Colorado area.
We are here to assist you with any questions you may have and also would be more than happy to put
you in touch with mortgage lenders that really know how to provide
true customer service.
Listings are updated everyday and with the real estate market being as hot as it is at this moment you
truly need a Real Estate Agent on your side to assure you have all of
the latest market knowledge and local experience. For any Real Estate needs on the western slope,
Delta county and Denver Colorado.
Waiting on the Real Estate Market? Dont wait and then buy,,, buy and then wait!
Two items that you should take into account. The price of homes will continue to rise. So why sell now
instead of waiting? The low unemployment rate across the country
including Grand Junction, Rifle and other surrounding western slope communities indicates the Grand
Junction area is much different economicly than the rest of the
county. . This means that in 2 years your home for sale will be worth more but there will be fewer
qualified buyers for your listing.
Obviously if you are looking to buy the reasons above should be enough to motivate anybody who is
qualified to buy a home for sale. Real Estate in Grand Junction and the
Western Slope is a great investment for anybody who is willing and able to relocate to Grand Junction or
to purchase a second home for a rental.
COLORADO - World-class winter skiing and summer music festivals in the mountains are just two
reasons that nurses love traveling to Colorado. Boasting four
spectacular seasons, Colorado is where travel nurses get to explore the state's 18 million acres of state
and national parks, forests, and monuments for biking, hiking,
fishing, mountain climbing, and kayaking, to name a few. Colorado has many cultural treasures, including
ancient Native American sites and dinosaur fossil exhibits,
historic ghost towns, and even award-winning vineyards in Grand Junction. And for those who enjoy city
life, amid all this natural beauty lie wonderful metropolitan areas
like Denver and Boulder, full of shopping, performing arts, and professional sports.
Loomis Real Estate
Grand Junction, Rifle, Delta & Denver Colorado Real Estate
Loomis Real Estate is a local, family owned Real Estate Brokerage.
Our firm consists of 4 full time Realtors that work for each client as a team,
"The Loomis Team".
Buying
Selling
Disclaimer
All information on this site is provided for informational purposes only! By no means is any information
presented
herein intended to substitute for the advice provided to you by any professional or organization.
Our Family Serving Yours
Denver (303) 646-5285 Grand Junction (970)424-5100
Visit our Links Page
Link Partners Here
CLICK HERE FOR
GRAND JUNCTION
RELOCATION
INFORMATION
& TO RECEIVE A
RELOCATION PACKAGE
America Property TraderHow to Buy a Home or Real Estate With a Low Down Payment
by Brandon Cornett
It's no surprise that so many Americans are looking for ways to buy a home with a low down payment.
After all, with so many other costs associated with a home purchase -- like closing costs, furniture,
moving expenses, etc. -- coming up with a large down payment isn't
always an option. So the idea of buying a home with a low down payment can be very appealing to many
buyers, especially first time home buyers.
Many people mistakenly believe that a down payment of at least 20 percent is required in all mortgage
scenarios. This is the way things were for a long time. But these days,
there are more flexible loan programs and terms available to home buyers. In fact, some mortgage
lenders will extend loans to qualified buyers with a down payment as low
as 5 percent of the purchase price.
Generally, a mortgage loan with a down payment of less than 20 percent is referred to as a low down
payment mortgage loan.
But like all things in life (and in home buying), there are special conditions to buying a home with a low
down payment. For instance, many mortgage lenders who grant
loans with such a low down payment usually require that the loan be insured in some way. This insurance
is aptly called mortgage insurance.
Mortgage Insurance for a Low Down Payment
Mortgage insurance is just what it sounds like -- insurance on a home mortgage loan. This type of
insurance protects the lender financially in the event that a homeowner
defaults (ceases to make payments) on the mortgage.
Mortgage lenders usually require mortgage insurance on loans with a down payment of 20 percent or
less. In other words, some form of mortgage insurance is almost
always required for a low down payment mortgage. The home buyer is usually required to pay the cost of
this mortgage insurance.
Two Types of Mortgage Insurance - Government and Private
Let's recap what we have covered so far. We know that it's possible to buy a home with a low down
payment, and that a 20 percent down payment is not always necessary.
