Mortgage Credit Certificate Program of Denver

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Getting ready to buy a home and want to get 30% of your interest payments back?  Keep reading.

The City and County of Denver 2012 Mortgage Credit Certificate (MCC) program allows qualifying borrowers to receive an annual federal income tax credit equal to 30% of the annual interest they pay on their mortgage loan. The tax credit enables a taxpayer to subtract the amount of credit from his or her annual total federal income taxes. Borrowers may choose to adjust their W-4 withholding to account for the tax-credit benefit and receive a higher net monthly income. Any excess credit from the MCC may be carried forward for up to three subsequent tax years.

This program will run from April 2012 to December 31, 2014.  Homeowners must keep their first mortgage and occupy the home as their primary residence.  The homeowner must not have owned another home in the past three years (unless they have purchased their home in a “targeted area.”)  Furthermore, the allowable maximum family income for families of 2 or fewer is $79,300 in a non-targeted area and $91,195 for a family of 3 or more, while the maximum family income is $95,160 for a family of 2 or less in a targeted area and  $111,020 for a family of 3 or more in a targeted area.  Click here for a list of targeted areas.

Note:  You must contact the appropriate government agency about getting an MCC before you get a mortgage and buy your home.

For a list of lenders who participate in the MCC program of Denver, please call us to get started at 303-908-9873.

Different Types of Mortgages – Which One is Right For You?

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New house buyers concept for mortgage, home loan

FHA Loan – This is a great program for first-time home-buyers, though you do not need to be a first-time buyer to qualify for this loan.  FHA loans usually require a middle credit score of 640 and tends to have more lenient guidelines than most other mortgages.

The Guidelines:

-Bankruptcies must be discharged at least two years ago

-Foreclosures and Short Sales must be at least three years ago

-Debt to income ratios are allowed up to 55%

-3.5% is required for a down payment

-Co-signers are allowed, as well as gift funds for a down-payment

CHFA Loan – This is another great program for first-time home-buyers offered by the Colorado Housing and Finance Authority.  CHFA is a organization that provides down payment assistance for FHA loans.

The Guidelines are the same as FHA Loan Guidelines except:

-Only a .5% down payment is required or a minimum of $1,000 down, whichever is more

-Buyers must complete a Homebuyer Education class that can be done in person or online

VA Loan – This is a great loan program for any veteran with VA loan eligibility.  Similar to FHA loans, this loan has very lenient underwriting guidelines.

The Guidelines are the same as FHA Loan Guidelines except:

-No down payment is required

-No mortgage insurance is required

Conventional Loan – This is the preferred program for any buyer with a higher credit score (at least 650) and can afford at least a 5% down payment.  Ideally, a buyer would need to put 20% down for a conventional loan.  However, buyers can now put as little a 5% down with various options for mortgage insurance.  (Generally, a higher credit score will gain the buyer a lower price on mortgage insurance.)

The Facts:

-Bankruptcies must be discharged at least 4 years ago

-Foreclosures and short sales must be at least 7 years ago

-Debt to income ratios allowed up to 45%

-At least 5% is required for a down payment

-Co-signers are allowed in most cases, as are gift funds

-With a slightly higher credit score and a slightly larger down payment than an FHA loan, a conventional loan ends up being a much cheaper option than an FHA loan

On a final note, buyers be aware that a conventional loan is often required when purchasing a condo.  If you have more in depth questions about which loan is right for you, give us a call or email and we will point you in the direction of a great loan officer!  Also, if funds for your down payment are a problem, look into the Denver Mortgage Assistance Program to see if grant money is still available for home-buyers who qualify for a home, but need assistance with a down payment.

How To Choose a Home That is Likely to Increase in Value

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house and money on scales. Isolated 3D image

A lot of people have expressed concerns to me about buying a home in the Denver market, as the rapidly increasing prices have raised concerns about a housing market bubble.  If you would like to learn more about current economic trends affecting the Denver market, click here.  For now, let’s consider some good maxims for buying a home in any city and any market.

Your home is one of your greatest investments.  There is absolutely nothing wrong with buying the home you like, wherever you like, BUT if you prioritize your home increasing its value, consider these following tips:

1)  Seek homes in walkable neighborhoods.  Walkable neighborhoods are becoming a high priority for home-buyers.  With increases in gas prices, people are moving back in from the suburbs and finding that its often more pleasant to walk to work, to the store, and to dinner.  A home in a walkable neighborhood will be more likely to maintain and increase in value.

