are serious about buying a house and you know what price range you can afford. This not only helps your Pink Realty agent narrow their search for a home into your price range, it also can motivate sellers.

Additionally, once you are pre-approved, don’t do anything that will affect your credit score. Don’t incur new debt (this includes incurring more debt on credit cards), don’t pay off debt, cancel any accounts, transfer any credit card balances and don’t change jobs! Your lender will pull your credit again before you close and you don’t want you credit to have changed or you could lose your approval!

Once you have chosen a lender and are ready to begin the mortgage process there is a lot of paperwork that needs to be processed. You will be required to provide copies of specific financial information. So when you are ready to begin looking for a house and a mortgage, you can start preparing by rounding up the items you will need. The following is a list of the information and documents you will have to provide your mortgage lender if you want to get approved for a mortgage loan:

Information about your employment and your income:

1. Where do you work, how long have you been at your job, and what is your income?

2. Are you a 1099 contract paid worker, paid on commission only, or do you receive a steady hourly wage or regular salary?

3. You will have to show proof of your income. This will include providing tax returns, 1099 statements, paystubs, etc.

4. If you receive disability pay or social security income, you will have to provide statements.

5. Depending on how you receive your income, a steady salary with paystubs or irregular income as a 1099 contractor, your interest rate could be higher. A steady paycheck is generally deemed less risky than pay on commission only or as a contractor.

What are your outstanding debts?

1. You will have to provide information about your recurring debts whether they are for a car loan, a student loan, or credit cards. When the lender runs your credit report these accounts will show on your record, so be honest!

2. The total amount of your recurring debt will be analyzed against your monthly pre-taxed income and a debt-to-income ratio will be calculated.

How much do you have in cash reserves?

1. How much is your down payment and do you have enough cash to make this down payment and cover the required closing costs?

2. Is the money you are using to make the down payment your own money or is it borrowed funds or a gift?

3. You will have to provide the lender with copies of bank statements to show you have enough money to cover these costs. If you are receiving a gift for your down payment from a family member, a friend or a non-profit agency, you will have to provide a gift letter to the lender.

4. Lenders need to know if your cash reserves will be completely depleted after you pay your down payment and closing costs because they want to know you will have enough money left in the bank to cover a couple of mortgage payments in case something happens!

What works in your favor?

The following is a list of things that will definitely benefit you when you are applying for a mortgage:

1. Being employed by the same employer for two or at least being employed in the same line of work for that period of time or longer.

2. Having minimal debt and no recent large purchases, such as an automobile. If your debt-to-income ratio is 36% or less, you are in pretty good shape! You can call Pink Realty, and our lender can help you evaluate your debt ratios. Call 719-393-7465 (Pink).

3. If you can afford to put at least 5% of the sales price down with your own funds. If you qualify for an FHA loan, you may only have to put as little as 3.5% down, or if you are a VA buyer, you may not have to put down anything, but the more you can put down, the better. If you are trying to qualify for a conventional loan, you can qualify for as little as 5% down, but you will have to pay private mortgage insurance which can be expensive and is added to your monthly payment.

4. Having enough cash reserves left in the bank to cover two mortgage payments after you have paid your down payment and closing costs.

Things that can make it more difficult to obtain a home loan?

1. If you are self employed, a contract worker, work on commission only, or have irregular income. You may be considered a higher risk if your income isn’t steady, based only on commissions or if you are paid as a 1099 contract worker. If you are self-employed and have tax returns that solidly substantiate your income your risk can be reduced, but in addition to tax returns, you will also have to show profit and loss statements for your business.

2. If you have a lot of recurring debt or a high amount of debt and your debt-to-income ratio is higher than 36%, you may run into issues or be charged a higher interest rate.

3. If the cash reserves you have will be completely depleted after you have made your down payment and paid for closing costs, the lender can consider you a higher risk because if you lose your job or get injured and can’t work for a period of time, there is a risk you may not be able to make your mortgage payment.

4. If you are receiving gift funds for your down payment because you have no funds of your own to purchase the home, you can also be considered a higher risk and may be charged a higher interest rate.

Before Getting a Mortgage, consider the following:

1. Know what your budget is so you know what size mortgage you can really afford. You can be given a pre-qualifying mortgage amount by a lender based on your income, but you also have to take your monthly recurring debts into consideration, along with unexpected expenses such as medical bills..

2. Depending on your cash situation, you need to know if it is more important to offset a higher rate with lower closing costs or a lower rate with higher closing costs. When you are shopping for mortgage quotes, don’t just look for the lowest interest rate. You also want to compare the terms and conditions. There is a lot of competition out there today, so be sure to ask your lender for any special incentives. Lenders may be willing to waive some fees to attract your business!

When shopping for a mortgage quote, be sure to ask the following questions?

1. What will my monthly payments be?

2. Are there any pre-payment penalties?

3. Are the terms fixed or variable? If the interest rate is variable, what is the interest rate cap? In other words, what’s the highest my interest rate can go and what will the payments be at this rate?

4. Do I have to pay any loan origination fees?

5. Do I have to pay any discount fees for this interest rate?

6. Are there any lender incentives? In other words, will the lender pay any of the closing costs or waive any fees?

7. Will I have to pay private mortgage insurance?

What not to do after you have been approved!

After you have been approved for a mortgage and have received your pre-approval letter from your lender, do not do any of the following or you can jeopardize your approval:

1. Don’t apply for new credit as the inquiries will change your credit score.

2. Make sure you pay all your recurring debt payments on time.

3. Don’t pay off collections or charge off accounts unless specifically told to do so by your lender.

4. Don’t charge more on your credit cards and don’t close any credit card accounts or transfer any credit card balances.
5. Don’t make any large cash purchases as this may decrease your verifiable bank balances.

6. Don’t quite your job.

7. Don’t change your job without first consulting your loan officer.

8. Don’t bounce any checks.

Do your homework and become an educated consumer! Knowledge is power and knowing what’s required to get a mortgage, how to determine the amount of mortgage you can safely afford, and how to shop and negotiate for the best mortgage for your situation will benefit you tremendously. If you have any questions or want help, Pink Realty is here to help you. Give us a call at 719-393-7465 (Pink). Our loan officer will be happy to help you with a loan, and then a Pink Realty can help you find your dream Colorado Springs house! We want to help you through the whole process and feel all the rewards of homeownership! Give us a call today. We are here to help you!

Posted by z4k!_xy in Homes for Sale in Colorado Springs and tagged with , , , , , , , , ,