Need to Sale, but Underwater?

With almost half of Colorado home owners underwater on their home there are a lot of people wondering what to do when they have to move? Bankruptcy? Foreclosure? Short Sale? Or do you keep the house and convert in to a rental?  None of the options are great, but what is the best of all evils?

There is no right answer for every one, however, more lenders are starting to allow clients to purchase a new house after a short sale is completed with NO seasoning requirements.   FHA announced this change in guidelines in December of 2009, however lenders still required applicants to wait 2-4 years after a short sale to be eligible for a new mortgage.  A majority of lenders still require borrowers to wait, but there are a few lenders that will now let you obtain a new mortgage immediately.

However, there are additional guidelines you must meet to qualify for a new mortgage without waiting at least two years.  If you are considering a short sale on your current house and purchasing a new home you must:

1. Have no delinquent mortgage payments in the last 12 months and your mortgage must be current at time of closing.
2. You can't have any delinquent payments on any installment debts in the last 12 months.
3. You can not complete a short sale just to take advantage of the market.  You need to be able to show that moving is necessary (increase or decrease in family size, moving to a different geographic area)

If you have any questions or are planning to do a short sale please call us for more information.

There is Not Much Time Left

No I'm not talking about the tax credit. While the home buyer tax credit has received the most attention, the government's mortgage backed security (MBS) program has done more for the real estate market and may have a bigger impact when it's over.

The federal government allocated $1.25 TRILLION to purchase MBS to keep mortgage backed rates. In fact, they have become the ONLY player in the MBS market. The MBS purchase program is set to expire at the end of March. Once the government leaves we will see rates increase, the question is how much? Some experts believe we will see an increase of at least 1% immediately and possibly 2%-3% higher by the end of the year.

What does this mean in dollars? If you have a $200,000 loan currently you could receive an interest rate of 5% which would give you a payment of $1,073. If rates increase to 6% your payment will increase to $1,199. The difference of $125/month or $1,500/month or $45,000 over the life of the loan.

If you thought of refinancing, have a rate above 6%, have an adjustable rate, or purchasing a new home, do it now. Go to www.colomortgages.com and apply online for free.

The Moving Target

As the mortgage industry continues to evolve the toughest obstacle to over come is the constant moving target of loan approval. Tougher guidelines continue to limit home ownership to those who want to buy. Many potential home owners are finding out they may have qualified last month to purchase a home and now they don't OR they are approved for a much lower loan amount. So what can you do to make sure that you are able to buy home today AND next month with guidelines changing so rapidly and often?


You need to make a budget for yourself and know what you can afford and WANT to pay on a monthly basis. The biggest problem most potential home owners make is they try to purchase a house at their qualifying amount, which is not always what they can afford. Mortgage underwriters only account for the debt that is reporting on your credit and you may have other obligations that are unknown to the underwriter. Make sure you have room in your budget for emergencies and don't over buy. By not over buying you are also protecting yourself from debt to income ratio guidelines changing.

Pay off your debt and save money! I know this sounds like common sense, but you don't how many people purchase new items for their home BEFORE they close or start the approval process. The lower your debt and the higher your savings will help your chances of loan approval when guidelines change. Mortgage underwriters will grant exceptions on certain guidelines if there are compensating factors and the two biggest compensating factors; our your debt to income ratio and savings.

Plan ahead - Once you obtain a mortgage approval it is typically good for 120 days, but you must be approved FIRST. Before you start looking for houses talk with a mortgage professional and obtain underwriting approval. This way if guidelines change, you most likely won't be affected as your loan is already approved. Also, the approval process is taking a little longer then it did six months ago, if you wait to start the approval process until you are under contract you may run in to complications with closing on time.

Finally, be prepared for the loan approval process to be a little more in depth and require more documentation then you did the last time you purchased a house or refinanced. If you haven't obtained a new mortgage in the last 12 months you are going to be surprised/shocked on how different the process is now.