We also said that most lenders who offer mortgages with a low down payment (below 20 percent) will also
require some form of mortgage insurance. Thus, buying a home
with a low down payment almost always requires mortgage insurance.
With that straight, let's talk about the two types of mortgage insurance -- governmental and private.
Government Mortgage Insurance
Government-backed mortgages are usually insured by one of three federal organizations. These
mortgages are either insured by (A) the Federal Housing Administration, or
FHA; (B) the Department of Veterans Affairs, or VA; or (C) the Department of Agriculture's Rural Housing
Service, or RHS.
Each of these agencies has its own criteria for the types of loans they will ensure. For example, the VA
Home Loan program only applies to military veterans or their
spouses, and RHS loans are usually reserved for people in rural areas.
The FHA requires a minimum down payment of 3 percent. They also limit the loan amount that they're
willing to ensure based on geographic area.
So this is governmental path to buying a home with a low down payment. When you obtain a mortgage
loan backed by one of the federal organizations listed above, you can
make a down payment less than the traditional 20 percent.
Private Mortgage Insurance
In addition to the three governmental options above, there are also private companies willing to insure
mortgage loans. This too can be a path to home buying with a lower
down payment. Private mortgage insurance is aptly referred to as PMI. Private mortgage insurance is
available to a much wider audience than the governmental options
listed above. For instance, there are no restrictions regarding military service or rural residence.
Private mortgage insurance, or PMI, is available on a wide variety of low down payment home loans and
there is no pre-determined limit on the loan amount (as there
usually is with the government-backed mortgage loans).
Conclusion
These days, it is certainly possible to buy a home with a low down payment. In this context, "low" refers to
a down payment of less than 20 percent. These types of home
loans require some form of mortgage insurance, either government insurance or private mortgage
insurance (PMI). Here are some resources to help you learn more about
home buying with low money down.
10 Things You Must Do Before Buying a Home or Real Estate
by Brandon Cornett
Buying a home is often the largest personal finance transaction a person makes in his or her life. So it's
critical that you make the right preparations and do the proper
research. Regardless of unique situations and special circumstances, there are ten things you must do
before buying a home.
1. Study the home buying process.
This will allow you to make better decisions and act confidently. Home buying lingo is a big part of this, so
be sure to read through a few home-buying glossaries before you
get into the thick of things.
2. Obtain your credit report.
Get a copy of your credit report and review it for errors. You can get copies from all three credit bureaus
at once by visiting www.AnnualCreditReport.com. Mortgage lenders
will review your credit with a fine-toothed comb, so you should do the same ... before they review it.
3. Fix credit errors quickly.
If you find an error on your credit report, go to the company's website where the report came from
(TransUnion, Equifax or Experian) to contest it. It can take time to clean up
an erroneous credit report, so get started as soon as you spot the error.
4. Check your debt-to-income ratio.
Mortgage lenders like to see a borrower's debt at (or below) 20% of net monthly income. If your debt
exceeds 20% of your net monthly income, try to pay it down for applying
for a mortgage loan. You'll have an easier qualification process and will likely qualify for a better rate.
5. Determine your budget.
Use an online mortgage calculator to get an idea of how much you can afford to pay each month, and
what that equates to in terms of a home price. This will give you a
budget to work from, which will help you weed out the homes that are beyond your comfort zone.
6. Start saving your cash.
This is one of the best things you can do before starting the home buying process, for a couple of
reasons. First of all, mortgage lenders like to see that you have some cash
reserves on hand. Secondly, you'll need cash reserves for any unexpected fees or costs that might arise
(which is common).
7. Get pre-approved for a loan.
During pre-approval, a mortgage lender will review your credit, finances, debt, etc. and conditionally
qualify you for a certain amount of mortgage. Sellers will take you more
seriously if you have a pre-approval letter, and the process also helps identify any problems with your
credit or other qualifying factors.
