Showing posts from December, 2010

Questions You SHOULD Be Asking Your Lender

More and more, consumers are learning that there is much more to getting a mortgage than just the interest rate and points. A good mortgage planner is more in the advice business than the lowest price business. With tightening guidelines, often the question first is “Will the loan be approved?” But moreover, the borrowers’ concerns need to involve some of the answers to these non-price questions:

1. What type of lender should I use?
There are three basic types of lenders. Mortgage BROKERS promote a broad product menu, competitive pricing, and entrepreneurial approach; however, BROKERS cannot lock, commit, or approve your loan because they are not actual lenders. Banks and Credit Unions rely on financial strength, direct lending capabilities, and stability; however, the have limited product menus and often a “cover my ass” mentality. Mortgage BANKERS blend the best of both- direct lending ability, financial strength and stability, wide product offerings, competitive pricing and the entre…

2011: The Year a House Again Becomes a Home

For almost a decade now, every time we talked about real estate we immediately discussed money. We didn’t talk about the value of a home but instead about the price of the house. We didn’t worry about a roof over our heads but instead the ceiling on our interest rate. We didn’t care as much about where we raised our family as we cared about how much we increased our family’s net worth.

That will change in 2011. We believe very strongly that real estate will return to what it has been for the 200+ year history of this country: a place for us and our families to live comfortably. It will also prove to be a great long term investment as it always has been.

Our parents and our grandparents didn’t buy their homes as a short term financial investment. They bought it so they had a place of their own to come home to at the end of the day; a place to raise their family; a place they could feel safe.

Sure they dreamed of a ‘mortgage-burning’ party. They realized it was a form of forced savings. Th…

Real Estate 2010: The Year of Intervention

This past year has been very challenging for real estate. The market was defined by outside intervention. This intervention tugged at historic trends. Government involvment caused market fundamentals to be distorted beyond recognition. Unpredictability was the only thing we could predict.


The administration’s announced goal of the modification program was to save 3-4 million families from losing their homes. The actual number of homeowners assisted will come in at less than one million. Most consider the program a failure.

However, we believe that there was a secondary unannounced goal of the modification program: to slow the flow of foreclosed homes to the market. Putting homes through the modification process prevented banks from moving forward with the repossession process as quickly as they normally would.

Limiting supply was one of the ways the administration used to help stabilize home prices. However, the administration has recently slowed the modification process (s…

Dr. Doom, Mr. Bear and Real Estate

Trying to negotiate the current housing market is difficult. There are so many external variables impacting real estate it seems almost impossible to project where sales and prices are headed. But, there were two people who saw the challenges we are currently experiencing back in 2005-2006. They looked at the market and predicted we were in for the collapse that occurred. Who are these men? How do they see real estate today? What are they doing to take advantage of the current market?

Dr. Doom
Nouriel Roubini is a teacher at New York University. He warned that borrowers defaulting on their mortgage loans would unleash a housing bust and deep recession.

According to the Wall Street Journal Roubini is:

…the New York economist whose warnings of a housing collapse earned him the nickname “Dr. Doom” … Ever since much of his dire forecasting came true, Mr. Roubini has become one of the world’s most recognizable economists. He has been in demand as a speaker and consultant, often shuttling arou…

Prices Compared to Historic Trend Lines

Last week, I did a blog post on house prices as compared to income levels. I showed that, using historic ratios, house values were lower than previous norms. Many people asked us if we believe that home prices were about to increase. As I said in the post:

Some experts are predicting that today’s values will drop and not be seen again until the middle of 2012 at the earliest. We concur with these estimates…

It is understood that prices are determined by supply and demand. Inventories are still very high and a lack of consumer confidence is limiting demand. Prices will continue to soften through the first half of 2011 (most experts are calling for a 5-8% decline) before appreciating again.

However, the current market has been dramatically impacted by a foreclosure crisis never before experienced. What will happen when this cloud of distressed properties starts to dissipate? Where will prices be as compared to previous markets? Have we already surrendered the ‘bubble’ increases we experien…

Home For Sale in Colorado Springs

Nice Ranch Style Home for Sale in Colorado Springs is Perfect for the First Time Home Buyer or if you are Relocating to Colorado Springs! Featuring 3 Bedrooms, 2 Bathrooms, 2 Car Detached Garage and 2,576 Square Feet. Tour this Home Today! Located on a Private, Treed 1.05 Acre Lot this Home Boasts a Large Living Room that is Open to the Formal Dining Room. The Ample Sized Kitchen has plenty of cabinets for storage. Main Level Master Bedroom, Finished Basement with 3rd Bedroom, Recreation Area and Storage. Enjoy Peaceful Evenings from the Comfort of your Spacious Deck. Great Location with Easy Access to Fort Carson, I-25, Shopping, Parks and More! If you are interested in this Home for Sale in Colorado Springs, contact Mike MacGuire Today, your Colorado Springs Real Estate Expert!

5 Reasons You Should Sell Today (Updated)

Selling your house in today’s market can be extremely difficult. It is for that reason that every seller should take advantage of each and every chance that appears. There is a fantastic opportunity available right now. Meet with Mike MacGuire, your Colorado Springs Real Estate agent and mortgage professional today and see whether it is the right time for you and your family to make a move.

Here are five reasons you should consider selling in the first 90 days of 2011.

1. Interest rates have spiked up.

Rates have jumped over 1/2 point in the last several weeks. The short term result of increasing rates is a surge of buyers jumping off the fence to purchase in fear that rates may continue climbing upward. This is a short window of opportunity. If rates fall again, buyers will jump back on the fence. If rates continue to rise, it limits the number of buyers who can qualify at each price point. Now is the best time to sell your house.

2. If you are moving up, you can save thousands.

If your …

How Will the Foreclosure Mess Impact Prices?

