**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

Michael Shotnik

Refinance Specialist

Link:  refinance-denver.com

Most people go through their day to day routine and don't consider how their mortgage could be improved to reduce stress, put more money in the bank, get rid of those high interest credit cards or create financial security.  If it's in your financial plan to do all of the above you are half way there by owning your own home. 

ARM to Fixed Rate.  Adjustable Rate Mortgages are generally available at lower rates which is very attractive in the beginning.  When the ARM starts to adjust is when it's definitely time to consider a fixed rate mortgage.  30 year fixed mortgages offer a type of security that ARMs do not.  The rates are slightly higher but offer a piece of mind ARMs do not.  There are many products available to refinance your ARM into a fixed rate mortgage.

Link:  refinance-denver.com

 Lower Your Monthly Payment.  Mortgage rates are at a historical low point.  The best value from a refinance comes in the form of a rate reduction.  Over the course of 30 years even a small rate reduction can save thousands in interest over the life of the loan.  If you have not refinanced since you purchased your home chances are your rate or terms of your mortgage can be improved. 

 Consolidate Debt.  Another great way to save money on a monthly basis is to reduce the interest you pay to borrow money.  If you have credit card debt generally at 15% - 28% you can save money by reducing the rate on your debt.  By consolidating the debt into your mortgage you will be paying mortgage rates on your once revolving debt.

 Cash out.  Equity in your home can be put to work by pulling the equity out in the form of cash.  A great way to take advantage of equity in your home is to do home improvements.  Lenders love when you add value to your home, it reduces the risk to them.

Link:  refinance-denver.com

If you are reading this article you must be thinking about your mortgage.  For most people their mortgage is the largest monthly obligation they have.  This is why it makes sense to make sure your payment and terms are aligned with your financial plan. 

Michael Shotnik

Refinance Specialist

Link:  refinance-denver.com

Summit Home Mortgage

mshotnik@summit-mortgage.com

303-800-4595

Michael Shotnik

Mortgage Banker

Denver, CO

Link:     denver1stmortgage.com

FHA Down Payment Confusion

With new FHA changes (HR 3221) taking affect on October 1^st there has been a lot of confusion regarding the down payment required for FHA loans.  A lot of realtors were informed that starting October first the minimum down payment would be 3.5%.  THIS IS NOT TRUE!  The 3.5% minimum down payment will not take effect until January 1^st 2009. 

Given that Colorado is a low closing cost state the minimum down payment until Jan. 1^st 2009 is as follows:

As you can see above the minimum down payment isn't even 3% regardless of the purchase price! 

FHA is a wonderful program for first time homebuyers as well as seasoned buyers.  The rates are better than conventional financing and the required down payment is much less.  When the 3.5% required down payment goes into effect FHA will still be more advantageous than conventional financing. 

Eligible source of down payment assistance:

-gift from family member

-gift from employer

-loan from family member (must disclose the terms of the loan)

Michael Shotnik

Mortgage Banker

Link:     denver1stmortgage.com

Michael Shotnik
First Home -  Loan Specialist
mshotnik@summit-mortgage.com

denver1stmortgage.com               Mortgage Broker vs. Mortgage Banker

Mortgage Broker

A Mortgage Broker is an intermediary between the borrower and the lender. Most mortgage brokers represent multiple lenders and will work to find the client the lender that is most likely to approve your application. Mortgage brokers can generally offer a broad range of programs. It is important to understand that although a mortgage broker is in place to find you the correct product it is not always in their best interest to give you the best rate. Mortgage brokers earn a fee/commission for their work on your particular loan. The mortgage broker's commission can come from 2 places. Directly from you in the form of an origination fee or from the lender as YSP (yield spread premium). The higher the rate they sell to the client the more YSP the mortgage broker makes. The YSP will be disclosed on the good faith estimate but not in exact figures. Brokers generally state YSP 0-3%, this is sufficient for disclosure purposes and will not inform the client of exactly how much money they are making. At the time of closing you will see the YSP paid to the broker by way of  a fee that details POC (paid outside of closing). This is the amount the lender is paying the broker in addition to any origination fees you are paying them directly.

Mortgage Banker (that's us!)

Not to be confused with the local bank down the street. Mortgage bankers only provide mortgage banking and are considered bankers because they lend their own funds unlike a broker. Mortgage bankers offer the flexibility of working with a broker and are also able to provide direct funding which improves the rate for the client. Bankers are able to make approval decisions "in house" unlike a broker which greatly improves underwriting time. Upon closing the servicing is transferred to a servicing company who will service your loan. The transfer is seamless and is done without further participation from the client. As a client you will deal directly with the banker who will fund your loan right from the start, yet will have the flexibility of "shopping" your particular loan to multiple servicing companies to acquire the best rate and terms. Unlike brokers bankers do not get paid YSP, bankers are paid a release fee. This fee is paid by the servicing company once the loan is transferred. This fee is set by the servicing company.

Definitions:
YSP - yeild spread premium.  The income a broker makes from the lender.
Lender - bank lending funds to home buyer.
Broker - independent contractor acquiring financing on behalf of the buyer.
Banker - employee of the lender, direct funding source.
Origination - fee charged by the broker/banker to establish financing for the buyer.
GFE - Good Faith Estimate.  Estimate that details the costs associated with the loan.
POC - paid outside of closing.  Any fee that is not paid at time of closing by buyer or seller.
Underwriter-person who approves or denies the loan.

Please call or email me if you would like my list of dos and don'ts for first time homebuyers!

Visit my website to read the entire "First time homebuyer series"!

Michael Shotnik
First Home -  Loan Specialist
mshotnik@summit-mortgage.com

denver1stmortgage.com

Michael Shotnik, Direct Mortgage Banker

Denver1stmortgage.com

Fed rate cut

The Fed cut its key lending rate by .5% before the market opened this morning.  The market reacted positively for about an hour and then sold off as a result of higher expectations for the Fed cut.  Wall Street is remaining hesitant until there is more certainty in the market.  I've heard a couple analysts say we'll soon see a 1000 point jump in the market on any given day.  This makes sense; a lot of investors have pulled large sums of money out of the market and are waiting for a "safe" re-entry point.  In my opinion we are getting to the low point and the market will have no reason to go any lower and that's when we'll see massive volume and  massive gains.      

Housing Market

Despite looming credit issues Augusts' pending homes sales index reflects an increase in buyer activity.  This index tracks how many homes are under contract at any given time and in August the numbers of home under contract was up nationally and even more so in the west.

Nationally                                           West

Vs July:  +7.4%                                   Vs July:  +18.4%                                

Vs last year: +8.8%                             Vs last year: +37.8%

As you can see above the West is performing much better than the national average.  Since August mortgage applications have remained consistent we should continue to see our housing economy do better than expected.  The driving factor behind real estate purchases is employment.  Colorado has out-performed the majority of the country which is probably the strongest sign of recovery.

Average Sales Price:

As can be seen above the change in trends in Colorado took place over the course of 2007.  By tracking the second quarter on we should be able to see if we are pulling out of our downward trend which it looks like we may.  We know applications are up and rates are down which should bring buyers into the market and reduce inventory, which should also at least level home prices out.  In any other market I think we would start to see an upward trend but with the tight lending guidelines and the national slump I think the trend may come a little slower.  But when we do level out and start heading back up the trend will probably last longer and be much stronger than the last uptrend.

Michael Shotnik, Direct Mortgage Banker

Denver1stmortgage.com