Parker CO Homes For Sale, Homes in Castle Rock, and Elizabeth CO Homes Blog

Monday, March 10, 2008

Ridin That Crazy Train!

"I'M GOING OFF THE RAILS ON A CRAZY TRAIN..." OZZY OSBOURNE And speaking of going off the rails crazy...Bonds and home loan rates just experienced one of the most volatile, crazy weeks ever seen, with fixed home loan rates rising by about .375% by the time the smoke cleared.

During the first four days of last week, Bonds underwent a crazy 313 basis point sell-off - more than they sometimes move over the course of six months. Why the insane action? Uninspiring commentary from Federal Reserve officials, renewed fears of inflation...and another very interesting story playing out last Thursday. Losses from The Carlyle Capital Group and Thornburg Mortgage decreased their capital to the point where their financial backers had asked for cash back in the way of a "margin call". What does this mean?

Imagine a home that received a loan for 50% of the value...but a provision in the loan stated that under no circumstances could the equity fall below 50%. And the home would need to be appraised every day to evaluate this. If the home lost significant value, the lender would be entitled to an immediate payment to retain the 50% equity position. So if the home did indeed decline in value, the lender would make a call for capital to make sure their 50% margin of loan-to-value remains intact...hence the name margin call. If the homeowner had the cash to meet this call - all is well. But if the homeowner did not have the cash, the only way to satisfy the lender would be a sale of the home. And that is basically what Carlyle Capital Group and Thornburg Mortgage had to do last Thursday...they didn't have enough cash on hand to meet their margin call, so they were forced to sell home loans that they were hold ing. This flood of mortgage paper on the market pushed Mortgage Bond prices lower...much lower.

The week was shaping up to be one of the worst in history for Bonds and home loan rates - but then, remembering that weak financial news is good for Bonds and home loan rates, Friday's utterly dismal monthly Jobs Report came to the rescue. On the report that there were a net loss of 63,000 jobs in the US last month - as well as negative revisions to previous months reports - Bonds rocketed back higher, at least enough to erase the previous day's losses, but still ended significantly worse off for the week overall.

Forecast for the Week

And don't think the wild ride is over...Bonds and home loan rates are probably not pulling into the station just yet, so stay strapped in and keep your hands on the safety bar. Another week of potential volatility lies ahead, with several key economic reports due for release, including Retail Sales, Initial Jobless Claims, Consumer Sentiment and the inflation-measuring Consumer Price Index.

Remembering that when Bond prices move lower, home loan rates move higher - the chart below shows just what kind of dramatic volatility has been seen of late. The 200-day Moving Average shown in blue has traditionally been a very strong "floor of support" or "ceiling of resistance", depending on which side of the line Bonds are trading. Last Thursday's action saw a deep dip below this benchmark line in the sand - but Friday's strong positive move helped Bonds power their way back above the line.

The news in the days ahead will dictate which side of this important line Bonds will head next, and could determine the trend for the next several weeks...and perhaps even months.
Chart: Fannie Mae 5.5% Mortgage Bond (Friday Mar 07, 2008)

This Blog is dedicated to Parker Colorado Real Estate and Parker Colorado Homes, Elizabeth Colorado homes and land, Franktown Colorado homes, Castle Rock real estate, and metro Denver Colorado real estate property listings. Search the Denver MLS directly for properties and homes at http://www.coloradodreamhomes.info/ and access a huge real estate resource at http://www.coloradodreamhomes.net/

Thursday, March 06, 2008

Mortgage Rules Changing Almost Daily!

Several changes have happened in the last 5 days that you should really be aware of. Some good, some bad. Please be sure to read all 3, as they may impact deals you currently have in the pipeline.

1) As of 3/1/08, there are no Mortgage Insurance Companies that offer MI in the Denver area at less than a 97% Loan To Value. The scary thing here is, your client could have an approval (automated via Fannie Mae, or full approval through an underwriter) that is NO GOOD, because it is dependant upon Mortgage Insurance that is no longer available.

Mortgages with $0 - $1,000 down are still available through 4 sources:
A: A CHFA approved lender. (we're aproved). Colorado loans the downpayment money to the borrower. Income restricted.
B: Denver Bond Program (we're approved). Downpayment is given to the borrower. Income restricted.
C: B-Paper. Note that the rates will be significantly higher.
D: The old downpayment assistance programs, IE Nehemiah. Remember, your client will pay more for the house than needed.

Otherwise, your best bet is FHA with a 3% gift from a family member.

2) As of today, FHA has INCREASED(!) loan limits to $406,250. Woo Hoo!

