Day by day the market is becoming more of a buyer's market. As interest rates rise the pool of buyers is diminishing and the longer homes sit on the market. For those of us on the buying side this is a good thing!

If you can approach the purchase process with patience and a critical eye there has never been a better time to get a great home at a great price. "Low ball" offers are at least an offer and sellers are becoming less likely to disregard aggressive offers.

How to get a good deal:

•1.       Work with a experienced energetic agent

•2.       Expect a 90-120 timeframe

•3.       View A LOT of properties

•4.       Submit A LOT of offers

From my perspective as a lender I work with a lot of different agents and buyers. This allows me the opportunity to see how each agent and buyer approach the process. What's the most fun is when I'm incorporated into the offer part of the process working with all parties to submit an offer with strategy. Purchasing a home is ultimately a negotiation and with the correct strategy you can come out on top.

Michael Shotnik

Mortgage Banker

Summit Home Mortgage, Inc.

mshotnik@summit-mortgage.com

303-800-4595

Link to online loan application: https://www.michaelshotnik.com/loan-application/

Purchase price: 285,000

Loan amount: 300,000

Appraised value 6 months later: 359,000!!

59,000 in gained equity in only 6 months!!

The buyer was a gentleman interested in purchasing a nice home for his family. He wasn't an investor and his primary motivation was not to make a quick buck. But, he was able to develop a tremendous amount of equity very very quickly. He did this by using an FHA 203k loan. This loan allowed him to roll upgrades into the loan, including: flooring, appliances, heating repair and window repair. About 15,000 in funds for upgrades/repairs.

The property was unable to be financed by multiple lenders because of the heating issue which resulted in the seller drastically reducing the price. With the 203k loan needed repairs can be easily overcome and completed after the home is actually purchased. Most transactions require the seller to complete repairs prior to the sale, but with a 203k loan the repairs can actually be done after closing.

A good example of the 203ks capabilities:

A lot of bank owned properties are sold as-is, meaning that the seller will not make any repairs in order to close. This presents a large issue with traditional financing but it also presents a huge opportunity. The properties you are allowed to purchase with a 203k loan vs. a traditional loan have most likely sat on the market for months or even years, meaning that the seller is has most likely reduced the price many times over or is willing to entertain a very low offer.

Keep in mind 203k loans aren't just to address needed repairs. They can be used to improve the property even if repairs aren't needed. Items that can be done: kitchen remodel, bath remodel, flooring, windows, appliances, etc.

The great thing about the 203k purchase loan is that it allows the buyer to purchase an amazing home at an amazing price!

*The qualification requirements are that of a traditional FHA loan. Flexible credit requirements, full doc, 3.5% down.

Michael Shotnik

Mortgage Banker

Summit Home Mortgage, Inc.

mshotnik@summit-mortgage.com

303-800-4595

Link to online loan application: https://www.michaelshotnik.com/loan-application/

If you are just getting started on purchasing a home in Denver then you should consider yourself very lucky. Denver is a great city and has a strong real estate market to match. The different sub-areas around Denver offer desirable properties whatever your price range.

If you're looking for a fixer upper than my loan products in combination with due diligence from your real estate agent will result in a tremendous buy. If you're looking for a home that doesn't need any work at all than you're in luck as well!

If you want to purchase a home that you can make your own than I have the perfect loan product for you, it's called an FHA 203(k) loan. This loan program allows you to buy a home with little down, a great interest rate and you can finance up to $35,000 in repairs. I've had clients buy and improve fixer uppers into their dream homes.

On the other had if you want to purchase a home that is not in need of repair Denver has those to offer as well. As Denver continues to be a strong market the investor community acknowledges this by actively buying and rehabbing homes here. Homes that have been vacated and in need of repair are purchased and brought back to a high quality condition before resale. I've participated in many investor transactions and have been very impressed with the quality of homes most investors are selling.

Not sure which type of home you'd like to buy, call me!

Michael Shotnik
Mortgage Banker
Summit Home Mortgage
mshotnik@summit-mortgage.com
303-800-4595

FHA just recently announced some fairly significant changes. The changes are intended to help FHA/HUD maintain a strong position while having as little impact as possible on the housing industry.

The way FHA will decrease their risk is by requiring each person who obtains an FHA loan to pay a higher amount for mortgage insurance. Mortgage insurance is in place to protect HUD against default/foreclose. FHA loans do not require much of a down payment so in the case of foreclosure if the insurance were not in place the loss to HUD would be substantial. In a nutshell the consumer is purchasing insurance to protect the lender against foreclosure which allows FHA loans to require so little down.

 The "upfront MIP" will be increased from 1.75% to 2.25%. This is not paid at the time of closing. In other words the 1.75% and soon to be 2.25% is paid over the life of the loan along with principle and interest.