If you have any questions or would like to be pre-approved for a mortgage please call 303.666.6550, email, or visit us online.

http://www.colomortgages.com/

YES, We Are STILL DOING LOANS!!!!

I've never been so amazed on how many people believe every thing they hear on the news. Almost every person that I have met in the last month are amazed that I'm still doing business in the mortgage industry. They all thought that mortgages were near impossible to obtain at this point and were surprised to hear that I was not filing for unemployment. What about the credit squeeze they heard about on the news?

The facts are, that mortgages are still being approved and funded every day. Yes, the guidelines can be tougher in some places and there are a lot of loans that we can no longer due. However, you don't have to have an 800 credit score or 20% down to be approved for a loan. NOT EVEN CLOSE.

There are still 100% financing options available and you don't necessarily have to have GREAT credit to obtain no money down financing. And, YES, you can still obtain a mortgage loan if you can't verify your income. AND, YES, you can still obtain a mortgage for an investment property.

However, lenders will no longer approved loans with layered risk (multiple risk factors). If you don't have great credit and can't verify your income, good luck finding a loan. Or if you want to purchase an investment property with no money down, have fun trying. There are dozens of programs still available (with good rates) that will lend money to people with a lower credit score or can't verify income or don't want to put money down, but you can't have multiple risk factors.

When we look back in 5-10 years at the mortgage meltdown, I believe layered risk will be one of the biggest lessons learned. A lot of these loans are great programs, but there can't be multiple risk factors involved within these loans.

Greg Selters
Mortgage Manager
Prosperity Financial, LLC
http://www.myprosperityfinancial.com/

100% Financing And Much More

In this market there is no doubt that it's tougher to get financing then it was a year ago or even a few months ago. If you are self-employed or trying to buy a house with no money down you already know this. But it doesn't mean you can qualify for a mortgage, even at 100% or with stated income. Although you can't go to your local bank and get a loan at 100% financing or with stated income, mortgage brokers have access to these types of loans.

Why don't you hear about these programs, because a lot of brokers are lazy and complacent. They are still in the same mind set they were a few years ago, they have a few lenders that they work with and when their lenders eliminate programs they assume every one has. A lot professionals in the business also have the mindset if they can't help you now, they can't help you.

Don't give up if you have been turned by a lender or even 5, there are programs out there that can help you achieve your goals, but you have to be willing to do the research. I spend about 2 hours a day looking for new lenders and new programs that can help my clients (and I know where to look). Yes, you might have to do a little work to improve your credit scores, but your mortgage professional should be able to help you do this. I would say about 25% of our clients needed help with improving their scores 20-30 points before we could do a loan, but that usually can be done with in 60 days.

If you are self-employed, looking for 100% financing, or just need help finding a loan call us, we will work you to find the right solution, whether that is doing a loan with us or another option that will meet your needs better.

Prosperity Financial - Your Mortgage Manager

Questions YOU SHOULD be Asking

Any time I talk with a client or introduce myself to a stranger as a mortgage professional, the first and usually only question I receive, is what are your rates? Obviously, price (rate and closing costs) are important to every one, but I'm amazed that is the only question I hear?

While, price is an important factor when making a decision on what lender to use, service is more important. The problem is most people don't understand how great service from their lender can save them thousands of dollars and a dozen headaches. Here are some questions that you should be asking your lender and why they are important.

What is your process and how do you communicate the status/progress of the approval process? While all lenders basically have the same process, they all do it differently, and this can be important if there is a time crunch, especially on purchase transactions. Communication is also very important, you want to make sure you are working with a lender that communicates effectively with all parties involved. Also, make sure your lender is willing to fax/email/mail your rate lock to you, this will help you avoid the bait and switch tactic some lenders employ.

What after closing services do you offer? I believe this is one of the most important questions you can ask. You want to make sure you have a great relationship with you lender and that they are looking after you best interest even after the loan closes. A good lender will offer multiple after closing services such as, credit analysis, rate watch, and value analysis. After closing services can save you thousands of dollars, if not hundreds of thousands.

