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FHA Loan changes affect the Colorado Springs real estate market
Colorado Springs Real Estate News — FHA Loan changes will affect buyers and sellers
Currently over 25% of home buyers use FHA loan to purchase their home in Colorado Springs
For a free Buyers Guide, Email Kathy Torline at KTorline@msn.com
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The Department of Housing and Urban Development set forth a legislative mandate in Section 202 of the National Housing Act for ensuring that FHA’s Mutual Mortgage Insurance Fund remains financially sound. As part of these changes, and in an attempt to strengthen their financial position, there is a mandated increase in the Annual Mortgage Insurance Premiums for case numbers dated on or after April 18, 2011.
At first glance these changes may not seem like much. But due to the significant increase in the Annual Mortgage Insurance Premium from .55% in April 2010 to 1.15% in April 2011, it definitely decreases your buying power
What is Mortgage Insurance?
When buyers are approved for FHA home loans, they are required to carry mortgage insurance. That includes both a Mortgage Insurance Premium (MIP) and an Up Front Mortgage Insurance Payment (UFMIP). The Upfront Mortgage Insurance Premium payments go into an escrow account set up by the U.S. Treasury Department and the funds are used to protect the government in case the borrower defaults on the FHA loan.
Here’s a summary the major differences on a $250,000 FHA loan during the last year
- In April 2010, the FHA Up Front Mortgage Insurance Premium (UFMIP)was 2.25% and the Mortgage Insurance Premium (MIP) was a factor of .55%.
- In October 2010, The FHA UFMIP changed to a flat fee of 1%, but the MIP increased to .9% annually.
- Beginning April 2011, the FHA UFMIP will continue at a flat fee of 1%, but the MIP will increase again to an annual factor of 1.15%.
Portions of this article were furnished by Bev Cresswell with Academy Mortgage in Colorado Springs
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Kathy (719-287-1049) KTorline@msn.com
Financing matters!
If you are getting ready to sell a home, it’s important to know what kind of financing buyers use to purchase a home in Colorado Springs
Are you asking why I would say this? Essentially, financing matters.
If you would like information about selling your Colorado Springs Home, call Kathy Torline at 719-287-1049
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Different financing options effect home sellers in different ways
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Buyers who use FHA and VA financing have certain closing costs they cannot pay for, hence the seller ends up paying for these costs. Over 50% of Colorado Springs buyers are currently using VA or FHA loans.
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Both FHA and VA buyers typically take about 45 days to close.
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Conventional loans can typically close even faster than FHA and VA loans, maybe within 30 days.
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If a home needs substantial repairs, a great option is to market it to be financed with a FHA 203K loan.
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Both VA and FHA appraisals can come back with appraisal conditions that can be required home repair items to be fixed before the loan can be processed. As an example, FHA requires the home to meet minimum living conditions which could cost the seller money; including repainting areas on the exterior of the property where paint is flaking and peeling.
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Both VA and FHA loans limit how much a seller can contribute towards the buyer’s closing costs and down payment
Here’s a chart that shows the financing for homes sold in Colorado Springs for the first two months of 2011.
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Kathy (719-287-1049) KTorline@msn.com
FHA 203K loans and HUD properties, perfect partners
How can I finance a Colorado Springs HUD homes?
Search for Colorado Springs HUD homes
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There are currently 43 HUD homes for sale in the Colorado Springs area and 12 under contract. With new properties coming on
the market every day, home buyers have some great opportunities to purchase these homes. Many of them need some repairs; and are perfect candidates for an FHA 203K loan.
What is a FHA 203K loan?
HUD has an FHA 203K loan that allows home buyers to finance an additional $35,000 in repairs into their mortgage purchase. This program allows the the buyer to have easy access to the funds to improve or repair a property; including improvements identified by a home inspector or an FHA appraiser. The following is a list of some of the repairs that can be completed under this program.