8. Avoid new lines of credit.
Try to keep your financial situation as "stable" and favorable as possible. It's a good idea to pay down
some debt (see item #4 above) and to save up some cash. But the
worst thing you can do is take out a new loan / line of credit. At best, this could make the qualification
process take longer. At worst, it could tip the debt scales into the
"greater than 20%" zone, which will make it harder to get a loan.
9. Validate the asking price.
It's called an "asking price" for a good reason. No asking price is set in stone, and everything in real
estate negotiable. So don't accept an asking price as being reasonable
until you validate it through careful research. Compare the home / price to recent sales in the area. Your
real estate agent can provide a comparative market analysis (CMA)
to help you with this step.
10. Get a home inspection.
It is never -- I repeat, never -- wise to skip the home inspection. A house is a sizable investment, and the
last thing you want is to find a bunch of things wrong with it after
you've taken ownership. Home inspections are very affordable, and you cannot put a price on the peace
of mind you'll have as a result of your inspection.
About the Author: Brandon Cornett is the founder of Home Buying Institute, the Internet's largest library
of home buying advice. If you are in the process of buying a first home
make it a point
We are here to assist you with any questions you may have and also would be more than happy to put
you in touch with mortgage lenders that really know how to provide
true customer service.
Listings are updated everyday and with the real estate market being as hot as it is at this moment you
truly need a Real Estate Agent on your side to assure you have all of
the latest market knowledge and local experience. For any Real Estate needs on the western slope,
Delta county and Denver Colorado.
Waiting on the Real Estate Market? Dont wait and then buy,,, buy and then wait!
Two items that you should take into account. The price of homes will continue to rise. So why sell now
instead of waiting? The low unemployment rate across the country
including Grand Junction, Rifle and other surrounding western slope communities indicates the Grand
Junction area is much different economicly than the rest of the
county. . This means that in 2 years your home for sale will be worth more but there will be fewer
qualified buyers for your listing.
Obviously if you are looking to buy the reasons above should be enough to motivate anybody who is
qualified to buy a home for sale. Real Estate in Grand Junction and the
Western Slope is a great investment for anybody who is willing and able to relocate to Grand Junction or
to purchase a second home for a rental.
COLORADO - World-class winter skiing and summer music festivals in the mountains are just two
reasons that nurses love traveling to Colorado. Boasting four
spectacular seasons, Colorado is where travel nurses get to explore the state's 18 million acres of state
and national parks, forests, and monuments for biking, hiking,
fishing, mountain climbing, and kayaking, to name a few. Colorado has many cultural treasures, including
ancient Native American sites and dinosaur fossil exhibits,
historic ghost towns, and even award-winning vineyards in Grand Junction. And for those who enjoy city
life, amid all this natural beauty lie wonderful metropolitan areas
like Denver and Boulder, full of shopping, performing arts, and professional sports.
Loomis Real Estate
Grand Junction, Rifle, Delta & Denver Colorado Real Estate
Loomis Real Estate is a local, family owned Real Estate Brokerage.
Our firm consists of 4 full time Realtors that work for each client as a team,
"The Loomis Team".
Buying
Selling
Disclaimer
All information on this site is provided for informational purposes only! By no means is any information
presented
herein intended to substitute for the advice provided to you by any professional or organization.
Our Family Serving Yours
Denver (303) 646-5285 Grand Junction (970)424-5100
Visit our Links Page
Link Partners Here
CLICK HERE FOR
GRAND JUNCTION
RELOCATION
INFORMATION
& TO RECEIVE A
RELOCATION PACKAGE
America Property TraderHow to Buy a Home or Real Estate With a Low Down Payment
by Brandon Cornett
It's no surprise that so many Americans are looking for ways to buy a home with a low down payment.
After all, with so many other costs associated with a home purchase -- like closing costs, furniture,
moving expenses, etc. -- coming up with a large down payment isn't
always an option. So the idea of buying a home with a low down payment can be very appealing to many
buyers, especially first time home buyers.
Many people mistakenly believe that a down payment of at least 20 percent is required in all mortgage
scenarios. This is the way things were for a long time. But these days,
there are more flexible loan programs and terms available to home buyers. In fact, some mortgage
lenders will extend loans to qualified buyers with a down payment as low
as 5 percent of the purchase price.