How do you store/dispose of my private information? This should be a no brainer, however, there have been many instances in the news of lenders throwing away clients private information (application, tax returns, bank statements), in the trash with out shredding it. Make sure you lender takes your privacy as seriously as you do.

Ask for Referrals!!!!! It blows me away how few people ask me for referrals from past clients. Any GREAT mortgage lender will have a plenty of refferals that you can call and ask about their services. Great lenders have raving fans as clients and their clients never have problems talking to prospective clients. If your lender is hestitant or will not provide you referrals, find a new lender.


Prosperity Financial - Your Mortgage Manager

www.colomortgages.com www.3bed2bath.net www.myprosperityfinancial.com

Why it Will Get Worse

I know I have been predominately optimistic about the local real estate market, however, over the last few weeks I'm starting to think we might not be out of trouble yet. In fact, the problem may be getting bigger. Why the change of heart? Lender guidelines, "Declining Markets, and Americans spending habits"

This ugly tag of a "declining market" that lenders and mortgage insurance companies have set on most of Colorado and the nation is going to hurt. If a market is designated as a "declining market" financing becomes much more difficult for those who are trying to obtain financing (purchase or refinancing). 100% financing, forget about it. In a "declining market" 95% financing is difficult to find, a lot of lenders will on financing 90%-92%. Ten, twenty years ago this would not have been a problem (actually the norm), however, very few people plan or have the ability to make a down payment now.

Lender and mortgage insurance guidelines are becoming more conservative by the day. Stated income loans, which most self-employed borrowers use to qualify, are becoming extinct or so limited they are only useful to a small percentage. Other similar guideline changes have excluded thousand from home ownership or trapping them in bad loans that they can't refinance.

For example, I talked to a borrower the other day, he purchased his house 2 years ago with no money down. He has a great credit score 743, he has never made a late payment in his life, however, because he lives in a "declining market" and is self-employed he has no chance at obtaining a new loan at this time. He can't afford his payment when it increases $650/month, he is going to have to walk a way from his home.

So we have an excess of homes on the market, thousands of people who own homes and now in trouble (because of the economy, life changing events, or bad loans), lenders shutting the doors on a majority of society, and Americans who like to spend and hate to save. This is bad news for the national economy and local real estate market. However, all of the plans that have came from the White House or Capital Hill will do little or nothing to stop the slide. Watch out!!!

Prosperity Financial - Your Mortgage Manager
Lafayette, CO

www.colomortgages.com www.myprosperityfinancial.com www.3bed2bath.net

Say it Ain't so, Joe

Lenders are once over reacting and creating another mortgage mess. This time they are eliminating programs for qualified borrowers making it tougher for people to purchase or even keep their homes.

Every day I hear of new guidelines or lenders eliminating products eliminating another set of borrowers from purchasing or refinancing their house. There are very few lenders offering 100% LTV loans even if you have great credit, income, and assets it's a lot harder to obtain financing then it was a few months ago.

Self-employed borrowers options to obtain financing is also becoming scarce. A lot of self-employed borrowers typically use stated income loans because their tax returns do accurately reflect their cash flow. However, many lenders are eliminating their conforming stated income programs making it tough or impossible for them to obtain financing. If they can obtain financing the loan amount for which they will be approved will be much lower than before.

These two changes are going to eliminate a lot of borrowers from the real estate market and will also probably help increase the foreclosure numbers around the nation. There are some alternatives for borrowers, such as FHA and others but they will not be able to help a lot of these people. Not good for the real estate market and not good for the value of your house.

Why are lenders over reacting? There are a few reasons, supply and demand on the secondary market and mortgage insurance companies are facing problems with their current portfolio of loans that they insured over the last few years.

If you need help navigating through mortgage chaos to find financing that meets your financial needs, please call and we would be happy to help you or guide you in the right direction.


Prosperity Financial - Your Mortgage Manager

http://www.3bed2bath.net/ http://www.colomortgages.com/ http://www.myprosperityfinancial.com/

ARMs Making a Come Back???