* Repair/Replacement of roofs, gutters and downspouts
* Repair/Replacement/upgrade of existing HVAC systems
* Repair/Replacement/upgrade of plumbing and electrical systems
* Repair/Replacement of existing flooring Read the rest of this entry »
Are jumbo loans coming back?
Jumbo loans are challenging
Search for Luxury homes in Colorado Springs
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When the credit crisis hit a couple of years ago, most lenders stop making loan for more expensive homes; which has certainly made it
challenging for homes to sell in the $500,000+ range. Per a recent article in the Wall Street Journal on Saturday, November 6th, it seems that some regional lenders are starting to issue more jumbo loans.
Jumbo loans are classified as loans too big to be issued by Fannie Mae and Freddie Mac; and the maximum amount for these loans in Colorado is $417,000. According to the WSJ article, Jumbo loans constituted 5% of total mortgages in 2009 and 2010 vs. 20% from 2004 to 2007.
More jumbo loans could certainly help the Colorado Springs luxury home market. There are currently 683 homes for sale in the Colorado Springs that are priced over $500,000; and 339 homes over $500,000 have sold in the last 10 months; equates to 34 homes a month. There is 20 months of inventory on the market; making it an BUYER’s market.
Since the consequences of jumbo loan foreclosure are so serious, getting approved for this type of loan is even more difficult. It is not uncommon for lenders who do participate in the jumbo loan market to utilize very strict guidelines for approving loans; and credit standards are are often more stringent for jumbo loans. In addition, many jumbo loans require a minimum down payment of twenty percent In additional jumbo home prices can be more subjective and not as easily sold to a mainstream borrower, therefore many lenders may require two appraisals on a jumbo mortgage loan.
If jumbo loans start to come back in the market, it certainly will help the luxury homes in Colorado Springs.
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To find out more information about buying a home in Colorado Springs or Manitou Springs, call ….
Kathy (719-287-1049) KTorline@msn.com
Colorado Springs insurance tips for home owners
6 Insurance tips for Colorado Springs home owners to know about
I attended a class yesterday’s by Mark J. DeZuba and Janet McMonigal with Farmers Insurance. As with most classes, I learned lots of helpful information and wanted to pass on my top 6 list.
- T-Locks…………More and more insurance companies won’t insure homes in the Colorado Springs areas that have T-lock
roofs. Many homes in the area were built with T-lock roofs; as they were thought to be more resistance to wind since the shingles lock together. But these types of shingles are no longer manufactured, hence it’s very challenging for a roofing company to just replace a couple of shingles. If you are looking at buying a home with a T-lock roof, you may want to check with your insurance company and find out how they handle it and what they cover. (FYI: There are several roofing companies in Colorado Springs that have a supply of T-locks.)
T-Lock roofs have a unique look and can be identified by their individual “T” shaped shingles.
Also, if you are interested in a home with Shake Shingles, check with an insurance agent.
- Vacant homes ……….. If you are getting ready to move and your house is going to be vacant while it is being sold, double check with your insurance agent. Your policy may need to be changed since it is a vacant property. Same thing if you are insuring a vacation home and won’t be living in it full time.
- Dogs …….. Do you own a dog; or multiple dogs? Again double check on your policy with your insurance agent Many of them have Read the rest of this entry »
El Paso Bond Money is still available for Colorado Springs home buyers
El Paso Bond Money for Single Family homes
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One type of financing that many Colorado Springs Realtors don’t know about, is El Paso Bond Money. According to a recent article in the Gazette, there is still money available for about 150 home owners. There are a variety of qualifications for home owners including you must be a first time home buyer (or haven’t owned one for 3 years). The property must be purchased in a targeted low-income area of Colorado Springs, and the maximum purchase price is $283,000. There are also certain maximum income requirements
Here’s a link to the information on the El Paso County web site.
According to the article “The county has provided mortgage assistance to local homebuyers since 1979, when the federal government began supporting single-family housing initiatives, McCann said. About 6,000 local homebuyers have taken advantage of the programs in the past 30 years.”
