Denver Mortgage Blog
Denver Mortgage Blog
April 28th, 2016 the Federal Reserve left interest rates unchanged with the benchmark rate targeted to the range between 0.50 and 0.75 percent. In their statement the Fed noted the following reasons:
Additionally the Fed reminded us that two interest rate hikes were likely in 2016. All that being said the Fed Funds future contracts disagree with the Fed’s projection for rates. Currently the market is pricing in a 41% chance of one Fed Rate increase and a 27% chance of 2 or more. That means the market is pricing in a 32% chance the Fed doesn’t raise rates at all in 2016.
The language presented in the Fed meeting used a softer tone putting them in a position to make an increase without shocking the market based on their comments. The drivers for a potential increase focused on the global economic challenges and the sharp increase in oil prices is an early indicator that inflation likely to pick up. Since the last meeting in February of 2016 we have seen oil prices nearly double; oil traded at $26 a barrel and today is stands at $45. With this steady pace inflation will become a factor putting upward pressure on interest rates. However, as of right now the market has reacted completely opposite with long term interest rates on a decline with the Fed’s more hawkish tone. Why?
In summary, there is an equal argument on both sides about inflation and the global economic outlook. The market views most nations as on the verge of a major recession and the Fed views most nations (especially the United States) as on the cusp of exiting a period of extreme economic challenge and heading towards more prosperous years. As the economy improves both short and long term interest rates typically increase. Only time will tell who is right and who is wrong but until the Fed actually raises rates, the market is right.
Our advice is to not wait until the next Fed meeting to lock in your mortgage interest rate. Relief market rallies tend to be smaller than Fed increases that can be sharp.
If you are looking to buy a home or refinance your existing mortgage, give us a call at 303-292-5363 to discuss a strategy that fits your needs.
Real estate and lending has never been more complicated than it has become since the 2008 financial collapse. Everyone wants to ensure that they get a reasonable deal on the real estate that they purchase, but there are other things that need to be taken into consideration throughout the process as well. Take the following tips and tricks into account as you shop for mortgage in 2015 to make sure that you are able to get the deal that you want, without having to take on too much risk as a result;
Don’t Procrastinate, Refinance
If it has been quite some time since you refinanced, you are more than likely paying a much higher interest rate on your mortgage then you need to. You can take advantage of the record low mortgage rates that are available today by refinancing. Additionally, rates are expected to remain low for the early going of 2015, so now is the best time to refinance, rather than later on when the interest rates are likely going to get higher. At some point, the interest rates will begin to gradually increase over time. By that point, you will have missed your opportunity, and will likely regret not having refinanced previously. Some people report being able to save hundreds of dollars on their mortgage per month through simple refinancing plans that your lender will provide to you. You should attempt to avoid procrastination, and refinance now, rather than at a later date when the interest rates will undoubtedly be higher.
It’s Time to Buy
Now is certainly the time to buy as well, for the same reasons that it is the time to refinance. Rates are near the lowest that they have ever been, and it is a great time to look into buying a house. Before the interest rates begin to rise next year, now is the most affordable time to find a decent home at an excellent price. By seeking out a mortgage pre-approval before you begin the shopping process, you will be able to speed up the home buying process as well.
Another thing that needs to be taken into consideration is whether you are going to utilize loans from the Federal Housing Administration, or go the more conventional route. Using the FHA loans, you can purchase a house with as little as 3.5% down. Keep in mind that FHA fees can be quite high, and the costs of FHA mortgages are going to rise as well. They can be an excellent choice for individuals that are undergoing financial hardship, but are still looking to purchase the home of their dreams.
