Colorado House Buyer

While the economy has created a ‘buyers’ real estate market with home values plummeting and Colorado Springs foreclosures soaring, who’s buying up the properties that are for sale? While first time home buyers are on the decline and previous buyers are being turned down because of tight credit conditions, Pink Realty agents are seeing that those with cash are the ones bringing the deals to the table. And today, it’s typically the investors that have the cash! Per Lawrence Yun, Chief Economist for the National Associate of Realtors (NAR), “Increases in all-cash transactions, the investor market share and distressed home sales all go hand-in-hand. With tight credit standards, it’s not surprising to see so much activity where cash is king and investors are taking advantage of conditions to purchase undervalued homes.”

On February 23, 2011, Jon Prior of the NAR summarized the housing sales for January 2011. All-cash sales increased to 32% of all sales in January, which was up from 29% in December 2010. Additionally, it was investors that grabbed more of the market share by accounting for 23% of all buyers in January, up from 20% in December 2010 and up 17% from one year ago.

While many investor home purchases will result in a traditional fix and flip sale, the current rental market and trends are also providing a great profit opportunity for investors. The demand for rentals in Colorado Springs is on the rise because more people are being turned down for home loans and more people are being displaced because of foreclosure or selling their home on a short sale. Colorado Springs has become a hot rental area because of the number of military personnel in the city, but also because the economy and housing market has caused so many homeowners to lose their homes to foreclosure or because they had to sell their home as a short sale. All these people are in need of housing and looking for rentals. This demand has resulted in less than 1% vacancy in Colorado Springs. Traditionally in Colorado Springs, the 3 bedroom home was always the highest in demand and considered the ’sweet spot’ in the rental market. The 3 bedroom homes were always rented, never vacant and there were never enough of them to meet the demand for them. The larger homes that were for rent were not in demand and stayed vacant.
However, today the demand for 4 and 5 bedrooms homes is increasing. As more and more middle class families are displaced, the need for the larger rentals increases. These larger rentals also bring a nice price point to the balance sheet. The current rental rate for a 3 bedroom single family home is $1140 per month and the 4 and 5 bedrooms are $1374 and $1789 respectively.

Call Pink Realty today at 719-393-7465 (Pink) to talk to an agent and see what great deal is out there waiting for you!

There is no doubt the opportunity for investors to ’snag the keepers’ is now.

While wholesaling and fix and flips bring fast and big profits, more investors are adding the right ‘keepers’ to their portfolio mix as rentals for additional long-term passive income. With the market trend shifting toward larger rentals, investors should also note that the larger homes with higher mortgages tend to get discounted more by the lenders when working a short sale. Many of these higher end homes are simply in need of paint and carpet. We have seen nice homes in the Stetson Hills area that needed as little as paint, carpet and linoleum flooring, but the homeowners couldn’t sell to a retail buyer because the buyers wanted a completely fixed home. Investors can buy homes for sale Colorado Springs for around $125K and get them turned into great rentals for about $10K. Cash flow on these short sales or bank owned properties would be very high.

If you call a Pink Realty agent, we would be happy to scour the market for you and find you a great property that will meet your needs.

Are you an investor who wants the upside of an investment property and today’s really cheap prices and huge cash flows but don’t want to at it alone?

The owners of Pink Realty are active, experienced investors and are always looking for partners on deals. Just give is a call at 719-393-7465 (Pink) and ask to talk to Russ or Monica about partnering on deals. We would be happy to talk to you. Just tell us what you want to bring to the table and we will see how we can work together.

• Do you qualify for the loan to buy the house? A common strategy investors are using now is to buy houses with cash, remodel the houses and then refinance the property with zero money out of pocket. We have investor friendly lenders ready to do these types of loans.

• Maybe you have a small amount of cash available and we can short a 2nd loan and bring the 1st mortgage current on a good property.

• Maybe you have a larger amount of cash available making 1% at the bank or in an IRA and you want to do something more productive with it but don’t know exactly how. We can find a really cheap house that we can buy, fix up, and rent.