If you are looking for a home in a new city, check the walk score.  Neighborhoods are rated from 0-100, with 100 meaning that multiple neighborhood businesses and parks will be within a stone’s throw.  The Riverfront neighborhood in Denver boasts some of the higher home prices in Denver and has a walk score of 98.

2)  Look for homes near parks and public transportation.  Homes that are near parks and public transportation are more likely to maintain or increase in value.  Once again, it’s where people want to be.  Location, location, location.

In Denver, an area which will likely increase considerably in value in the future is near the future lightrail extension by 38th and Blake.  If one were to purchase a home in this area now, in 3-10 years after construction is completed, the home value would likely have increased significantly.  Note:  choosing a location based ONLY on projected increases can be risky.  I recommend that you appreciate the location you choose as it is, in case projected improvements to the area never happen.

3)  Stay abreast of new developments that will make a location more desirable.  Glendale is already a desirable neighborhood to many, but when the Riverwalk is completed, homes near this development will likely increase in value because the neighborhood will be even more enjoyable.

4)  Learn a bit about the rental market in your area.   If rents on comparable properties are going for equal to or higher than your mortgage, this is good. If the vacancy rate for rentals in your city is low, this is good.  So, if, in the words of Kurt Vonnegut, the excrement hits the air conditioning and you no longer can afford your mortgage, you could likely cover your mortgage (and maybe even make money) by renting out your home and keep yourself out of foreclosure.  This could also benefit you if you have a job transfer to another city, while your current city is in a down market.  You could cover the mortgage (and maybe even make money) by renting out your property until the market improves so you don’t lose money when you sell your home.

Renting out your home may not be for everyone… Being a landlord contains its share of headaches, but if remaining financially strong is your primary goal, the ability to rent out your home can be a major asset.  Real estate markets aren’t so different from stock markets, and the mistake a lot of people make in stocks is selling when the prices are dropping.  Sometimes this can save you, but most markets will rebound and make their way back up.  Do what you have to do to weather the storm and wait it out.

5)  The home that is generally the best investment is the worst or smallest one on the block.  The home that is generally the worst investment is the biggest and best one on the block.  There can be some wiggle room on this… If , for instance, someone famous once lived in the biggest home on the block, that will be intriguing to future buyers.  If the worst home on the block needs major foundation work, a roof, and windows and would cost a great deal to get it up to snuff, it might not be the best investment.  If you are savvy about finding good contractors and can do some work yourself, consider purchasing and renovating the icky house in a great neighborhood!

6)  Choose a home that has eco-friendly features and make eco-friendly renovations.  From the tree huggers to the penny pinchers, home-buyers are increasingly desiring green homes.  Green homes sell for more than conventional homes; they sell more quickly and closer to asking price.  So, if you view your home as an investment, greening your investment will likely get you more green (money) when you sell, as well as saving you money while you live in your home.

If you are ready to buy a home and want to make sure you get the most bang for your buck and security in your financial future, let Conscious Real Estate guide you through the home-buying process. Call 303-908-9873 to reach one of our agents or email our owner, Allison Parks, at [email protected].

Denver Housing Bubble – Fact or Fiction?

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Is the Denver housing market is in danger of a bubble?  If someone you know has purchased a home in the Denver metro area this past year, you will certainly have heard about skyrocketing home prices, bidding wars, and properties often selling for higher than the asking price.  Considering that the home prices have quickly been rising while our nation’s economy still feels shaky, this is an understandable concern.

As with any bubble, real estate, stock market, or otherwise, a bubble can only be predicted in hindsight.  We don’t know where the peak (or the crash, for that matter) will hit, until we are past the hump or slump.

It’s worth mentioning that the Denver real estate market was not as negatively affected as many parts of the United States during the recession.  The subprime mortgage game wasn’t as prevalent in Denver, our economy remained stronger than many major cities, and our percentage of foreclosures was considerably lower.  The Case-Shiller Denver Home Price Index reported that metro Denver home prices have met and exceeded the pre-crash peak in 2013.

Much of the price appreciation has been due to the drop in interest rates.  During the recession, interest rates have been at an all time low, in the Fed’s attempt to keep money in the system and create more consumer confidence in home-buying.  Whether the attempt was psychological or not, when you buy at a low interest rate, as long as you can make your mortgage payments, you will greatly benefit in the long run by saving a boatload of money throughout the years on interest.

Denver, depending on which statistics you read, historically has had a 5% appreciation on home values.  (I have seen statistics reporting this number as high as 9%, but for sake of being conservative, I will report the lowest number I have seen.)  Most investments won’t yield more than 10% per year on average, and let’s face it – you can’t host a holiday party in your mutual fund.