Credit Has Never Been More Important
Credit has always been an important consideration when you were looking into getting a loan. Even today, you want to make sure that your credit is as tight as possible when you are looking for a mortgage. Throughout 2013, a number of new mortgage rules were unveiled, but the one thing the changes did not do is create a situation in which lower credit scores are going to make it easy for you to obtain a mortgage. Many lenders are going to want to see a spotless credit history for a year leading up to your application on your credit report. Your credit score has to be at least 720 in order to qualify for the best rates that are available. There are other options for individuals that have less than top-notch credit and Hunter Lending will work with everyone to help get the best deal possible.
If you are currently underwater on your mortgage, it is imperative that you are able to refinance. Understanding how to properly go through the negotiation process in order to get yourself properly refinanced is important for homeowners that are currently underwater. Many run into obstacles when refinancing, but with a number of new regulations available, there should be a wealth of options available to you. Hunter Lending has experience working through any obstacles to get you the best terms possible.
Low Rates and Good Service
One very important thing that needs to be taken into consideration when you are looking at which lender to go with, is going to be both the rates, as well is the service that they provide. It is important for you to ensure that you are working with a company that is able to provide you with a high level of quality service, ensuring that you work with the company that is going to be able to meet you halfway, and help you throughout the process to get the best possible deal.
Breathe Easy Only After Closing
Although applying for mortgages is going to be a very stressful time for everyone, you need to make sure that you are able to breathe easy after the loan closes. Once you have submitted the final mortgage application and have locked the rate, it does not mean that your job is done. You will have to submit any documents that have been requested by a loan officer, and usually have a time limit of 24 hours in which you can submit them. If you delay in responding to the lender, you could be wasting valuable time.
The Federal Reserve’s July meeting minutes stated that the policymakers think that the U.S. economy is now strong enough to raise these interest rates. What the minutes didn’t inform people of is when to expect these interest rates to go up. With that said, there have been many predictions to suggest that these interest rates are on track to start going up in the spring of 2015. There has not been any increase in the Federal Funds Rate since June 2006; this would be the first time in 8 years that people would see an increase in these interest rates, and some think the United States’ economy is not ready for this.
Although the majority of the policymakers were in favor of increased interest rates, there were some that did not agree. John Makin, a conservative economist at the American Enterprise Institute, stated his opinion that these rates should continue to be kept low for now. Makin argued that although there was a 4% growth rate in the U.S. economy in the second quarter of this year, the first quarter showed only a .95% growth rate. If interest rates were to be raised now, that 4% growth rate in the U.S. economy could be very fleeting.
The minutes from the U.S. Federal Reserve’s July meeting, coupled with the Bank of International Settlements annual report, which was released in June, propose that some of the economic issues in the U.S. are not being addressed. Many of the individuals at the meeting were concerned that Americans are spending too little and saving too much. This combination is suggesting that the low interest rates may not be in the U.S. economy’s best interest. Many factors are contributing to the slow recovery of the housing market; some of these factors include low income, student debt, and the fact that it is difficult for first-time home buyers to get mortgage credit. With all these factors in mind, there has never been a better time, and there might never be a better time, for the American people to lock in low mortgage rates while they still can.
Call Hunter Lending if you are considering locking in today’s low Denver Mortgage Rate by refinancing or using the opportunity to buy additional property.
All aboard Amtrak’s California Zephyr for a clickety-clack train ride across the plains from the east. Watch them begin to roll into foothills—pause for an early morning train wash in Denver—then climb the Rockies to the Continental Divide. Through the Moffat Tunnel, and suddenly your “light at the end of the tunnel” is the massive expanse of the ski slopes at Winter Park. As you continue a vacation journey through the spectacular mountains of Colorado—the hot springs at Grand Junction are just around the bend, as well as a glimpse of the skiing, culture, and arts community in Aspen—it’s stunning and world renowned.
Many have visited this great land for skiing and wilderness adventure. If the opportunity arises, it may be time to land yourself in this magnificent state, and not just for a visit. Perhaps the time and trends are right for putting down some roots in Colorado.