One important thing to know about the program is that the Down Payments Grants are not a loan and the program is only for owner occupants, not investors.
There are a variety of lenders that participate in the program, but here at two lenders that I’ve used and am very confident in recommending, Ent Federal Credit Union and Academy Mortgage.
To find out more information about Colorado Springs homes, Call ……
Kathy (719-287-1049) KTorline@msn.com
Are home sales in Colorado Springs really down?
Homes Sales in Colorado Springs continued to decline in September 2010
For a Free Colorado Springs Relocation Guide, Email Kathy Torline at KTorline@msn.com
Related Article:
Here’s a quick run-down on the Colorado Springs Housing Market
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Sales in Colorado Springs are down 24% from September 2010 to September 2009
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VA Loan continue to be a popular choice for Colorado Springs Home Buyers
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15% of the sales in September 2010 were paid for by cash
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The numbers of homes purchased by Conventional Loans has continued decrease, reflecting the state of the current lending environment.
To find out more information about Colorado Springs, Call ……
Kathy (719-287-1049) KTorline@msn.com
Financing options for Colorado Springs Military — VA Loans are the best!
Are you a military member or a veteran?
Are you moving to Fort Carson? Schriever AFB? Peterson AFB? Air Force Academy?
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- How do I get a down payment for Homes in Colorado Springs?
- Credit score explanation
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With your VA Guaranteed Home Loan benefit you can still obtain a loan with no down payment and a fixed interest rate that is as good as or better than a conventional mortgage rate. Let’s start with some of the basics about VA loans.
What is a VA Guaranteed Home Loan?
Some people have the misconception that the military is the organization loaning the money. Not true. Your VA Guaranteed Home
Loan will be made by a private lender, such as your bank or a mortgage company of your choosing that has VA lending approval.
The guaranty means the lender is protected if you fail to repay the loan. This is also why you will not have to pay private mortgage insurance (PMI). Normally, a lender would require a down payment and/or PMI to obtain a loan.
For even more facts about VA Guarantee Home Loans in Colorado Springs, go the web site for the United States Department of Veteran Services.
You still must meet loan requirements
If there are items in your credit history that are derogatory, you can be denied a loan even though you have your Certificate of Eligibility. The VA cannot demand a lender make a loan to you that would violate their lending practices.
Lenders also must comply with the VA rules and policies when it comes to income and credit standards. Just having the benefit is not enough, you must be credit worthy and have the correct debt to income ratios.
Is a VA Appraisal the same as an Inspection?
No, these are not the same thing. Read the rest of this entry »
Local lenders vs. a National lender
Choose your lender wisely
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If you are trying to buy a Colorado Springs home with FHA or VA financing, choosing a nationwide bank or lender can raise red flags
for the seller and the Listing Agent. In theory, the nationwide banks may seem to offer the best pricing and best closing costs; but not being local can cause problems.
- Even if you have a letter from the national lender saying you are pre-approved, the house still needs to appraise.
- I’ve heard from some of other Realtor friends that some of the national banks (who don’t have a local office) are using appraisers who are not local and who may not understand the prices and the market trends in Colorado Springs.
- Even if the appraisal does come in at or over the contact price, some of the larger lenders are requiring second, even third appraisals.
- Also, some of the larger nation-wide lenders don’t assign one key contact to your account. Hence, if you have a question, you may be transferred to a person in a call center, and sometimes the call center isn’t even in the U.S. No problem if your loan doesn’t incur any challenges, but if you run into any problems you want one consistent person to talk to to get answers from.
- If you use a local lender, you can walk in their office and talk to a live person. Sometimes that can make the difference in getting a loan.
If you decide to choose a lender that is a nationwide bank or lender, you won’t necessarily have a bad transaction. But there are advantages to staying local.
For a list of Colorado Springs Lenders and banks, contact Kathy at KTorline@msn.com
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Kathy (719-287-1049) KTorline@msn.com
FHA loans and Condos — important to know the rules
Colorado Springs Condominiums
Search for Colorado Springs Condominiums
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Have you heard about the HRAP/DELRAP system? It lists condo developments that meet eligibility requirements set the Federal 
Housing Administration.