Generally, a mortgage loan with a down payment of less than 20 percent is referred to as a low down
payment mortgage loan.
But like all things in life (and in home buying), there are special conditions to buying a home with a low
down payment. For instance, many mortgage lenders who grant
loans with such a low down payment usually require that the loan be insured in some way. This insurance
is aptly called mortgage insurance.
Mortgage Insurance for a Low Down Payment
Mortgage insurance is just what it sounds like -- insurance on a home mortgage loan. This type of
insurance protects the lender financially in the event that a homeowner
defaults (ceases to make payments) on the mortgage.
Mortgage lenders usually require mortgage insurance on loans with a down payment of 20 percent or
less. In other words, some form of mortgage insurance is almost
always required for a low down payment mortgage. The home buyer is usually required to pay the cost of
this mortgage insurance.
Two Types of Mortgage Insurance - Government and Private
Let's recap what we have covered so far. We know that it's possible to buy a home with a low down
payment, and that a 20 percent down payment is not always necessary.
We also said that most lenders who offer mortgages with a low down payment (below 20 percent) will also
require some form of mortgage insurance. Thus, buying a home
with a low down payment almost always requires mortgage insurance.
With that straight, let's talk about the two types of mortgage insurance -- governmental and private.
Government Mortgage Insurance
Government-backed mortgages are usually insured by one of three federal organizations. These
mortgages are either insured by (A) the Federal Housing Administration, or
FHA; (B) the Department of Veterans Affairs, or VA; or (C) the Department of Agriculture's Rural Housing
Service, or RHS.
Each of these agencies has its own criteria for the types of loans they will ensure. For example, the VA
Home Loan program only applies to military veterans or their
spouses, and RHS loans are usually reserved for people in rural areas.
The FHA requires a minimum down payment of 3 percent. They also limit the loan amount that they're
willing to ensure based on geographic area.
So this is governmental path to buying a home with a low down payment. When you obtain a mortgage
loan backed by one of the federal organizations listed above, you can
make a down payment less than the traditional 20 percent.
Private Mortgage Insurance
In addition to the three governmental options above, there are also private companies willing to insure
mortgage loans. This too can be a path to home buying with a lower
down payment. Private mortgage insurance is aptly referred to as PMI. Private mortgage insurance is
available to a much wider audience than the governmental options
listed above. For instance, there are no restrictions regarding military service or rural residence.
Private mortgage insurance, or PMI, is available on a wide variety of low down payment home loans and
there is no pre-determined limit on the loan amount (as there
usually is with the government-backed mortgage loans).
Conclusion
These days, it is certainly possible to buy a home with a low down payment. In this context, "low" refers to
a down payment of less than 20 percent. These types of home
loans require some form of mortgage insurance, either government insurance or private mortgage
insurance (PMI). Here are some resources to help you learn more about
home buying with low money down.
10 Things You Must Do Before Buying a Home or Real Estate
by Brandon Cornett
Buying a home is often the largest personal finance transaction a person makes in his or her life. So it's
critical that you make the right preparations and do the proper
research. Regardless of unique situations and special circumstances, there are ten things you must do
before buying a home.
1. Study the home buying process.
This will allow you to make better decisions and act confidently. Home buying lingo is a big part of this, so
be sure to read through a few home-buying glossaries before you
get into the thick of things.
2. Obtain your credit report.
Get a copy of your credit report and review it for errors. You can get copies from all three credit bureaus
at once by visiting www.AnnualCreditReport.com. Mortgage lenders
will review your credit with a fine-toothed comb, so you should do the same ... before they review it.
3. Fix credit errors quickly.
If you find an error on your credit report, go to the company's website where the report came from
(TransUnion, Equifax or Experian) to contest it. It can take time to clean up
an erroneous credit report, so get started as soon as you spot the error.
4. Check your debt-to-income ratio.
Mortgage lenders like to see a borrower's debt at (or below) 20% of net monthly income. If your debt
exceeds 20% of your net monthly income, try to pay it down for applying
for a mortgage loan. You'll have an easier qualification process and will likely qualify for a better rate.