With unemployment on the decline, and Denver beating the national average by 0.8%, it’s evident by market indications that Denver is thriving with a vibrant economy, and opportunity is in the refined air. It’s no wonder that commercial rents are now beginning to climb as word gets out that Colorado is “open for business.”
According to the Metro Denver Economic Development Corporation, 2013 was a year of records in areas of housing and commercial real estate. This coincides with records also being set in employment growth and the stock market. The region has also experienced a stable expansion in population growth through most of the recent recession and recovery.
For the period of May through August 2014, the median selling price in the Denver area was $276,000, up $6,000, or 2.2%, from the prior quarter, and the same amount from a year ago. In the past five years, sales prices have risen 45.3% in Denver. Popular neighborhoods in Denver include Capitol Hill, Cherry Creek, Green Valley Ranch, Hampden, Highland, and Stapleton. Although two- and three-bedroom homes saw a modest increase, one- and four-bedroom sale prices rose over 11% in the past year. A snapshot of local mortgage rates shows them still under the national average just above 4%.
Tom Clark, CEO of the Metro DEDC, says the forecast is strong for continuing business expansion in the region throughout 2014.
“Metro Denver will continue to record higher personal income, stronger retail sales, enhanced residential and commercial construction, and broad-based job growth at higher rates than both the nation and state. We plan to capitalize on these strengths when pitching companies considering new jobs and investment in our region,” according to Clark.
So, maybe Colorado is not just a gorgeous state to visit, but can now become part of one’s “bucket list” of great places to reside and thrive.
There are so many things that need to be taken into consideration when you are looking for a mortgage, that many things can get lost in the shuffle. However, it is always going to be in your best interest to evaluate the loan in full, to get a true idea of what the total costs are going to be, and what the process is going to be. There are a few questions that everyone needs to ask their lender, to have a good overall idea of what the process is going to entail. For instance, you should ask how long the application is going to take to review, what the minimum requirements are as far as down payment goes, and whether or not the interest rate can be locked in on the loan.
The typical time that an application takes to process for a mortgage loan is anywhere from 30 to 60 days, with most application approvals taking about 45 days. However, every lender is different, and some are going to be speedier than others. If you have received pre-qualification or pre-approval, then this may speed up the process significantly. Make sure that you understand the total time frame that you are looking at so that you can appropriately plan.
Many lenders are going to have a minimum required down payment in order to be approved for a mortgage. This is pretty much true for all lenders, and it is not likely that you are going to find a lender that allows you to put zero down on a mortgage. There are some options, though. Depending on the type of product, a gift of the down payment funds from a relative may be allowed. Some products require the borrower to have a minimum down payment investment and other products allow for the entire amount of down payment to be in the form of a gift. Additionally, for qualified borrowers, down payment assistance is an option. Typically, these funds are given by government approved agencies or other non-profit housing organizations.
One thing to determine is whether or not the interest rate of your loan should be Fixed. There are two main types of loans, Fixed Rate and Adjustable Rate Mortgages or ARMs. Depending on how long you are planning on keeping the home, may determine the type of product you select. The majority of the mortgages issued are 30 year loans. The most common type of mortgage in the recent years has been the 30 Year Fixed loan. It is loan in which the interest rate is fixed for the entire term of the loan and will be paid off at the completion of the 30th year. The same is true for ARMs, however ARMs typically have a fixed rate period for a certain number of years and then the interest is subject to adjustment based on the current market index at that time. For instance, a 5 Year ARM, is fixed for 5 years and then converts to a variable rate for the remaining 25 years of the loan. Most ARMs adjust on an annual basis and can increase or decrease depending on where the market index rate is at the time of adjustment. Talk with your mortgage consultant to determine what product is best for you.
Closing costs are the fees involved in obtaining mortgage financing. They include such items as the appraisal, title insurance, and government recording fees, just to name a few. Closing costs are a function of the interest rate. For example, you can pay additional cost to receive a lower interest rate. When comparing different mortgage companies rates, it is also important to understand what you are being charged to get that particular interest rate. Ask for a GFE or Good Faith Estimate of settlement charges. This will allow you to compare apples to apples when shopping around for a loan. Once you take application, the lender is bound to the disclosed fees and they are not allowing to increase by more than 10%.