If you are interested in a purchasing a Colorado Springs Condo, your ability to get an FHA loan will depend on an “approved” rating by HRAP/DELRAP system.
DELRAP stands for Direct Endorsement Lender review and Approval Process and the rules aim to prevent risky loans. There are a variety of reasons that a complex may be labeled “rejected”:
- More than 15% of homeowners in a development are delinquent on the HOA dues (This could be the result of homeowners in foreclosure)
- One investor or entity owns more than 10 percent of the project
- Less than 50% of the project is either sold or owner occupied
- More than half of the homeowners have FHA loans
You can go to HUD’s web site, and search for information on specific communities, you can even search by zip code. I’m not sure that the database is fully populated, so some developments that deserve a “rejected” rating may still be added.
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Kathy (719-287-1049) KTorline@msn.com
FHA Loan Changes
FHA Loan Changes
For a free Buyers Guide, Email Kathy Torline at KTorline@msn.com
Related Article:
Did you know that in 2009, the Federal Housing Administration (FHA) insured nearly 30% of the single-family mortgage market and that more than 50% of all first-time home buyers used FHA programs? I haven’t been able to find any facts to support this, but I think 
number if lower for homebuyers in Colorado Springs, as many of the military population relocating to Colorado Springs use VA Loans to finance their purchases.
As of April 5, 2010, FHA loans changed their upfront mortgage insurance premium from 1.75% to 2.25% of the loan amount. Additionally, an annual MIP (mortgage insurance premium) of 0.55% of the loan is charged on a monthly basis. These measures are intended to help the FHA better manage its risks, while continuing to provide affordable, responsible mortgage products. The annual MIP is automatically eliminated when the loan amount is reduced to 78% of the original purchase amount.
There have been several other changes including a reduction in maximum seller contributions from 6% down to 3%.
Another change is that new borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program. Borrowers with less than a 580 FICO score will be required to put down at least 10%.
If you want to read the complete Press Release from HUD, here a link to the article.
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Kathy (719-287-1049) KTorline@msn.com
Financial Do’s and Don’ts
Credit Do’s and Don’ts
You have finally decided to buy a Home in Colorado Springs. You have a lender and are now pre-approved.
Below you will find a reminders of DO’s and DON”Ts to do before you buy your Colorado Springs dream house.
For a free Buyers Guide, Email Kathy Torline at KTorline@msn.com
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- Credit score explanation
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DO’s
- DO continue making your mortgage or rent payments
- DO stay current on all your existing credit card accounts
- DO keep working at your current employer
- DO continue living at your current residence
- DO continue to use your credit as normal
DON’Ts
- DON’T make a major purchase (car, boat, fur, jewelry, etc.)
- DON’T apply for a new credit card
- DON’T transfer any balances from one credit card account to another
- DON’T pay charges offs without discussing it with your lender
- DON’T pay off collections without discussing it with your lender
- DON’T buy any furniture on credit
- DON’T close any credit card accounts
- DON’T change bank accounts
- DON’T max out or over charge on your credit card accounts
- DON’T consolidate all your debit into 1 or 2 credit cards
- DON’T take out a new loan
- DON’T finance an elective medical procedure
- DON’T pay off any loans or credit cards without discussing it with your lender
Waiver on flipping is good for the local Colorado Springs economy
Waiver announced on 90 day flipping
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The 90 Day Flipping rule has been lifted for at least 1 year starting February 1, 2010. HOWEVER, it’s important to keep in mind that it is 
not completely free from all stipulations. Here’s a link to the actual Waiver on the HUD web site; which gives the conditions of the waiver.
What does this mean to the Colorado Springs First Time Home buyers?
It means that buyers who are going to buy a property with a FHA loan financing can do so without having to wait for 90-days from the date of the last purchase of that property in order to purchase it.