5. Determine your budget.
Use an online mortgage calculator to get an idea of how much you can afford to pay each month, and
what that equates to in terms of a home price. This will give you a
budget to work from, which will help you weed out the homes that are beyond your comfort zone.
6. Start saving your cash.
This is one of the best things you can do before starting the home buying process, for a couple of
reasons. First of all, mortgage lenders like to see that you have some cash
reserves on hand. Secondly, you'll need cash reserves for any unexpected fees or costs that might arise
(which is common).
7. Get pre-approved for a loan.
During pre-approval, a mortgage lender will review your credit, finances, debt, etc. and conditionally
qualify you for a certain amount of mortgage. Sellers will take you more
seriously if you have a pre-approval letter, and the process also helps identify any problems with your
credit or other qualifying factors.
8. Avoid new lines of credit.
Try to keep your financial situation as "stable" and favorable as possible. It's a good idea to pay down
some debt (see item #4 above) and to save up some cash. But the
worst thing you can do is take out a new loan / line of credit. At best, this could make the qualification
process take longer. At worst, it could tip the debt scales into the
"greater than 20%" zone, which will make it harder to get a loan.
9. Validate the asking price.
It's called an "asking price" for a good reason. No asking price is set in stone, and everything in real
estate negotiable. So don't accept an asking price as being reasonable
until you validate it through careful research. Compare the home / price to recent sales in the area. Your
real estate agent can provide a comparative market analysis (CMA)
to help you with this step.
10. Get a home inspection.
It is never -- I repeat, never -- wise to skip the home inspection. A house is a sizable investment, and the
last thing you want is to find a bunch of things wrong with it after
you've taken ownership. Home inspections are very affordable, and you cannot put a price on the peace
of mind you'll have as a result of your inspection.
About the Author: Brandon Cornett is the founder of Home Buying Institute, the Internet's largest library
of home buying advice. If you are in the process of buying a first home
make it a point
Definition of a pre approval: The buyer has supplied the lender with all pertinent information that has been
investigated and verified. The buyer is approved for a loan of a certain amount.
Definition of a pre qualification: The buyer has been quoted an amount on which they MAY be qualified for.
The information given is general and not investigated or verified. Can be done
verbally or over the Internet !
Pre approved buyers are obviously more likely to be taken seriously by sellers and Brokers.
FIND OUT WHAT YOU CAN AFFORD
In order to only look for homes in your price range it is a good idea to get in touch with a lender to find out
what price range you and your Realtor should be shopping in. This will save you time
and prevent you from falling in love with a home that is outside of your price range.
Contact a lender that you feel comfortable with or ask your Realtor for a list of local lenders he/she works with.
Think in terms of possibilities as well as of your criteria is met, it shouldn't be long before you find the right
home. Perhaps a home isn't move-in perfect, but with a
little work it could be the home for you. Don't let cosmetic or minor remodeling problems discourage you.
Before you start house-hunting, decide what you really need in a house. This is just like going to the grocery
store with a shopping
list WISH LIST PDF it can save you time and money. HUD offers a wish list PDF that can help you pinpoint
your housing needs.
AS A REALTOR WE CAN ACCESS AND SEARCH THOUSANDS
OF HOMES ON THE MARKET THROUGH THE M.L.S.
The appraisal is usually mandatory especially if you are obtaining a loan. The Home Inspection is probably
the best money you can spend as a home buyer. We work
with several and would be happy to recommend qualified inspectors.
A survey can be done if there are any concerns about property lines or encroachments.
Disclaimer
All information on this site is provided for informational purposes only! By no means is any information
presented herein intended to substitute for the advice provided to you by
any professional or organization.
Loomis Real Estate
Buyers Corner
Finding and buying the right home is not as overwhelming as it may seem. There are a few steps to take in
order to prepare yourself. With our help, time and experience it can
actually be a very exciting and enjoyable process.
There are several ways to shop around online for homes, we can do this for you or right along with you. The
important part of the home shopping process is the due diligence
required before making an offer. We want you to get the home on your terms and for the best possible price
that both parties can agree on. We truly are a buyers advocate.