Getting a mortgage is one of the most complicated steps in buying a homes for sale Colorado Springs or anywhere. Will I qualify for a home loan? What do I need to get pre-approved? What type of mortgage can I qualify for – FHA, VA, conventional, an ARM, fixed rate, …? What is the best type of mortgage to get for my situation? Should I go to my bank or find a Mortgage Broker? Learning more about what you should know is important. Preparing yourself and doing your homework will take some of the stress away and speed up the closing process for you once you’ve made an offer on a house.

In other Pink Realty blogs and articles we gave you a lot of information about credit score requirements and how you can best raise your credit score to meet the minimum requirements for conventional, FHA and VA loans. Referring back to some of this information or even calling Pink Realty at 719-393-7465 (Pink) and asking to speak to our in-house lender will let you know what to expect with your credit and what work you might have to do to qualify. If you think your credit may need some improvement, our lender will help you and will work with you for however long it takes and at no cost to you to build your score and get you qualified.

Lenders can either pre-qualify or pre-approve you. What’s the difference? Getting pre-approved or pre-qualified helps you know how much of a mortgage you can afford, but there is a big difference between being pre-qualified and being pre-approved. While these terms are used pretty loosely in the industry, generally when a lender pre-qualifies you, they run a credit check and base their determination on information you provide them about your work history , income, and available down payment either verbally or maybe with documentation but possibly not complete documentation for their underwriting. The bottom line is that a pre-qualification is largely based on what you tell them. It is possible that the pre-qualification results can mislead you on how much of a mortgage you can really afford.

When you get pre-approved, lenders check your credit report and verify all documentation similar to if they were submitting the application to their underwriting department. This essentially makes the only unknown in the transaction the property.

When you are ready to get pre-approved for a mortgage, be sure to call Pink Realty at 719-396-7465 (Pink) and as to speak to our lender. She would be happy to give you a good faith estimate of what she can do for you and earn your business.

If you are getting pre-approved before you begin house shopping, consider locking in your rate for a period of time, especially if the rates have been increasing. Once you have your pre-approval letter, it shows real estate agents and sellers that you are serious about buying a house and you know what price range you can afford. This not only helps your Pink Realty agent narrow their search for a home into your price range, it also can motivate sellers.

Additionally, once you are pre-approved, don’t do anything that will affect your credit score. Don’t incur new debt (this includes incurring more debt on credit cards), don’t pay off debt, cancel any accounts, transfer any credit card balances and don’t change jobs! Your lender will pull your credit again before you close and you don’t want you credit to have changed or you could lose your approval!

Once you have chosen a lender and are ready to begin the mortgage process there is a lot of paperwork that needs to be processed. You will be required to provide copies of specific financial information. So when you are ready to begin looking for a house and a mortgage, you can start preparing by rounding up the items you will need. The following is a list of the information and documents you will have to provide your mortgage lender if you want to get approved for a mortgage loan:

Information about your employment and your income:

1. Where do you work, how long have you been at your job, and what is your income?

2. Are you a 1099 contract paid worker, paid on commission only, or do you receive a steady hourly wage or regular salary?

3. You will have to show proof of your income. This will include providing tax returns, 1099 statements, paystubs, etc.

4. If you receive disability pay or social security income, you will have to provide statements.

5. Depending on how you receive your income, a steady salary with paystubs or irregular income as a 1099 contractor, your interest rate could be higher. A steady paycheck is generally deemed less risky than pay on commission only or as a contractor.

What are your outstanding debts?

1. You will have to provide information about your recurring debts whether they are for a car loan, a student loan, or credit cards. When the lender runs your credit report these accounts will show on your record, so be honest!

2. The total amount of your recurring debt will be analyzed against your monthly pre-taxed income and a debt-to-income ratio will be calculated.

How much do you have in cash reserves?

1. How much is your down payment and do you have enough cash to make this down payment and cover the required closing costs?

2. Is the money you are using to make the down payment your own money or is it borrowed funds or a gift?

3. You will have to provide the lender with copies of bank statements to show you have enough money to cover these costs. If you are receiving a gift for your down payment from a family member, a friend or a non-profit agency, you will have to provide a gift letter to the lender.

4. Lenders need to know if your cash reserves will be completely depleted after you pay your down payment and closing costs because they want to know you will have enough money left in the bank to cover a couple of mortgage payments in case something happens!

What works in your favor?

The following is a list of things that will definitely benefit you when you are applying for a mortgage:

1. Being employed by the same employer for two or at least being employed in the same line of work for that period of time or longer.