Over the last 12 months we have seen a decrease in adjustable rate mortgages (ARMs). The main reason for the decrease was that borrowers could obtain a fixed mortgage at the same or a better rate them ARMs. However, ARMs are now offering significant lower interest rates than their fixed counterparts. Currently a 5/1 ARM is averaging about 0.875% lower than a 30 year fixed.

Does the discount on ARM loans mean it they are the best choice at this time? It depends on your situation and goals. If you are planning on staying in your house for more than 5 years it probably doesn't make sense to take the lower rate. On a $200,000 loan you would save almost $110/month if you went with ARM loan, but you would have to refinance your loan to avoid your rate increasing. Therefore, you would save $6,594 over 5 years on your mortgage payment, but would spend $3,500 in closing costs to refinance and would be gambling that you could get a fixed rate as good or better than you could today.

There are also other factors that you would need to consider that may limit your ability to refinance such as; income and liabilities, real estate market, and changes in the mortgage industry. Many people have learned this lesson the hard way in the last 6 months. They were able to save thousands of dollars over a few years, but the real estate market changed or their income decreased and they were unable to refinance.

ARMs are still great options and can save you a lot of money, here are some situations when to consider an ARM:

• You plan on selling within the fixed term on the ARM


• You plan on refinancing or paying off the loan within the fixed term of the ARM


• You know you will be making more money in the next few years and want to purchase a house that will meet your future needs and an ARM will allow you to afford the house and you can refinance to a fixed rate mortgage within the fixed term of the ARM.

Before refinancing or purchasing you should always think about your immediate needs and future goals and plans before deciding on a mortgage program. If you need help with deciding which loan will be best for you please feel free to contact us.

Prosperity Financial - Your Mortgage Manger

Lafayette, Colorado

http://www.3bed2bath.net/ http://www.colomortgages.com/ http://www.myprosperityfinancial.com/

Don't They Know What They're Doing????

Congratulations Nancy Pelosi and California home owners!!!!

A revised economic stimulus package has now passed the Senate and House that includes a temporary increase in the conforming loan limit and the upper threshold for FHA loan programs to as much as $729,000. Which will help only homeowners in a few markets around the county, but will raise rates around the country and jeopardize the stability of Fannie and Freddie.

The bill allows Fannie Mae, Freddie Mac, and FHA to purchase and guarantee loans up to 125% of the median home price in any given market for the duration of 2008. Currently, Fannie Mae and Freddie Mac are limited to loans equal to or below $417,000 regardless of location and FHA limits are based on the market (Denver Metro is about $310,000).

Regardless, this will have no impact/help on Colorado home owners, as there will be only a few if any "markets" that will have a median home price great enough to matter. Even if you have a jumbo loan now, unless you live in resort community like Aspen, Vail, or Beaver Creek your "market" most likely won't qualify.

Even though we won't benefit from the increase, we will PAY FOR IT!!! Larger loan amounts carry greater risk for the lenders, especially if they are in markets like California, Florida, Las Vegas that are suffering double digit depreciation. Fannie and Freddie must change (increase)their pricing (rates) in order to account for this additional risk they are taking on.

Another problem with this bill, is Fannie Mae and Freddie Mac are barely surviving with the current conditions in the market. This additional risk they will be adding to their portfolio is not coming at a good time and may be the straw the breaks the camel's back. And if you thinks are bad now, wait to see what happens if one or both companies fails.



Prosperity Financial, LLC - Your Mortgage Manager
Lafayette, Colorado

http://www.myprosperityfinancial.com/ http://www.3bed2bath.net/ http://www.colomortgages.com/


Purchase - Refinance - Cash-Out - Debt Consolidation - Home Equity - Great Rates

Top Foreclosure filings by Zip Code

Realty Trac issued a new report showing the top zip codes for foreclosure filings. The good news, out of the top 100 zip codes Colorado only has one listed, 80013 (Aurora). Colorado once had as many as 10 zip codes listed in the top 50.