If FHA/HUD had to find a way to maintain liquidity this is how we all would have wanted them to do it! It's not pretty to see the 1.75%/2.25% fee rolled in to the loan but the program still holds enough value that a large amount of homeowners will benefit from the low down payment and low interest rates.

On the horizon

There has been talk of FHA/HUD increasing the minimum down payment to 5% (currently 3.5%). From what I gather this will apply to consumers with under a 580 credit score. To be honest there aren't any lenders I know of who can go under 600 anyway.

Benefits of an FHA loan:

-Low down payment - 3.5%

-Great rates - competitive with Conventional rates

-Flexible underwriting

Michael Shotnik

Mortgage Banker

Summit Home Mortgage

mshotnik@summit-mortgage.com

303-800-4595

**NEW** Mortgage Credit Certificate (MCC) in Colorado

First Time Homebuyers - Mortgage Credit Certificate - Colorado

The Mortgage Credit Certificate (MCC) program is no longer just for Denver County but Colorado as a whole!  The program is in addition to the $8,000 first time home buyer tax credit. 

In simplified terms the Mortgage Credit Certificate (MCC) will put thousands of dollars in your pocket on an annual basis.  When compared to the $8,000 credit the MCC will actually be more beneficial financially.

The program is simple.  By way of an additional tax credit you will receive an extra $100 - $300 of income, every month!  The credit will remain in place until you no longer occupy the home.  So in theory you could receive the credit for an infinite amount of time, resulting in much more cash in your pocket than the $8,000 tax credit.  By the way, it's not a loan!

Funds for this program are limited which should give first time home buyers a real motivation to purchase a home within 2009.

Michael Shotnik

MCC Specialist

Summit Home Mortgage

mshotnik@MCCcolorado.com

303-800-4595

Keywords: MCC, Mortgage Credit Certificate, Colorado, Denver, $8,000 first time home buyer tax credit, refinance, ARM, first home, incentive, tax credit, rebate, w4, payroll, income, free money

Yesterday we had the worst day for mortgage rates we've had since October.  It was a landslide that most did not see coming.  Rates seemed to be fairly level over the previous month so the drastic change was unexpected by most. 

What happened?
The easiest answer is that investor money moved out of Mortgage Backed Securities and into Treasury Bonds.  This shift of money drove Mortgage Backed Securities to worse levels thus driving interest rates up.  The motivation for the move was to capture the higher rate of return of Treasury Bonds.  Mortgage Backed Securities had remained at high levels (good mortgage rates) while Treasuries were pushed lower.  This discrepancy between the two is what induced a massive amount of money to transfer from MBS to Treasury bonds. 

What's next?
It is likely that interest rates will improve over the next month or two but the chances of them reaching the levels of last week are slim.  It will most likely take patience to get even close to the previous levels. 

What does this mean for you?
Interest rates are still at nice levels so refinancing may not have as much benefit as it did last week but may still offer enough savings to make it worth-while.  If you purchased or refinanced as recently as a year ago the probability of saving money in this environment is still high.   In my opinion purchase business will remain strong because of the time of year as well as the $8,000 tax credit (available until 12/01/2009).

If you are looking to purchase or refinance this dramatic rate movement should open your eyes to the volatility of the market.  I would suggest working with an extended timeframe in order to capture the best rate possible and maintain your peace of mind. 

Micheal Shotnik
Summit Home Mortgage

An FHA Streamline Refinance is considered to be very secretive because not many loan officers know how to properly do an FHA Streamline Refinance! 

How does an FHA Streamline refinance work?
As a Denver based office we know the Denver market very well.  We know that over the last 2 years those who have refinanced or purchased a home in the Denver area have an interest rate of 6-7.5%, don't have much equity in their home and probably have an FHA loan.

If you currently have an FHA loan you have a huge advantage over those who don't.  You are eligible for an FHA STREAMLINE REFINANCE. 

What is a streamline refinance?  It is a refinance from one FHA loan to another to better the terms of your loan.  Whether it be lower your interest rate, convert to a fixed rate mortgage or modify the length of your loan.  Any of these improvements would give reason to consider refinancing.  

When can I do a streamline refinance??  You are eligible for a streamline refinance at any time, whether it is one month after you purchase or refinance or 10 years later.  The only caveat is that the new loan has to have a benefit to you.  Right now the obvious benefit is a lower interest rate.

Should I do a streamline refinance now or wait?? Do it now!  Rates are at 30 year lows and cannot sustain these low levels for long. Once the stimulus money takes hold and the economy shows signs of improvement the rates will trend upward along with the stock market.

How much will I save??

$200,000 loan

Current rate: 6.5%

Proposed rate: 5.25%

Proposed savings: $160 per month

Savings over the life of the loan: $60,000

If you apply the monthly savings to your loan the savings will be over $100,000!!

Do I qualify??
-The only qualifying involved is ensuring you currently have an FHA loan, have good payment history over the last 12 months and are employed!!  Almost seems too easy!!
-no appraisal needed!
-no W2s or tax returns needed!