Another serious consideration that needs to be taken into account is what your annual percentage rate, also known as an APR will be. The APR is the rate that you are paying to borrow the money. The APR should be fairly close to the actual interest rate that your monthly payments will be based off of. Be careful if the difference is greater than 1%, it could mean you are paying more closing costs and fees than you should be.
If you are purchasing a home, there could be some additional fees that are not necessarily part of the lending process. Some of these fees are real estate related and you should check with your real estate agent to determine what to expect. Some common out of pocket expenses that are not part of closing costs are inspections. Most buyers will hire a home inspector to make sure the fundamental components of the house are in good working order. Depending on what the inspector finds, some repairs may need to be performed prior to closing on the home. If the home you are buying is in an older neighborhood, it is also a good idea to get a sewer inspection.
Interest on mortgages are paid in arrears. This means that when you close on a home, you usually don’t have to make a payment the following month. Interest is paid from the closing date to the end of the month, so the earlier in the month you close, the more interest you will pay at closing. If you close at the very beginning of the month, you may be able to take an interest credit to help offset the closing costs if this is a concern. Talk with your mortgage professional to see what option is best for you. Most lenders allow a grace period to make your mortgage payment and do not charge a late fee if the payment is received by the 15th of the month. Another option to discuss with your loan servicer is the ability to make bi-weekly or bi-monthly payments. This can help with cash flow on a monthly basis by making a portion of the mortgage payment when you get a pay check.
To most, a mortgage is simply an obligation. It is an agreement that they will pay a set amount per month over a certain number of years, in order to purchase a home. The fact of the matter is that there are many benefits to mortgages that people may not even be aware of. Although it may seem like a mortgage is actually going to lessen your financial security, and slow your flexibility with liquid cash, the fact of the matter is that a mortgage can actually be quite beneficial to you in a number of different ways. To start, a mortgage surely is not something to be taken lightly. You are in fact making huge commitment when you agree to a mortgage, and you need to make sure that you are speaking with a financial planner about whether or not they believe the mortgage to be the best idea in your situation, because each person’s situation is different.
In most cases, a mortgage is going to provide you with certain unforeseen benefits that may actually allow you to better your financial situation while investing in a home that will shelter you for years to come. Consider some of the following advantages when you are looking into picking up your first mortgage, and determine whether or not these advantages are going to help to push you in that direction. Everyone should speak to a financial planner prior to taking on a mortgage, but it is also important that you have an understanding of the benefits available to you as well.
One huge benefit that is often overlooked is the fact that mortgages are not going to reflect the value of the home over time. In fact, your mortgage is only going to reflect the value of the home on the day that you take the mortgage out, and are approved to go forward with the purchase of the home. If your mortgage is for a certain amount and your home continues to gain value over the course of numerous years, you are actually getting quite a good deal in creating a good amount of wealth for yourself in the process. Even if you are not interested in investing in real estate full-time, buying your first home should be looked at as a potential investment. Finding a good deal on a home that will increase in price and value over time can help to generate tens if not hundreds of thousands of dollars for you over that time. If you believe that your home will increase in value over time, this can be determined by speaking with experts within the field, it may be a good idea for you to consider taking out a mortgage.
One of the main reasons why people decide to take out a mortgage and purchase a home is the building of equity. It is a major financial reason and can provide you with some very serious benefits. The fact of the matter is that you can utilize this equity for a range of different purposes including college, weddings, and even retirement. Many people state that the higher your mortgage, the lower the equity over time. However, there are ways to structure mortgages that help to build equity, especially over long periods of time. If the home is able to continue to rise in value over time, you can create profitable equity over the course of your mortgage.