Overall, the Denver economy is pretty strong.  Even if home prices drop for a bit, they most likely will recover and continue to rise.  Our state’s population has grown at almost double the national rate over the past few years.  State Demographer, Elizabeth Garner, states that of this growth, 55-60% of people are moving here due to a job change, indicating that Colorado is showing job growth.  Also, many young families are eschewing the coastal cities for Denver for lower taxes, lower cost of living, access to parks, and sunny days.  The Denver economy continues to grow with diverse industries – natural gas, mutual funds, clean energy, technology, and well… marijuana.

So, what do I recommend?  If you’re financially and emotionally ready to purchase a home, do so.  Interest rates are still low enough that even if home prices drop after you buy, you will still save money in the long run.  The Denver economy has remained strong and shows no indicators of slowing down.  The population keeps growing in Denver, and increasing demand for homes will keep prices up.

If you think you may be ready to talk a real estate professional about purchasing or selling your home, please contact Allison Parks at Conscious Real Estate at 303-908-9873 or [email protected].

Walkable Neighborhoods

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People walking on a street motion blur

Walkability is a measure of how friendly an area is to walking.  A high walk score mean that you will have neighborhood restaurants, coffee shops, grocery stores, schools, parks, and more nearby.  It also means you will have more public transportation options.  (Walk scores range from 0 to 100, with 100 being the best.)

The Walk Score website reports that people who live in walkable neighborhoods weigh 6-10 pounds less.  Walkable neighborhoods can save residents a considerable amount of money, as cars are the second largest household expense in the United States.  Walkable neighborhoods are also eco-friendly, as 82% of CO2 emissions are from burning fossil fuels.  Short commutes reduce stress and increase community involvement.

For help in finding some of Denver’s best walkable neighborhoods with homes for sale, let Conscious Real Estate guide you in your next home purchase! To contact one of our agents, call 303-908-9873 or email [email protected].

Is a 203(k) Loan Right for You?

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green paint and paint supplies ready to do home improvement

FHA’s Streamlined 203(k) program permits homebuyers and homeowners to finance up to $35,000 into their mortgage to repair, improve, or upgrade their home. Homebuyers and homeowners can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or an FHA appraiser. Homeowners can make property repairs, improvements, or prepare their home for sale.  Homebuyers can make their new home move-in ready by remodeling the kitchen, painting the interior or purchasing new carpet.

This could be very useful for you if you don’t mind buying a home that may not be move-in ready or would like to have the home customized to your taste… that’s right, the kitchen and bathroom would be designed by you.  For those of you who are passionate about sustainable living, the 203(k) loan could utilized to do green upgrades, such as energy-efficient windows, ENERGY STAR appliances, high-efficiency furnace with sealed ductwork, and solar panels.

The Section 203(k) program is FHA’s primary program for the rehabilitation and repair of single family properties. As such, it is an important tool for community and neighborhood revitalization, as well as to expand homeownership opportunities.

Note:  It is recommended to use a 203(k)-approved contractor for improvements.

Colorado Energy Saving Mortgage Program – 2013

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On May 28, Governor Hickenlooper signed into law the Colorado Energy Saving Mortgage Program.  Under this program, a homebuyer purchasing a new or renovated Zero Net Energy (ZNE) home is eligible for an $8,000 reduction on financing the total cost of their home mortgage.  A ZNE home produces as much energy as it consumes.  A new or renovated home that has a HERS rating greater than HERS* 0, but less than HERS* 50 will also receive a mortgage reduction incentive.

In addition to the mortgage incentive, homebuyers will benefit from lower energy bills, which can be used to offset the cost increase of a ZNE home.  For example, $30,000 in improvements on a 2,200-square-foot home after the $8,000 incentive would require an additional $94.53 in mortgage payments each month.  However, the monthly energy savings would be $154.00.  That’s a net savings of $59.47 a month.

Under this new program, a homebuyer can receive an $8,000 incentive and purchase a zero net energy home that is worth substantially more at a lower annual cost than an equivalent non-ZNE home.

With this attempt to move our Colorado housing market to ZNE homes, this movement should create more construction jobs, as well as increase state and local government tax revenue.  According to the analysis conducted by Architecture 2030, each $1 million in incentives will generate:  $16.22 million in direct spending, $16.49 million in indirect and induced spending, and $1.92 million in state and local government tax revenue.