2. Having minimal debt and no recent large purchases, such as an automobile. If your debt-to-income ratio is 36% or less, you are in pretty good shape! You can call Pink Realty, and our lender can help you evaluate your debt ratios. Call 719-393-7465 (Pink).

3. If you can afford to put at least 5% of the sales price down with your own funds. If you qualify for an FHA loan, you may only have to put as little as 3.5% down, or if you are a VA buyer, you may not have to put down anything, but the more you can put down, the better. If you are trying to qualify for a conventional loan, you can qualify for as little as 5% down, but you will have to pay private mortgage insurance which can be expensive and is added to your monthly payment.

4. Having enough cash reserves left in the bank to cover two mortgage payments after you have paid your down payment and closing costs.

Things that can make it more difficult to obtain a home loan?

1. If you are self employed, a contract worker, work on commission only, or have irregular income. You may be considered a higher risk if your income isn’t steady, based only on commissions or if you are paid as a 1099 contract worker. If you are self-employed and have tax returns that solidly substantiate your income your risk can be reduced, but in addition to tax returns, you will also have to show profit and loss statements for your business.

2. If you have a lot of recurring debt or a high amount of debt and your debt-to-income ratio is higher than 36%, you may run into issues or be charged a higher interest rate.

3. If the cash reserves you have will be completely depleted after you have made your down payment and paid for closing costs, the lender can consider you a higher risk because if you lose your job or get injured and can’t work for a period of time, there is a risk you may not be able to make your mortgage payment.

4. If you are receiving gift funds for your down payment because you have no funds of your own to purchase the home, you can also be considered a higher risk and may be charged a higher interest rate.

Before Getting a Mortgage, consider the following:

1. Know what your budget is so you know what size mortgage you can really afford. You can be given a pre-qualifying mortgage amount by a lender based on your income, but you also have to take your monthly recurring debts into consideration, along with unexpected expenses such as medical bills..

2. Depending on your cash situation, you need to know if it is more important to offset a higher rate with lower closing costs or a lower rate with higher closing costs. When you are shopping for mortgage quotes, don’t just look for the lowest interest rate. You also want to compare the terms and conditions. There is a lot of competition out there today, so be sure to ask your lender for any special incentives. Lenders may be willing to waive some fees to attract your business!

When shopping for a mortgage quote, be sure to ask the following questions?

1. What will my monthly payments be?

2. Are there any pre-payment penalties?

3. Are the terms fixed or variable? If the interest rate is variable, what is the interest rate cap? In other words, what’s the highest my interest rate can go and what will the payments be at this rate?

4. Do I have to pay any loan origination fees?

5. Do I have to pay any discount fees for this interest rate?

6. Are there any lender incentives? In other words, will the lender pay any of the closing costs or waive any fees?

7. Will I have to pay private mortgage insurance?

What not to do after you have been approved!

After you have been approved for a mortgage and have received your pre-approval letter from your lender, do not do any of the following or you can jeopardize your approval:

1. Don’t apply for new credit as the inquiries will change your credit score.

2. Make sure you pay all your recurring debt payments on time.

3. Don’t pay off collections or charge off accounts unless specifically told to do so by your lender.

4. Don’t charge more on your credit cards and don’t close any credit card accounts or transfer any credit card balances.
5. Don’t make any large cash purchases as this may decrease your verifiable bank balances.

6. Don’t quite your job.

7. Don’t change your job without first consulting your loan officer.

8. Don’t bounce any checks.

Do your homework and become an educated consumer! Knowledge is power and knowing what’s required to get a mortgage, how to determine the amount of mortgage you can safely afford, and how to shop and negotiate for the best mortgage for your situation will benefit you tremendously. If you have any questions or want help, Pink Realty is here to help you. Give us a call at 719-393-7465 (Pink). Our loan officer will be happy to help you with a loan, and then a Pink Realty can help you find your dream Colorado Springs house! We want to help you through the whole process and feel all the rewards of homeownership! Give us a call today. We are here to help you!