A good sign for our market?

Yes, but don't get too excited as Colorado still ranks in the Top 10 in total foreclosure filings and annual foreclosure rate. While we still have a long way to go, Colorado is one of only a handful of states that show a decrease in filings in December 2007 compared to November 2007 amd from the 4th quarter 2007 compared to the 3rd quarter.




We are definetly heading in the right direction and I'm optimistic that 2008 will be a rebound year for the real estate market in Colorado.

Prosperity Financial - Your Mortgage Manger

Lafayette, CO

http://www.colomortgages.net/ http://www.myprosperityfinancial.com/ http://www.3bed2bath.net/

Purchase - Refinance - Cash-Out - Debt Consolidation - Home Equity - Great Rates

The Economy Still Stinks? Let the Sell OFF Begin!

Here we go, investors on wall street just figured out that our economy still has some steep challenges in front of it and the latest Fed rate cuts has not fixed the problem. I always wonder if this can happen again, every time the Fed has cut the rates in the last 6 months we have seen this same pattern.

Good news is we should see mortgage rates drop today and again tomorrow morning.

Did You Miss Out?

In this crazy and volatile market there have been many opportunities for home owners to drastically reduce their interest rate and save hundreds of dollars a month. The problem is that the opportunities were short lived and only a very few were able to take advantage of lowest rates offered last week. On Tuesday, rates in the morning were at their lowest levels in over 3 years, however, 3 hours and 4 rate changes later they were up 0.375%-0.5% (still great rates).

By the time most home owners knew about the rates dropping, they already raised a 0.50% or more. It pays to work with a mortgage broker that will manage your mortgage and knows your target rate and payment to refinance. If you have a $250,000 mortgage a 0.50% in rate could save you about $80/month and over $28,000 over the life of your loan.

If you have not heard from your last mortgage broker/banker please feel free to give us a call and we can discuss and help you determine what your target refinance rate should be and ensure the next time rates drop you don't miss out.

Prosperity Financial, LLC - Your Mortgage Manager
Lafayette, Colorado

http://www.colomortgages.com/ http://www.3bed2bath.net/


Purchase - Refinance - Cash-Out - Home Equity - Debt Consolidation - Great Rates

Fraud Alert

Have you ever wondered why you receive so many calls from mortgage brokers and lenders once you applied for a mortgage from a broker or lender? It's called trigger leads. Once you apply for a mortgage loan (purchase or refinance), the credit bureaus/repositories sale your information to mortgage lenders, brokers, and possibly con artists around the country.

Currently it's perfectly legal for the credit bureaus and repositories to sale YOUR personal information. Feel a little vulnerable, wait a second? Companies that sale these leads don't even check or verify if the company/person they are selling YOUR information to are licensed mortgage brokers or if they are on the fraud watch list. Now you have 5-10 people calling you that know a lot about you personally, financially, and your credit offering to beat the rate and closing costs of your current lender. Beware!

A few quick stories from people we have helped recently.

1. The first borrower we were helping refinance their house to lower their rate and they wanted a little cash out. A few days in the process they received a call from a well known national lender (they were just purchase by Bank of America), promising lower closing costs and a lot more cash out. Obviously, any one would be interested in a deal like that. It turned out the loan officer was not familiar with our local market and assumed the house was worth a lot more than it was. After three weeks and $500 later the borrower called us tired of hearing promise after promise but no substance.


2. Borrower two received a call 3 days before closing, again a lender promising to beat the rate we had provided. They provided the loan officer all of their personal information and waited for a response, but never heard back. We closed the loan for them after a slight delay, and every thing was great. Until 3 months later we received a call from the borrower, their identity had been stolen.


3. Borrower three was purchasing a house and received a call about a week after we pulled their credit, once again some one telling them they could beat our loan. They provided the borrower with a good faith estimate and all the disclosures and every thing appeared great. However, on the day of the closing they received a call from their broker telling them rates had jumped over a 0.50% and their closing costs had also increased.