One little-known fact is that interest that is generated with the mortgage is completely tax deductible. All of the interest is tax favorable. For interest that is accrued through mortgages and loans on your home, up to $1 million, is completely tax-deductible. For individuals that are in the 35% tax bracket, every dollar that is spent on mortgage interest is able to save you up to $.35 per dollar on your federal income taxes. This is a great way to greatly reduce the amount of money that you spend on taxes, and also make sure that you remain financially stable in the long-term.
One often overlooked fact is that individuals with a mortgage may be able to rent out their home and may be able to cover the cost of their mortgage by simply requiring a rental fee that covers the cost of the mortgage. If you are able to get your monthly payments down to a reasonable amount, you may be able to rent out the home to individuals that are willing to pay up to the amount of the mortgage. This allows you to build investments, without having to pay for the mortgage, or live in the home. There is a wide variety of different ways to structure a mortgage, some may be better for individuals that are going to be renting out their home.
One mortgage myth is the fact that a mortgage reduces your liquidity and flexibility. Actually, in many cases, mortgages allow individuals to be more flexible overall. By taking your time, and paying your mortgage off gradually over time, there are several benefits. One fact is that you may be able to restructure your mortgage, or take loans out on the equity of your home, allowing you to make improvements or other investments with the help of a lender. The liquidity and flexibility of your financial situation is going to be a huge determining factor in your ability to appropriately aide investments in the future as well.
If you are going to be paying a monthly amount no matter what, you want to be building toward something if it is possible. This is one of the reasons why mortgages are typically better than renting. The fact of the matter is that mortgages allow you to build toward something over time, while making a payment that would be comparable to the amount that you can expect to pay in rent for a home. Of course, renting does give you flexibility in where you live, but that money is not being invested.
For many of us, a mortgage will be one of the largest investments that we make in our lifetime. For this reason, you want to ensure that you are able to make smart decisions when it comes to the finer details of your mortgage, and make a decision that makes financial sense for you and your family. If you believe it would help, utilizing a financial planner or investment consultant can help you to ensure that you make decisions that will benefit you financially, while getting the home of your dreams. Take the following things into consideration when you are looking at moving to the Denver area, and considering taking on a mortgage;
One common mistake that is made by individuals that are considering taking on a mortgage, is looking at a mortgage as if it were a commodity. Only considering the rate that you are paying is going to leave you disappointed in the long run. Look at it more as an attempt to find a trusted partner that will help you to get through a very complicated transaction. You want to ensure that you are able to work with individuals that provide honest advice, and excellent customer support, which is exactly what we strive to do here at Hunter Lending. The wide range of different plans that we offer make it easy for you to find a mortgage that benefits you, and helps you and your family to get into the home of your dreams. In a world where predatory lending practices have become commonplace, finding an honest and helpful company to walk you through the process of taking on a mortgage will allow you to ensure that you receive a beneficial outcome as a result.
Although the Internet has provided some very interesting opportunities in regard to research, you should still strive to work with local companies that you are able to speak with in person. The Internet is an interesting tool, particularly for examining the different types of mortgages and plans that may be available to you when you work with the certain company. However, taking on a mortgage through online websites, without actually speaking to the company can be a huge mistake. Not only should you trust the individuals that you work with, which can be hard to judge when you are only working online, but you want to make sure that you can guarantee that they are offering sound advice, just like we do here at Hunter Lending. Use the Internet for exceptional research opportunities, but be careful not to take the human element out of your mortgage dealings.
When you are examining all of the available options when considering taking out a mortgage, you have to take into consideration that oftentimes you will pay extra when dealing with reputable companies. There are multiple different reasons for this. It could be that these companies have a higher cost structure, and therefore pass those costs onto the consumer. Keep in mind that you may end up paying more when working with large companies and oftentimes those large companies are going to be reputable organizations.