*The HERS Index is the nationally recognized scoring system for measuring a home’s energy performance.  The HERS Index Score can be described as a sort of miles-per-gallon (MPG) sticker for houses, giving prospective buyers and homeowners an insight as to how the home ranks in terms of energy efficiency.  A HERS Index of 100 represents the energy use of the “American Standard Building” and an Index of 0 (zero) indicates that the building uses no net purchased energy.  The lower the value, the better.

Denver Housing Market – Summer 2013

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The houses

As our much anticipated summer kicks off, the Denver housing has become increasingly hot! 

Anyone currently buying a home in the Denver market no doubt has noticed how quickly things are selling, with multiple offers being made and accepted within a day of two of listing.  Many recent home sales have sold above asking price as the result of bidding wars.  All of this is the result of an influx of new home buyers and a shortage of sellers within the local market.

Denver’s Chief Economist, Jeff Romine, reports that 12,250 new jobs were created in 2012, unemployment has dropped almost 2% since 2011, construction is on the upswing, and consumerism has shown significant evidence of an increase.  Oh yeah, and he reports that Denver’s housing market is among the strongest in the nation with home values up 8.3% from last year.  Yes, Denver’s economy has improved. 

In fact, Denver’s economy never took as hard a hit as many U.S. cities during the recession.  Couple this with the fact we have a fun, healthy city adjacent to the majestic Rocky Mountains attracting a population of active professionals, and it should be no surprise that housing demand has been on the rise. 

So… what does this mean for home buyers and sellers?

For buyers, “sleeping on it” may not be the best approach to deciding on whether to submit an offer on your dream home.  I have had recent experiences with clients who saw a home they loved only to have missed out on the opportunity by simply taking a night or two to think things over.  It is imperative to be pre-qualified for financing and have earnest money available to submit an offer immediately when the right home presents itself.  Buyers will also gain a huge benefit by having a realtor represent them who has access to industry databases that provide immediate updates with new listings and comparable sales data that may not be available on public sites.  To the extent that bidding wars have become commonplace, having a realtor advise you utilizing their familiarity with market statistics may also prove key in making a reasonable and successful offer.  Buyers should also be aware that mortgage rates have increased recently as a result of a strengthened national economy and that there is speculation the Federal Reserve Board is contemplating an increase to the prime rate, meaning that historically low interest rates could soon increase.

For sellers, the strengthened economy, increase in local housing demand and prices, and short supply has created the most seller-friendly environment Denver has seen in ages!  Yet not many people are selling their homes.  Perhaps Denver’s home-owners haven’t received the memo that housing prices have surged 10-20%, or remain hopeful they will continue to appreciate.  Maybe the recession has made people more cautious, so they are reluctant to sell and upgrade to a larger home and mortgage payment.  Maybe folks finally got the color of that accent wall right and they don’t want to mess with a good thing.  Whatever the case, prices have continued to rise and comparable statistics from recent sales over the year or so may not be applicable to current valuations, making it important that you work with a knowledgeable real estate professional.  It is also possible that rising housing prices could eventually plateau given the influx of new large scale construction occurring in the Denver metro area, such that increased housing prices may not continue indefinitely and there has never been a better time to sell.

If you are considering buying or selling, I’d look forward to discussing your situation and assisting you in any way possible. Please call Allison at 303-908-9873 or email [email protected]. 

Denver’s Mortgage Assistance Program – 2013

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denversmall 

      I love to be the bearer of good news!  Denver currently has a grant program to assist home-buyers with their down payments.  Lacking the funds for a down payment prevents many people from purchasing a home, so this program seeks to alleviate that problem for individuals and families with lower to moderate incomes.  This program provides up to 4% of the down payment and closing costs of the home for people applying for 30-year fixed rate mortgages.  This is not a loan; it is grant money.  It does not need to be paid back.

To find out whether you qualify, you may speak with a lender.  The guidelines are the following:  your income must be lower than $91,100 for households with two or fewer people, or less than $103,000 for a household with three or more people.  Your minimum credit score must be 640, (660 for manufactured homes.)  You must attend homebuyer counseling, which is free.  You must occupy the home as your primary residence. At this time, only homes in Denver, Arvada, Dacono, Edgewater, Littleton or Sheridan can be purchased through this program.

This program currently is funded at 15 million dollars, and is operating on a first-come, first-serve basis.  The funding is expected to last until approximately December 2014.

If you are interested in being connected with a lender to see if you qualify for this program, please contact me and I will provide you with a list of lenders.  In fact, my favorite lender is on that short list.  If you are accepted, I would love to help you find your new home!