How can you avoid your personal and credit information being sold? Call toll-free 1-888-5-OPTOUT (1-888-567-8688) or visit http://www.optoutprescreen.com/

Remember it's always good to shop when looking for a mortgage, however, make sure you know who you are doing business with, try to use a local broker/lender that is familiar with the market, and you ask for a lock confirmation as well as the other disclosures.

Please contact us if you have any questions or would like to look over your mortgage package another lender has provided.

Prosperity Financial, LLC - Your Mortgage Manager

Lafayette, Colorado

http://www.colomortgages.com/ http://www.3bed2bath.net/

Purchase - Refinance - Cash-Out - Debt Consolidation - Home Equity - Great Rates

Good News in Colorado Real Estate?

Many experts believe that Colorado's real estate market troubles are in the past and 2008 should be a promising year. Experts site the strength of our local economy and the fact that we didn't not experience the "Boom" as much as other markets in the country.

Many people I still talk to believe the real estate market locally is still suffering and that we still lead the nation in foreclosures. While foreclosures levels are still high, we not even in top 10 markets for foreclosures. Experts believe the biggest obstacle for our local real estate market are people's beliefs. Almost every day there is a negative report on real estate, however, a majority of the reports are national reports, not local reports. Real estate markets are local and it appears that is a good thing for Colorado in 2008.


http://www.9news.com/money/article.aspx?storyid=84644

http://www.rockymountainnews.com/news/2008/jan/17/economist-sees-denver-housing-turnaround/

Fannie and Freddie Not Helping Many Colorado Cities

A few weeks ago Fannie Mae labeled most of the Denver Metro Area cities as declining markets, and it appears Freddie Mac will follow suit. What does this mean to you? Why do you care? How will it affect you?

To begin for those of you who don't know, Freddie and Fannie are the two largest suppliers of mortgage funds in the nation. The designation of a declining market by both companies will make it more difficult and impossible for some to purchase a house. Fannie and Freddie both determine declining markets based on your zip code.

If you are trying to purchase or refinance a house in a declining market both companies will reduce your borrowing power by 5%. The max you will be able to borrower is 95% of the value of the house, and in some cases lower.

This designation will make it extremely difficult for many real estate markets to improve, and it will surely have a negative impact on many markets. For example, let's take the Highlands neighborhood in Denver, this neighborhood has seen some of the highest appreciation in the state over the last 2 years. However, some how this neighborhood has found itself on the declining market list, which means any person trying to purchase a house using a conforming loan will have to put 5% down. They could try an FHA loan, but currently most of the houses in this neighborhood would not meet their guidelines. Due to this new guideline, there are will now be less qualified prospective buyers, lowering the demand for houses in this neighborhood, forcing sellers to lower the price of the house if they want to sale.

The declining market will also make it impossible for many A paper borrowers to refinance their house if they are currently in ARM, which may force people with great credit into foreclosure, reducing the value of the neighborhood further!!!

On the other hand, this may help cities/neighborhoods that avoided the list. For instance a majority of Broomfield is on the declining market list, while neighboring towns to the north (Erie and Lafayette) are not. Prospective buyers looking to purchase in the north part of Broomfield, are now likely to look at houses in Erie or Lafayette if they don't have 5% down or don't want to put 5% down. Good for Erie and Lafayette, not so much for Broomfield.

For more information on the declining markets in Colorado, or to see if you are in a declining market, please email or call me.


Prosperity Financial - Your Mortgage Manager
Lafayette, Colorado

http://www.colomortgages.com/ http://www.3bed2bath.net/


Purchase - Refinance - Cash-out - Debt Consolidation - Home Equity - Great Rates

Purchase Horror Story - Don't Let it Happen to You

A Realtor that I have helped in the past called me today to share a story of one of his clients. His clients, like many savvy mortgage shoppers, went online to shop multiple mortgage companies to find the best rate and program before they started looking at houses. They found a lender that offered them a rate that was almost 0.50% lower than any of the lenders. They found a house they really liked, put in an offer, and every thing was great until the day before closing.