One unfortunate fact of many mortgage deals is the fact that the client does not put enough time and effort into assessing whether or not the fees that they pay are going to be reasonable. Depending upon the company that you work with, the amount that you can expect to pay in fees can range greatly from one company to another. Another fact that many people do not know is the fact that many of the smaller fees are actually negotiable, so long as you are willing to speak up. When dealing with the company, it is always in your best interest to ask for a good faith estimate so that you know what you were getting into, before getting over your head in fees.
Some of the different types of fees that you can expect to pay when negotiating a mortgage include an application fee, pay points, a credit evaluation fee, a loan processing fee, appraisal fees, documentation fees, escrow fees, and even underwriting fees, among others. The fact of the matter is that most of these fees are relatively arbitrary and mostly serve as additional profit generation for mortgage providers.
It is important that you not agree to pay too much in fees. Being willing to negotiate with your lender will allow you to greatly reduce the overall costs of the mortgage process, and simply letting the company know that you are not going to stand around and pay arbitrary fees will make them much more likely to write some of them off, and remove some of them altogether.
In some cases, adjustable rates should be avoided for any mortgage. Although these can be attractive, the advertised rate of an adjustable rate mortgage is not actually what you will end up paying over time. Typically, an adjusted rate mortgage will allow for different payment options. You could pay the minimum payment per month, which, in most cases, is never going to even cover the cost of the interest of the loan. Additionally, many companies offer interest-only payments, which will not begin to pay down the loan. Most institutions also offer full 15 year, and 30 year loan periods.
When evaluating adjustable rate mortgages, it is of the utmost importance that you have a good understanding of the finer details of the loan. Adjustable mortgage rate should only be considered if you are certain that the rates are not going to go up from current levels, the ceiling of the adjustable rate is below current fixed rate prices, or you have certain assurances regarding the adjustable rate.
The most important thing that needs to be taken into consideration when you are looking at purchasing a home in the Denver area is to ensure that you find a home that is to your liking, and meets all of the needs and requirements that you have. There are many things that need to be taken into account when looking for a mortgage including whether or not you would like to avoid adjustable rates, determining fees prior to obligating yourself to any payments, working with reputable organizations and local companies, and ensuring that you do not treat your mortgage as a commodity. Finding the right home is easy compared to finding the right mortgage, and we here at Hunter Lending attempt to make the process as easy as possible by providing reliable, trustworthy advice that can help you to get into the home of your dreams.
Although you might be used to the concept of test driving a car, you probably have never really heard the same concept applied to homes. There have probably been many different situations in which those that have purchased homes have wished that they had the opportunity to try the home out before obligating themselves to years of mortgage payments. However, over the course of the last few years, likely in response to the financial crisis of 2008, the practice of trying a home out before making a purchase has become increasingly common. It is a relatively new concept for potential homebuyers. Will the concept of ‘test driving’ a home continue to gain in popularity? It will likely remain an oddity in the real estate industry, but one that a small subset of shoppers will always be interested in.
A number of real estate agents and brokerage firms have started to arrange trial periods for sellers to test out a home before taking the plunge and making the purchase. Limor Nesher, a real estate agent with CORE, a New York brokerage firm has started to arrange 12 hour trial periods for potential home buyers. If they have shown serious interest in purchasing, they can be approved to spend some time in the home. Although most sellers (and buyers) are initially surprised by the idea, there is a number of benefits that both will enjoy from the arrangements.
Buyers are able to get to know the home more intimately. It can be difficult to get a real feel for the home just by walking through it and checking out the space. It can be difficult to see how the dimensions and layout will affect your day to day life. Getting to spend a trial period in the home will certainly allow you to gain a better understanding of the home, and get to know it inside and out. Noticing the finer details of the property and experience what a specific area has to offer can help home buyers to make their decision and feel more comfortable with the decision that they have made.
