Finding that Special Property

In just three short years the Denver real estate market has gone from one of the slowest to one of the hottest markets in the country. All indications suggest that this trend is going to continue for the next several years. As marketing conditions vary throughout the Denver area, one’s ability to negotiate price and terms will vary depending on where one chooses to live and what price range they are seeking.

Regardless of where you want to live and the price range you are buying, there is one factor that is universally important to a Seller. He wants to be reasonably assured that any purchase offer he accepts is a closable transaction. It is therefore most important that a Buyer posture himself to the greatest advantage.

It is human nature for the buying public to be on the lookout for the best properties available. As a result , multiple offers are often submitted to purchase a newly listed property. Often the offered price exceeds the asking price of the property. There are many strategies that can be employed to make your contract more attractive than someone else’s offer. Price is not always the final determining factor.

I will be happy to discuss some of these strategies with you at a later time as this discussion does reference certain aspects to the purchase contract an a certain element of risk. In general however, there are certain things that should be done before you come to Denver to find that special property:

• Know honestly what you can expect in "net proceeds" from your present property.

• If you have the benefit of corporate or company sponsored relocation benefits, have a copy and fully understand the application of these benefits.

• If your company or it’s authorized representative will buy your present property if it doesn’t sell, make sure the process is well underway to insure the availability of your funds. More important, does the offered price from your company provide adequate funds to complete a purchase in Denver.

• If you have an existing VA or FHA loan that you are going to allow to be assumed, you need to be aware that this assumption might create a contingent liability that might complicate your ability to buy a new home.

• You should actually apply for a new mortgage loan. This will assist you in determining how much house you can actually afford and give you an array of options to best maximize both your investment and purchasing power. I can give you the name of several good lenders to assist you with this process. Additionally, a prospective seller will want know that you are qualified to perform on any loan contingencies in the contract.

• Have you addressed any income tax implications that could result from this move? Most buyers are not aware that they must buy a property with a value equal to or greater than that of their previous residence to defer any tax liabilities.

After you have determined the answer to the above referenced questions, we can begin the process of finding your new home. Since each person’s priorities are different, it is important that we formulate a game plan that is flexible, efficient, and maximizes the limited time you will have to pursue your new home. In detail we can determine both immediate and long-term needs. I can arrange hotel accommodations, loan origination appointments and other special arrangements that might be appropriate. Generally, a 3 to 5 day stay is all that is required to identify the area and locate your new home. Additionally time may be needed to schedule the proper inspections. Regardless of all the things that we must do to accomplish your goals, it is my sincerest wish to make your house hunting experience a truly enjoyable, rewarding experience.

A word about children
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FINANCING
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Because there are so many loan programs available in the Denver area, it is impossible to discuss each one. A general overview is given on the various programs below.

Home loan programs

There are numerous loan programs to choose from in the Denver area. The interest rates on these various programs change constantly. Some of these programs are as follows:

Fixed Term and rate

This program is what most people want primarily because they don’t understand and are subsequently afraid of adjustable rate loans. They are available as Conventional, VA, or FHA type loans. The interest rate and payment is constant for a period of years; usually a 30 year term, however, better interest rates can usually be obtained with shorter term loans.

The primary attraction to these types of loans is that the interest rate and monthly payment are fixed for the term of the loan. Although convenient, a fixed rate loan may not necessarily be the most advantageous to the borrower.

Adjustable rate mortgage

This popular loan program offers many variations but the concepts are basically the same. The loan is tied to certain economic indexes that somewhat guarantee the lender a yield on the loan. The interest rate and payment may fluctuate on a period basis depending on the program. Because of government pressure, there are many safeguards built into the conditions of the loan that will protect the borrower against runaway interest rates. This type of financing, although flexible in its payment schedule, could be less expensive overall than fixed rate loans..

"Purchase Money" Second loans

The purchaser assumes the first mortgage by securing a second loan to make up the difference between the first loan, down payment and the purchase price. This type of financing offers lower effective interest rates, rapid equity build up, and easy qualification. This is very often one of the best ways to buy a property.

High Risk or Low grade paper loans

An emerging market for mortgage loans is being developed for less than prime mortgage loan buyers. These borrowers consist of generally of people with credit history problems or other difficulties that make traditional mortgage lending unlikely.

This loan usually requires a down-payment of 20% - 30% of the purchase price. The interest rate and terms are usually established based on the risk associated with the problems the borrower has had in the past. The interest rate and cost of the loan is usually higher that the prevailing mortgage rate. Nevertheless, this type of loan does give the opportunity for less than credit worthy borrowers to buy a home.

Quick qualifiers

Recently re-introduced by various lending institutions is the Quick Qualifier. They are available in both fixed rate and adjustable rate formats. These loan programs are actually a type of equity loan. All that is usually required is a 25% - 30% down payment, a good credit history, a pay stub showing the buyer’s represented income and an appraisal showing the appropriate loan to value ratio.

This very popular loan is extremely easy to qualify for, yet is usually very competitive in interest rates. The drawback is that in the event the lender discovers or suspects any kind of irregularity, the lender can and usually does require full verifications as with standard loan underwriting or an adjustable rate loan.

Purchaser's Closing Costs
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Mortgagee’s Title Policy

The insurance policy you furnish for the lender’s protection

Tax Certificate

This document, from the county, certifies the current property tax status of the home.

To record in the county records your Warranty Deed and Trust Deed.

A one-time charge, this fee is for an annual inspection of tax records and payment of taxes by a third party.

This survey that shows that the location of the property improvements, easements, any rights of way, etc. within the boundaries of the property.

Tells the lender your credit status.

Establishes a value of the property that will secure the loan by means of the Trust Deed.

Costs charged by the lender to offset processing costs.

State tax based on price of property

Lender yield and profit

Anywhere from 0% and up of the loan amount. Represents the difference in yield to the lender between a "par" or no point loan and an interest rate lower than the par interest rate.

Usually one year in advance, with two months reserve. Can sometimes be waived on loans with 20% down or more.

Usually about two months taxes. Pays the following year’s property taxes. Can sometimes be waived on loans with 20% down or more.

On most loans, interest is paid from the day of closing to the end of the month and then the interest starts accruing in arrears.

With the exception of VA and FHA loans whose fees are regulated, a lender can charge whatever he chooses on conventional loans.