3) Fannie Mae and Freddie Mac are changing their pricing criteria on credit scores. Previously, for full doc loans, a 640 FICO score was as good at a 719, and a 720 score got a borrower $500 in fees reduced on a typical loan. Now, at each 20 pt increment, your client loses money. So, at 720+ borrowers get the same rates as today. At 640, they could be as much as 0.625% worse (!). So.... YOUR CLIENT NEEDS TO TALK TO A LENDER AS SOON IN THE PROCESS AS POSSIBLE, because with an extra two weeks to work, a good lender could save them thousands. This does not impact FHA.

The nutshell: FHA and CHFA are now much more attractive than it was for anyone with a credit score below 720 and / or a downpayment below 20%. Have them talk to your preferred lender early, to be sure they are best served.

Thanks,

Matt.

Matthew M. Lee

Sr. Mortgage Planner

The FIRST Team: Financing Integrity, Resourcefulness, Service, and Trust.

Cherry Creek Mortgage Co.
7400 E. Arapahoe Rd. Suite 303
Centennial, CO 80112
Office: 303.270.9600
Fax: 303.843.9203
Website: http://www.coloradofirstmortgage.com/ <http://www.coloradofirstmortgage.com/>
Email: mlee@ccmc-net.com <mailto:mlee@ccmc-net.com>

This Blog is dedicated to Parker Colorado Real Estate and Parker Colorado Homes, Elizabeth Colorado homes and land, Franktown Colorado homes, Castle Rock real estate, and metro Denver Colorado real estate property listings. Search the Denver MLS directly for properties and homes at http://www.coloradodreamhomes.info/ and access a huge real estate resource at http://www.coloradodreamhomes.net/

Tuesday, March 04, 2008

Coming Soon next to Quincy Lake!

Here is an example of the "sale" prices you can get right now. Arapahoe County has this home valued at 122,500 in 2007. After running solds in the neighborhood, I'm recommending to the bank that it is listed at 99,900. This is going to be a good deal to some lucky buyer!

This Blog is dedicated to Parker Colorado Real Estate and Parker Colorado Homes, Elizabeth Colorado homes and land, Franktown Colorado homes, Castle Rock real estate, and metro Denver Colorado real estate property listings. Search the Denver MLS directly for properties and homes at http://www.coloradodreamhomes.info/ and access a huge real estate resource at http://www.coloradodreamhomes.net/

Houses are on Sale!

So this home started out at 412,900, and is now at 350K, representing a 63K drop in price. It would easily comp out in the 390K range. All it needs is some landscaping and appliances. A buyer could put all of 7K into this home and get instant equity. It need nothing else.

So this home is now $899, which is a $100,000 price reduction from its original list price. It has never been lived in, as the builder was foreclosed on. It is priced signifigantly less than every other house in Timber Canyon, a high-end residential neighborhood in Castle Rock. On a $/SF basis, it is the lowest in this subdivision.

These are just two examples of the deals you can get out there right now. Nobody knows how long this historic "sale" will last, but if I were in the position to buy, I'd be jumping on the opportunity. Remember the old saying "Buy low, sell high?" To make money in the stock market you buy when the mood is gloomy and you sell when things are rocking. In real estate its no different. Nobody will ever be able to pick a top or bottom of a real estate cycle, but buyers have an unprecedented opportunity right now to build some solid future equity.

This Blog is dedicated to Parker Colorado Real Estate and Parker Colorado Homes, Elizabeth Colorado homes and land, Franktown Colorado homes, Castle Rock real estate, and metro Denver Colorado real estate property listings. Search the Denver MLS directly for properties and homes at http://www.coloradodreamhomes.info/ and access a huge real estate resource at http://www.coloradodreamhomes.net/

Thursday, February 21, 2008

The Deals out There are Incredible!

Buyers are truly missing huge opportunites...

Just surveying the active listings out there, and stumbling across a ton of bank owned properties, it is truly amazing the deals that are out there RIGHT NOW. There are a bunch of high end luxury homes that are a steal as an example. I saw a couple that had dropped over 200K. I have a home in Timber Canyon that has dropped 100K. I had a 7000 SF home with a pool that dropped over 145K until finally another Realtor has it under contract. She is guaranteed to make at least 100K in equity instantly when the market turns around (and it will). You KNOW when there are great deals out there when REALTORS START TO BUY THEM UP.

I'm telling you, if you are on the fence at all, you would truly be foolish to wait any longer for prices to drop more. You have no guarantee that will ever happen. My bet is that we ARE AT THE LOW POINT RIGHT NOW.