We research price history, market conditions and endless sources to make sure that you are informed about
the homes that you are considering to purchase.
Denver (303) 646-5285 Grand Junction (970)361-7195
NEW
Featured
Real Estate
CLICK HERE FOR
GRAND JUNCTION
RELOCATION
INFORMATION
& TO RECEIVE A
RELOCATION PACKAGE
2231 N 17th Circle
Grand Junction
Sunrise Subdivision
Delta Colorado
$60K to $75K
1 to 1.9 Acre Lots
Views Views Views
CLICK TO ENLARGE
Before ever hiring an agent to work for you, ASK the difference between a "Buyers Agent" and a "Transaction
Broker" .
Read the definitions and then ask yourself which one you would rather hire.
Ultimate Service Agency
2928 Joan Way
Grand Junction
investigated and verified. The buyer is approved for a loan of a certain amount.
Definition of a pre qualification: The buyer has been quoted an amount on which they MAY be qualified for.
The information given is general and not investigated or verified. Can be done
verbally or over the Internet !
Pre approved buyers are obviously more likely to be taken seriously by sellers and Brokers.
FIND OUT WHAT YOU CAN AFFORD
In order to only look for homes in your price range it is a good idea to get in touch with a lender to find out
what price range you and your Realtor should be shopping in. This will save you time
and prevent you from falling in love with a home that is outside of your price range.
Contact a lender that you feel comfortable with or ask your Realtor for a list of local lenders he/she works with.
Think in terms of possibilities as well as of your criteria is met, it shouldn't be long before you find the right
home. Perhaps a home isn't move-in perfect, but with a
little work it could be the home for you. Don't let cosmetic or minor remodeling problems discourage you.
Before you start house-hunting, decide what you really need in a house. This is just like going to the grocery
store with a shopping
list WISH LIST PDF it can save you time and money. HUD offers a wish list PDF that can help you pinpoint
your housing needs.
AS A REALTOR WE CAN ACCESS AND SEARCH THOUSANDS
OF HOMES ON THE MARKET THROUGH THE M.L.S.
The appraisal is usually mandatory especially if you are obtaining a loan. The Home Inspection is probably
the best money you can spend as a home buyer. We work
with several and would be happy to recommend qualified inspectors.
A survey can be done if there are any concerns about property lines or encroachments.
Disclaimer
All information on this site is provided for informational purposes only! By no means is any information
presented herein intended to substitute for the advice provided to you by
any professional or organization.
Loomis Real Estate
Buyers Corner
Finding and buying the right home is not as overwhelming as it may seem. There are a few steps to take in
order to prepare yourself. With our help, time and experience it can
actually be a very exciting and enjoyable process.
There are several ways to shop around online for homes, we can do this for you or right along with you. The
important part of the home shopping process is the due diligence
required before making an offer. We want you to get the home on your terms and for the best possible price
that both parties can agree on. We truly are a buyers advocate.
We research price history, market conditions and endless sources to make sure that you are informed about
the homes that you are considering to purchase.
Denver (303) 646-5285 Grand Junction (970)361-7195
NEW
Featured
Real Estate
CLICK HERE FOR
GRAND JUNCTION
RELOCATION
INFORMATION
& TO RECEIVE A
RELOCATION PACKAGE
2231 N 17th Circle
Grand Junction
Sunrise Subdivision
Delta Colorado
$60K to $75K
1 to 1.9 Acre Lots
Views Views Views
CLICK TO ENLARGE
Before ever hiring an agent to work for you, ASK the difference between a "Buyers Agent" and a "Transaction
Broker" .
Read the definitions and then ask yourself which one you would rather hire.
Ultimate Service Agency
2928 Joan Way
Grand Junction
Real estate follows a pattern and key factors will affect the rise and fall of the market. The result of this pattern is that
some areas are still hot property markets and others are not. Can you use this information to your advantage to buy or
sell a house for yourself? If you are considering buying or selling, then understanding some of the facets of the real
estate market will help you to evaluate your own unique situation.