The process is simple and the savings can be gigantic.  Even if you currently have a good rate it is still worth considering an FHA streamline refinance.

Call me today before we lose these amazing rates!!

Michael Shotnik
Summit Home Mortgage
303-800-4595
License # LMB100017466

FHA Streamline Refinance

On December 4^th details of a Treasury intervention to bring mortgage rates down to 4.5% was leaked.  This news was not supposed to be released as the plans are still under discussion.  I have not commented on this topic because I wanted to see if more concrete news was going to be released but at this point nothing new has come out and I feel it's my job to give my opinion on the topic.

First, at this point the plan is just speculation, so I'm remaining central on the issue. 

From what we're hearing the plan will only be eligible for first time homebuyers (people who have not owned a home within the past 3 years).  The 4.5% will not be available for refinancing or buying an investment property.   In my opinion the plan should included refinance loans.  For the people whose budgets are tight the drop in rate to 4.5% would allow for more spending thus help the economy.

Going into the New Year and new leadership I think the 4.5% would be great for the Denver housing market.  As a relatively strong market the 4.5% would incent more fence sitters to buy homes.  The more buyers we have in the market the less supply Denver has which will level home prices out if not drive them up. 

I plan on updating readers on this topic as often as news is released.  If you are interested in refinancing or buying a home in the near future this news directly affects you.  To be added to my email list send me an email: mshotnik@summit-mortgage.com

If you are one of the many Americans that routinely watches the local news than you mostly likely think no one is able to buy or sell real estate in the current market.  The media is in the business of entertaining whether it be true or false and in the case of the local Denver Real Estate market is way off.  The term that is regularly used like "credit freeze" and all the publicity given to failing banks greatly discourages first time and seasoned buyers from buying a home.  Any investor will tell you to buy low and sell high, now is the low point and for some reason the media is scaring people away from real estate.  Homebuyers will realize the most benefit by buying in this real estate lull and selling at the next high.  The process is cyclical and proven to re-stabilize and produce massive gains every time.

To set the record straight we have outlined steps to homeownership in this market: 

•1.       Find

•2.       Qualify

•3.       Budget

Find.  The first step is to find a price range and quality of home you are interested in.  Denver and the Metro area vary greatly depending on the aspects of a neighborhood that are important to you.  A local real estate agent can easily provide you with detailed information about a particular home or area of Denver. 

Qualify.  After you have decided you would like to buy a home a very important step is to speak with a mortgage professional.  As a mortgage banker I can help you determine what purchase price you qualify for and also what type of loan product is the best fit for your individual situation.  Many home buyers avoid this step until they are very involved in the home buying process.  I always recommend starting early because by the time you find the perfect home you won't want to talk to me about interest rates and amortization terms you'll want to spend time at Crate and Barrell picking out your furnishings.

Budget.  Whether you need to save for a downpayment or prepare for move in costs budgeting is another important aspect.   As a home buyer you will have additional costs as well as financial benefits that will need to be incorporated into your monthly and annual budget.  I suggest planning financially before and after the home purchase.

Finding, Qualifying and Budgeting for your new home is an exciting process.  If you focus on the 3 elements laid out above you will discover just how beneficial owning your own home can be.

In an effort to educate our clients we hold monthly workshops to focus on Finding, Qualifying and Budgeting for home ownership. 

EMAIL ME TO INQUIRE ABOUT THE NEXT HOMEOWNERSHIP WORKSHOP - mshotnik@summit-mortgage.com 

Final bit of advice:

The absolute truth about real estate regardless of the market conditions is the sooner you get in the sooner you'll realize your financial potential. 

Michael Shotnik

Mortgage Banker

Summit Home Mortgage

P 303-800-4595

E mshotnik@summit-mortgage.com

www.idahospringsmortgage.com

In an effort to service more of Colorado Summit Home Mortgage now has a branch in Idaho Springs Colorado.  Idaho Springs is in Clear Creek County just west of Floyd Hill.  Our office is on Colorado Blvd about 1 mile west of the I-25 off ramp.

New Address:

In the RE/MAX building

2313 Colorado Blvd
Idaho Springs, CO  80452 

Summit Home Mortgage

-Bankers not Brokers = better rates & an easier loan process

-Certainty in this uncertain market

-loans for purchases and refinances

With a presence in Clear Creek County we are able to offer:

-USDA Rural Housing Loans

                1 loan up to 100% of the appraised value (purchases only)

                NO mortgage insurance

                Great rates!

-FHA (purchases and refinances)

                1 loan up to 97%

                Flexible underwriting

                Great rates!

Stop by and say HI!!

Michael Shotnik

Direct Mortgage Banker

Summit Home Mortgage

720-979-4355

mountainfinancing@gmail.com

www.idahospringsmortgage.com