As an example: A home was purchased by an Investor on November 15, 2009 and the investor fixed up the property. With the previous 90-day rule, a buyer who was using FHA financing would have to wait 90-days from the 11/15/09 date in order to go into contract on this property. The new rule is waiving the 90 day period.
What does this mean to Colorado Springs Real Estate Investors?
It means that investors can buy and flip properties and not worry about waiting 90 days to get the property sold. Although conventional and cash purchases were not affected by the 90-day rule, the majority of homes are now being financed by FHA. This moratorium will help homes sell quicker; which means investors can then move on to the next property!
Who Else Does it Affect?
Many of the homes that the banks are foreclosing on are in bad shape and need repaired and updated to make them more attractive to Colorado Springs First Time Home Buyers.
I think this change in the guidelines will help Colorado Springs foreclosed homes sell faster, which in turn helps the local economy. It’s estimated that on an average a home buyer spends an additional $8000.00 on a house after they purchase it, which certainly also stimulates the economy.
Wouldn’t you much rather have a homeowner in your neighborhood vs. a foreclosed empty house?
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Kathy (719-287-1049) KTorline@msn.com
Tax Credit for military personnel
Tax Credit for military personnel
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Military families stationed at Fort Carson, Peterson AFA, Schriever AFA, and the U.S. Air Force Academy and other military installations in the Colorado Springs Since Colorado Springs will be glad to learn that 
the First Time Home Owner Tax Credit has some wonderful additional benefits for the military. Here’s some of the highlights:
- Members of the military and certain other federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit. Thus, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2011. If a binding contract is entered into by that date, the taxpayer has until June 30, 2011, to close on the purchase. Members of the uniformed services, members of the Foreign Service and employees of the intelligence community are eligible for this special rule. Read the rest of this entry »
Where do I find a loan to buy a distressed property?
Want to buy a Colorado Springs Foreclosure, check out FHA 203K Loans –
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With foreclosures at an all time high in the Colorado Springs area, it’s a perfect time to pick up a good deal on a home. BUT, the challenge is that many of these homes need work and many buyers don’t know they have options on loans that can help them purchase the property as well as still have money for the work that needs to be done. One of the best programs around is the FHA 203K Loan. It provides a great way to buy a distressed property and to still have money to get the repairs done. Let’s start with some of the basics.
What type or properties are eligible?
- A one to four-family dwelling that has been completed for at least one year, including townhouses and condominiums
- The program can also be used to convert a one-family dwelling to a two-, three-, or four-family dwelling
Where can I get more details?
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The HUD web site has more information than you probably ever need to know, but it’s worth reading the highlights on the web site. There is also a great section about FHA 203K Loans on the FHA web site.
What type of Improvements are eligible in the FHA 203K Streamline?
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Repair/Replacement of roofs, gutters and downspouts
- Repair/Replacement/upgrade of existing HVAC systems (When and why should I replace my furnace?)
- Repair/Replacement/upgrade of plumbing and electrical systems
- Repair/Replacement of flooring, tiling and carpeting
- Remodeling, such as kitchens and bathrooms
- Weatherization, including storm windows and doors, insulation, weather stripping
- Purchase and installation of appliances, including free standing ranges, refrigerators, washer/dryers, dishwashers and microwave ovens
- Repair/replace/add exterior decks, patios, porches
- Window and door replacements and exterior wall re-siding (Colorado Springs home Improvement — it’s all about the windows)
- Basement finishing and remodeling
- Basement waterproofing
- Septic System and/or well repair or replacement
- Lead-based paint stabilization
- Accessibility improvements for persons with disabilities
The next post will include a step-by-step guide of the application process.
Kathy (719-287-1049) KTorline@msn.com
7 ways to avoid identity theft
1 in 10 will be the victim of ID theft this year
Identity theft is one of the fastest growing crimes in Colorado and in the US.
Must Read Posts:
- Credit score explanation
- Pre-Qualification or Pre-Approval, which do you need to buy a home?