Real estate is not only linked to economic growth, there are also other influences and some of these are regional
factors such as population growth, job growth and rising incomes. This means that some areas are still red hot
markets and that the increase in others may be dwindling. For instance, the nationally posted figures for increases in
real estate this year are 3.2% (that is up to June 2007).
But some areas are reporting much larger jumps than that. For instance, Wenatchee, Washington reports a 24%
increase and the Pacific Northwest, Colorado and Utah are showing upwards of 10% appreciation.
In Grand Junction, Colorado, the city's work force has expanded by over 25% since 2002 and property has increased
by 65% in the last five years. The area houses a large gas field and the related industries have all expanded. Keeping
an eye on natural resources can be one indicator of projected growth in the property market. When large numbers of
new employees move into one area, all at the same time, the demand for housing often exceeds the supply therefore
houses are scarce and it is a sellers market.
Job growth has long been an indicator for serious realty investors. If you are wondering about the property market in
your part of the country, then the local newspaper is a good place to start. If it forecasts that many companies, or even
one large company, is moving out of town, it would be wise to keep an eye on the other businesses.
One tell tale sign is an excess of rental signs in property windows and more 'For Sale' signs around than usual. If you
are in an area where the market is stagnant and you can ride it out,then this is advisable as the market trend is usually
always up. Sometimes the perceived 'drop' in prices is really just a drop in the profit margin that was on paper.
Alternatively, if there are reports that new companies are moving into the area, it may mean that back up businesses
will follow. Also check for reports that one of the established businesses in your town is planning an expansion, either
way, these changes will bode well for the housing market.
some areas are still hot property markets and others are not. Can you use this information to your advantage to buy or
sell a house for yourself? If you are considering buying or selling, then understanding some of the facets of the real
estate market will help you to evaluate your own unique situation.
Real estate is not only linked to economic growth, there are also other influences and some of these are regional
factors such as population growth, job growth and rising incomes. This means that some areas are still red hot
markets and that the increase in others may be dwindling. For instance, the nationally posted figures for increases in
real estate this year are 3.2% (that is up to June 2007).
But some areas are reporting much larger jumps than that. For instance, Wenatchee, Washington reports a 24%
increase and the Pacific Northwest, Colorado and Utah are showing upwards of 10% appreciation.
In Grand Junction, Colorado, the city's work force has expanded by over 25% since 2002 and property has increased
by 65% in the last five years. The area houses a large gas field and the related industries have all expanded. Keeping
an eye on natural resources can be one indicator of projected growth in the property market. When large numbers of
new employees move into one area, all at the same time, the demand for housing often exceeds the supply therefore
houses are scarce and it is a sellers market.
Job growth has long been an indicator for serious realty investors. If you are wondering about the property market in
your part of the country, then the local newspaper is a good place to start. If it forecasts that many companies, or even
one large company, is moving out of town, it would be wise to keep an eye on the other businesses.
One tell tale sign is an excess of rental signs in property windows and more 'For Sale' signs around than usual. If you
are in an area where the market is stagnant and you can ride it out,then this is advisable as the market trend is usually
always up. Sometimes the perceived 'drop' in prices is really just a drop in the profit margin that was on paper.
Alternatively, if there are reports that new companies are moving into the area, it may mean that back up businesses
will follow. Also check for reports that one of the established businesses in your town is planning an expansion, either
way, these changes will bode well for the housing market.
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Mortgage rates poised to jump as Fed cuts funds?
Carolyn Said, Chronicle Staff Writer
The Federal Reserve is poised to turn off a major money spigot that has helped sustain the ailing real estate sector, as an extraordinary program under
which the Fed has pumped $1.25 trillion into the mortgage market is slated to end March 31.
"Housing has been on government life support, and without it the crash would have been much more severe," said Mark Zandi, chief economist with
Moody's Economy.com in Pennsylvania. "This spring and summer as those policy efforts unwind, we most likely will see mortgage rates move higher
and more house-price declines."
Rather than being held by banks, today's mortgages are sliced, diced and resold on Wall Street to create liquidity - money that then can be lent in
more mortgages. After the credit crunch beginning in the fall of 2008, investors lost their appetite for these mortgage-backed securities, so the Federal
Reserve stepped in to purchase them to ensure that money would keep flowing to home purchasers.