There are also benefits for sellers as well, as well as a few worries and risks. Allowing a potential buyer to have some time to themselves in the home could encourage them to move forward much more quickly. Giving them the opportunity to check the home out in depth and check out the surrounding area may also cause them to strengthen their bid or be willing to proceed immediately for fear of losing a home that they have already fallen in love with. Giving them some time with the home allows them to gain a deeper appreciation for all that the home offers, and will help to make it much easier for them to take the plunge and secure a mortgage.
There are obvious issues with granting people access to a home that is for sale. A big part of the process is working with a real estate agent that is a good judge of character. This wouldn’t be the type of deal that you would extend to anyone that was showing interest, and instead should be an arrangement that is exclusively offered to those that have shown a large amount of interest in the purchase. Sellers will be concerned about the security of their home and the belongings that are contained within the home. Liability is another very serious concern that most sellers will raise for the purchase. In most cases, the seller may express interest in meeting with the buyer before agreeing to the arrangement.
In order for a seller to protect themselves in this type of dealing, a few things need to be taken into consideration. A basic security deposit can be a great choice as it ensures that any damage that befalls the property can be repaired through the use of the deposit. Sellers should always consider setting up written agreements in order to ensure that they are fully protected from any damages.
Sellers should also always run credit checks before allowing anyone into the home. A credit check can be a very simple and straightforward way to gain a better understanding of a potential buyer and help you to determine if you believe they would be too much risk for the reward.
Will allowing potential buyers to have a small trial period in the home before committing to the purchase catch on? Only time will be able to tell. There is certainly a growing interest in it over the course of the last few years and that upward trend is only expected to continue well into the future. As of right now, the practice is nothing but a marketing tactic for sellers, but if buyers have a genuine interest in these arrangements, you can bet that more sellers will show interest in pursuing them.
The tactic is particularly interesting for homeowners that are having trouble selling their home. Depending upon the part of the country that you live in, and the current state of the real estate market in that area, allowing buyers to have a good look before they purchase could help to get a cold market moving in your favor.
Whether or not these ‘trial inspections’ catch on remains to be seen. It is important that sellers remain open to different marketing methods for their home, especially if they are seeing a general lack of interest in their local market.
Jumbo loans are back. An article released by Realty Times suggested that some financial experts are predicting the Jumbo market may do better than the Conventional market this year. A Jumbo loan is one with loan amount over $417,000. Many lenders got away from offering Jumbo loan products after the housing crash several years ago, but that trend seems to be reversing. More lenders are getting back into the Jumbo-lending arena. Typically, interest rates on Jumbo loans are higher than conventional loans, but with the rates holding strong, Jumbo loans are still very appealing. Additionally, is common that Jumbo products require higher credit scores and more money down that Conventional products or FHA.
Even with these higher requirements, increasing sales in the luxury home market are making Jumbo loans a more popular option. The National Association of Realtors reported that sales increased 25.7 percent nationwide in the first quarter over the prior year for homes valued at more than $1 million. A report released by Kentwood Real Estate in July indicates that the numbers are consistent in the Denver metro area with an increase in million dollar sales of 23.6 percent for the month of June.
There were 89 luxury homes sold in metro Denver in June at an average sales price of $1.515 million, an increase over the month of May. The average days on the market also decreased from 213 days for homes sold in May to 190 days in June. This is just over the year to date average of 195 days on the market for the 331 luxury homes sold this year.
With the luxury home market gaining momentum as the year progresses, the Jumbo loan is going to be a key lending product for the mortgage industry. Recently, lenders have loosened up the guidelines on Jumbo loans to offer loan to values as high as 90 percent. This means a buyer could finance a Jumbo loan with only 10 percent down. Traditionally, Jumbo loans maxed out at 80 percent, requiring buyers to come up with 20 percent down payment. These new, lower qualification products demonstrate the lenders willingness to get into this bustling luxury home market.
Contact an expert mortgage broker to carefully walk you through the available options. Kentwood’s market data was gathered from Metrolist Inc.
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