- Why do I have to pay mortgage insurance?
- 26 criteria used to determine interest rates
Here’s my top 7 tips to avoid identity theft
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Mail: Have it delivered to/from the post office. Don’t have mail delivered to your home mailbox; especially if it is unsecured
- Social Security number: Never carry your social security card with you. Be very cautious about giving it out.
- Receipts: Take all your ATM and gas receipts with you. Don’t leave them at the gas station or at the ATM machine.
- Statements and credit card solicitations: Don’t just throw them away, shred them.
- Bar codes: Remove the bar codes from magazine and shred them.
- Credit report: Monitor your report on an annual basis at www.annualcreditreport.com
- Electronic Keypad signatures: Put the date at the end of your signature when you are signing on an Electronic keypad. (This will keep your signature from being stolen and used again.)
Remember, Knowledge is Power
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To find out more information about buying or renting a home in Colorado Springs or Manitou Springs, call ….
Why do I have to pay mortgage insurance?
Colorado Springs Vintage Homes is happy to feature a great article by
Harry Venik with Adams Mortgage, LLC in Colorado Springs
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Why Pay Private Mortgage Insurance (PMI)?
Private Mortgage Insurance (PMI) is required by most lenders when a borrower puts less than 20% down on a purchase loan. Paid for by the borrower, PMI not only protects the lender from foreclosure, it also enables many buyers to qualify for loans and purchase real estate when they couldn’t have otherwise. On January 1st, 2007, legislation went into effect making Read the rest of this entry »
26 criteria used to determine interest rates
Colorado Springs Vintage Homes is happy to feature a great article by
Harry Venik with Adams Mortgage, LLC in Colorado Springs
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When it comes to buying a home in Colorado Springs, consumers can no longer shop for a mortgage based simply on lowest interest rate quotes. Today’s Colorado Springs home buyer needs good advice from an experienced, educated mortgage professional who has the consumer’s best interest in mind.
For consumers, this means beware of anyone who quotes you an interest rate over the phone or the Internet without asking anything about you, your family, your finances or your lifestyle. Besides market conditions, your mortgage rate is based on Read the rest of this entry »
How do I get a down payment for Homes in Colorado Springs?
Colorado Springs Vintage Homes is happy to feature a great article by
Harry Venik with Adams Mortgage, LLC in Colorado Springs
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Colorado Springs Home Buyer’s Down Payment FAQs
With today’s combination of lower home prices, some of the lowest interest rates the industry has ever offered, and 
the $8000 tax incentive for first-time buyers, buying a home in Colorado Springs has never been so attractive. The only real hurdle left for many Americans is coming up with a down payment. With this in mind, we’ve put together some of the most frequently asked questions we get about down payments in today’s market.
Q. Are there any no-down payment programs left?
Yes. While it’s true that most of the popular no-down payment programs disappeared in the wake of the subprime mortgage collapse, there are still two longstanding government-backed programs that offer mortgages with no down payment: the USDA Rural Development Program and the VA Loan Program.
A USDA Guaranteed Loan is a Read the rest of this entry »
What is allowable for VA Seller Concessions?
VA Loans – Part II
Must Read posts: 6 BIG advantages of VA loans
For a Free Colorado Springs Relocation Guide, Email Kathy Torline at KTorline@msn.com
Must Read Article: 6 BIG advantages of VA loans
One of the biggest areas of confusion about VA loans is the Seller Concessions. In the recent class I was in where the instructors were from the Denver VA office, they did a great job of explaining what can and what can’t be used as 
part of Seller Concessions.
VA Mortgages have a limit of 4% of the Appraised Value that the seller can contribute to a buyer on a VA purchase without it being considered excessive. For VA purposes, a seller concession is defined as anything of value added to the transaction which the buyer pays no additional amount and which the seller is not customarily expected to pay. Some examples of concessions include seller payment of the following:
- Buyer’s VA funding fee
- Buyer’s prepaids (Taxes and Insurance) Read the rest of this entry »