They called the lender to discuss what the final payments, closing costs, and how much money they would need to bring to the closing. What they found out was that their interest rate was almost a full point higher than what they were originally quoted. The lender would not budge on the rate stating that rate changes and they could do not any thing about it. They could not change lenders as the closing was tomorrow and they really wanted the house so they could not back out (if they did back out they most likely would have lost their $3,000 in earnest money). They were forced to close on the mortgage and take the mortgage with the higher rate.

It's tough to say if the mortgage lender was acting fraudulent, and I hate to speculate on what happened, but at the very best, the lender exercised very bad communication. One thing many people don't understand is how often and how big rate fluctuations are in this market. If you obtain a rate quote today and don't close on your house for 60-90 days your rate will more likely be different, however, the lender should communicate any and all changes in rates.

How can you protect yourself from this happening to you? It's pretty easy to avoid this type of situation by following a few simple steps.

1. Do business with some one you trust and was REFERRED TO YOU.
2. Talk to your lender about lock options, you can typically lock your rate for 30 days at no cost and longer if you are willing to pay a little more in closing costs. It may be worth to pay a little more in closing costs if you and your lender believe interest rates are going to increase.
3. If you talked to a lender about rates before you found a house and didn't lock the rate, ask them again what your rate will be once you have a contract on a house.
4. Once you decide to lock your rate ask your lender to fax/email you the lock confirmation. Every lender has the ability to do this and if they say they can't or won't I would find a new lender. A good faith estimate (GFE) is not the same as rate lock, it just an estimate of your rate and closing costs, but things can change (see story above).
5. Ask your lender to email/fax you the closing docs before the loan commitment date on the purchase contract. If you find a problem with the loan before the loan commitment date you are more likely able to extend the contract (and find a new lender) or terminate the contract with out losing your earnest money.

While most mortgage professionals are honest and professional individuals, as in all business, there a few bad apples or people that just don't know what they are doing. Make sure you take every step to protect yourself. If you have any questions, please feel free to call or email me.

Prosperity Financial - Your Mortgage Manager

http://www.colomortgage.com/

http://www.myprosperityfinancial.com/

Purchase - Refinance - Cash-out - Debt Consolidation - Home Equity - Great Rates

Purchasing a House with No Money Down

People all the time tell me they are waiting to purchase a house until they can save enough money for a down payment. My first question is always, why? I typically will receive 1 of 2 responses, "Don't I have to have some type of down payment" or "I want to get a good interest rate." This probably the biggest myth in the real estate industry.

There are dozens of loan programs/mortgages that are available that don't require any down payment and they all offer great interest rates. In fact, purchasing a house usually will take less money out of your pocket than renting a home. When you rent a house you have to make a security deposit and pay the 1st month rent (some time the last month too), however, when you purchase a house the only money that is out of your pocket is the earnest money (typically $500-$1,000, and you usually receive this back when you close).

Any time your mortgage finances over 80% LTV (if you purchase a house for $100,000 and you mortgage is for $90,000 you are financing 90% loan to value (LTV)), you will have to pay monthly private mortgage insurance (PMI). PMI helps reduce the risk for lender by insuring the lender against defaults, therefore, allowing the lender to offer you a better interest rate. While, a mortgage with PMI will add to you monthly payment, it is tax deductible if your household income is less than $100,000 and many of the no down payment programs/mortgages offer reduce PMI rates.

Another option for 100% financing is to obtain a first and second mortgage, often called an 80/20 (your 1st mortgage finances 80% of the purchase price and the 2nd finances 20%). The advantage of an 80/20 is that you can avoid paying PMI and therefore, at times can offer a lower payment.

For more free information on mortgages or real estate please visit us at, http://www.myprosperityfinancial.com/ or you can call me or one of our mortgage professionals at 303.666.6550.


Prosperity Financial, LLC
Lafayette, CO 80026
Refinance - Purchase - Cash Out - Home Equity - Great Rates