The Fed started buying securities backed by Fannie Mae, Freddie Mac and Ginnie Mae in January 2009 and originally planned to conclude the
program by year's end. It extended it for three months to ease the impact on mortgage markets, although it didn't allocate more money. The program's
ultimate cost won't be known until the Fed sells off the securities, something that officials said it will do gradually starting this year. It's conceivable
that the program could end up generating a modest profit, breaking even or losing money, depending on what prices the securities go for.
While experts agree that the Fed's exit will cause mortgage rates to rise, the big unknown is how severe the effect will be.
"There is no question rates have been kept artificially low by the Fed's heavy buying," said Guy Cecala, publisher of Inside Mortgage Finance. "My
opinion is that rates will go up a full percentage point initially," meaning that 30-year fixed conforming loans, now hovering around 5 percent, would
hit 6 percent.
Keith Gumbinger, vice president of HSH Associates, which compiles mortgage loan data, thinks that rates will slowly rise to about 5.75 percent after
the Fed withdraws.
"Right now the Fed is acting as a sponge, absorbing about $12 billion a week of what you might consider excess supply," he said. "When they stop, the
market will have to pick up some chunk of change."
Julian Hebron, branch manager at RPM Mortgage's San Francisco office, anticipates a bump up to around 5.5 percent by summer with rate volatility
all year.
"The Fed isn't going to start dumping mortgage bonds on April 1, they're just going to stop buying," he said. "By that time, improving economic data is
likely to push the Fed toward a rate hike bias. This will contribute to higher mortgage rates, slowing refi activity, and less mortgage bond supply. So
while the Fed won't be buying anymore, rates shouldn't spike immediately because there will be less supply for markets to absorb."
Christopher Thornberg, principal at Beacon Economics in Los Angeles, thinks the Fed's withdrawal will have a radical impact.
"Clearly, when they stop printing all that money, it's going to be a shock to the system. I have to assume that when they pull back on it, it will cause a
100- to 200-basis-points rise" to rates of 6 percent or 7 percent, he said. "When they start selling off the stuff they purchased, which by my guess would
come early next year, that would cause another 100- to 150-basis-points rise."
The Fed has indicated that it might resume buying mortgage-backed securities if mortgage rates spike.
In written Congressional testimony released last week, Fed Chairman Ben Bernanke said the Fed eventually will take steps to forestall inflation that also
are likely to result in higher interest rates for all loans.
Several other government programs designed to prop up the housing market also are in play:
-- The home buyers tax credit of $8,000 for first-time buyers and $6,500 for repeat buyers expires April 30. Although many experts think the program
simply caused people to buy houses earlier than they had planned, its end is likely to cause a dip in home sales.
"Higher interest rates without a tax credit means the cost of buying a home will rise significantly," Zandi said. "We should expect much weaker home
sales in May, June and July."
Cecala thinks that if home sales are anemic, Congress may extend the tax credit an additional six months, as it's already done once before.
-- Federal Housing Administration loans, an increasingly important source of financing for many borrowers, especially those with low and moderate
incomes, imposed more stringent lending criteria in January. As FHA delinquencies rise, the rules could tighten still more, eliminating some potential
buyers.
"The FHA portfolio has all sorts of bad debt in it," Thornberg said. "Eventually they'll have to pull back" on lending.
-- Home Affordable Modification Program, the government-backed plan to get banks to help troubled homeowners, has kept the market from being
flooded with foreclosures, as hundreds of thousands of borrowers are negotiating with their lenders for lower payments. Eventually, observers say, much
of that backlog will wind up in foreclosure because homeowners simply don't have the income or ability to make modified payments. A new surge of
bargain-basement foreclosures would undermine home prices.
"We have a boatload of homes that ultimately will find their way to a foreclosure sale, and that will put pressure on house prices," Zandi said. "The
more that distressed home sales rise, the more home prices get pushed down."
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/02/15/MNSP1BVILP.DTL&type=realestate#ixzz0fjeThRxx
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