Three months ago, it was revealed that many banks were guilty of improperly processing the paperwork on their foreclosures. Most banks at the time declared a foreclosure moratorium while they reviewed their paperwork and corrected any errors. Today, we want to give you an update on the situation and explain how the housing market will be affected.

The banks have admitted to some procedural errors. The severity and intent of these errors is still being investigated and the proper sanctions are being debated (one state attorney general is threatening jail time). However, there seems to be no evidence that families were incorrectly forced from their homes.

So what does mean to the housing market?
When this discounted inventory enters the market, it will put downward pressure on house values. Foreclosures entering the market put downward pressure on the non-distressed properties trying to sell. A foreclosure is competition to other homes as they sell for a 41% discount.

When will this invent…

Negative Equity: Not Good But Improving

Back in October, we posted that falling home prices would drive more homeowners into a negative equity situation where their home was worth less than the amount of their mortgage (also known as the house being ‘under water’ or ‘upside down’). If a homeowner falls further into negative equity, it increases the chances that they will walk away from their mortgage obligation. This is known in the industry as a strategic default. This could dramatically increase the number of foreclosures coming to market and cause house values to fall further.

The Wall Street Journal reported on the impact of negative equity on strategic default:

Most defaults are typically driven by a combination of income shock and negative equity, or what’s known as the “double-trigger” hypothesis. While borrowers who lose their jobs but have equity in their homes can sell and avoid default, those without any equity are left with fewer options.

The most recent Fannie Mae National Housing Survey looked at how people viewe…

Demand for Housing Will Increase in 2011

The last Pending Home Sales Index from the National Association of Realtors (NAR) showed a substantial 10.4% month-over-month increase. According to NAR the index measures:

Housing contract activity. It is based on signed real estate contracts for existing single-family homes, condos and co-ops. A signed contract is not counted as a sale until the transaction closes. Modeling for the PHSI looks at the monthly relationship between existing-home sale contracts and transaction closings over the last four years.

This increase confirms a growing feeling that demand for housing has begun to increase.

Both NAR and Fannie Mae expect an increase in sales over the upcoming five quarters. Here are their projections:

Bottom Line
Sales will increase over the next several quarters. The increase will initiate a housing recovery. However, price increases will not take place until current inventory levels diminish. That could take 12-18 months.

For More Information on the Colorado Springs Housing Market, Co…

Insider Secrets to An Optimal Credit Score

As you prepare to apply for credit (like a home mortgage) understand that it is significantly better to have your best possible credit profile BEFORE applying. Working to improve your score during the mortgage process can be done, but there are two problems. One, time to clear up items can become an obstacle when compared the time you are anticipating a closing. And two, lower scores upfront can give an underwriter an additional reason to be uncomfortable with a file. “Sooner, rather than later” should be the mantra of credit score improvements. Here are some tested ways to do it:

Credit Cards – Revolving Debt proportions

Look on the credit report for revolving debt (not installment loans, or “open” accounts)
As a general rule of thumb, the balance should be no more than 30% of the credit limit. So, if it’s more than that, have you should make every attempt to pay it down.

If there are many revolving accounts with high balances, you will most probably need to pay down most or all of them…

Forbes: Housing Had a Superb Decade

Has real estate been a good investment over the last decade? Many people would be quick to answer ‘no’ to that question. However, they would be wrong. Real estate prices in this past decade have appreciated nicely despite the challenges over the last four years. reported on this issue two days ago:

With all the teeth-gnashing over the real estate bubble, the bust and the mortgage mess, you can be forgiven for failing to notice this little tidbit: Housing had a superb decade.

According to Radar Logic, the value of a square foot of housing in the U.S. is up 58% from its January 2000 level. That represents an average annual gain of 4.3% in the value of one square foot of housing. According to the Case Shiller Pricing Index, home values are still up 34.9% over 2000 prices.

How did real estate compare to the stock market? Forbes answered this question:

The growth in average U.S. housing values looks pretty impressive compared with that of other assets, especially stocks. The S&P …

House Price Declines Hitting Most States

This winter will see a softening of prices in most parts of the country. If you are considering selling your home in the near future, you should set an appointment with a real estate professional that has experience in the Colorado Springs Real Estate Market. That being said, we want to explain the magnitude of the challenge.

The FHFA just released their third quarter House Price Index. In the titled they claimed: U.S. House Prices Fall 1.6 Percent in the Third Quarter; Declines in Most Parts of the Country

What is the FHFA HPI?
Federal Housing Finance Agency (FHFA) explains their pricing index this way:

The HPI is a broad measure of the movement of single-family house prices. It serves as a timely, accurate indicator of house price trends at various geographic levels. It also provides housing economists with an analytical tool that is useful for estimating changes in the rates of mortgage defaults, prepayments and housing affordability in specific geographic areas. The HPI is a measure d…

This is Good News for Housing, Not Bad News

We found it interesting to see how some media outlets reported on the latest Fannie Mae National Housing Survey. It is true that the number of people who believe that now is a good time to buy a home dipped 2% since the June report. However, the report also showed that 68% of people still believe it is a good time to buy. That is more than two out of every three people surveyed.

Yet, the headlines seemed to concentrate exclusively on the negative:

Survey: Americans Growing More Cautious on Housing – Wall Street Journal 11/24

Housing Drop: More Bad News for the Economy – Time 11/24

Is the fact that 68% of the people think now is the time to buy bad news? Shouldn’t it be great news? We elect the president of this country with barely 50% of the voters agreeing. A senate ‘supermajority’ only demands 60% to bring out a vote of cloture or to end a filibuster. Over two thirds believing now is the time to buy is fabulous news.

There were two other very revealing findings in the report:

1. People tr…