Today’s economy has caused many people financial hardship. Whether your hardship is the result of a loss of employment, illness or injury, death of a spouse, divorce, or bankruptcy, hardships can result in derogatory information ending up on your credit report. Unfortunately, derogatory information leads to further hardship as needed credit is denied, future employment is affected and interest rates and insurance premiums go up leaving you in a ‘debtor’s prison’ that seems to have an endless sentence with no right to appeal. While solving credit report and credit repair issues may seem to be a mystery, there are myths and truths you should know and this article addresses them and think before you get Colorado Springs Foreclosures

Myth # 1: I can pay off my past-due charge-offs and collection accounts and my credit report will show ‘paid’ and will no longer be a negative strike against my credit score.

While it is difficult to fully repair your credit if you have outstanding past-due accounts, paying off old accounts that will automatically be removed shortly in the future, can harm your credit for a longer period of time. Past due accounts, collections, charge-offs and judgments can stay on your credit report for a maximum of 7 years. Bankruptcies and foreclosures can stay on your credit report for a maximum of 10 years. This length of time is determined from the last date of activity posted on your account. If you have an old collection that was placed on your credit report in 2000, it would automatically be deleted in 2007. However, if you pay off the ‘bad’ debt in full in 2005, the account will show ‘paid’, however the account is still reflected as an account that was past due, or a collection and that negative mark will now remain on your credit report until 2012. Therefore, if you have funds to pay off any delinquent accounts or collections, it makes more sense to pay off the recent derogatory accounts as the old accounts will drop off on their own within 7 years of the last posted activity.

Myth # 2: If a negative item is deleted from my credit report, it will just come right back on my report.

In truth, credit bureaus will temporarily delete a negative listing if they have not heard from the creditor within 30 days of an item being disputed. If the creditor submits verification of the account, even after 30 days, the credit bureau can re-insert the negative account back onto your credit report. However, many times the creditor fails to respond and the negative item is deleted permanently. If the creditor does verify the account and it gets put back onto your credit report, it is oftentimes deleted again because the challenge process to fully verify the account is intensified and the creditor no longer pursues the account.

Myth # 3: Items such as bankruptcies, foreclosures, judgments and tax liens are impossible to remove from a credit report.

While it can sometimes be a difficult and time-consuming process to remove these types of accounts, every type of negative listing has been removed from a credit report.

Myth # 4: Disputing a credit report is easy. Any consumer can do it themselves.

While it is easy to dispute accounts on a credit report, getting results can be difficult. Credit reporting agencies are publically traded, profit seeking entities and their time spent investigating consumer disputes cuts into their profits. Therefore, they work harder to hinder your progress to repair your credit than they do to help your progress. There are companies that tell you getting disputes resolved yourself are complex, time-consuming, and frustrating and many of these companies charge high, upfront fees and make false promises about getting all your negative information removed from your credit report. Beware of these companies and their scams. You can get more information about how to repair your credit yourself and credit repair scams that you should be aware of by going to the FTC (Federal Trade Commission) website at http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm or you can simply call us at Pink Realty at 719-393-7465 (Pink) and ask to speak to our lender. She will be happy to help you get your credit score up.

Myth # 5: The credit bureau allows me to submit a 100-word explanation to tell my side of the story. Creditors read my statement and take it into consideration.

While the credit bureaus do allow you to submit an on-line explanation to dispute an account, the creditor does not necessarily take it into consideration. While credit reporting agencies are supposed to forward the information to the creditor, there is a good chance the creditor will never see your explanation! To file a dispute, send a letter to the credit reporting agency with attached copies of any documentation you have to support your dispute. Be sure to send this letter by certified mail - return receipt requested, so you can document that your information was received by the agency. Additionally, send a letter to the creditor and again, sent the letter by certified mail - return receipt requested so you can document it was received by the creditor. The consumer reporting agency must investigate your dispute within 30 days. They are required to forward your information to the creditor. The creditor must respond and if the investigation proves the information reported to the credit bureau is inaccurate, the creditor must notify the credit reporting agency and they must correct your file.

Myth # 6: The credit bureaus are a government agency and therefore infallible.

Credit reporting agencies, such as Equifax, Experian and TransUnion are publicly and privately traded companies that are in business to earn a profit for their stockholders. They are not government agencies and are very heavily regulated as a result of public abuse and mistakes. The consumer protection legislation and laws allows consumers to challenge these agencies and can force the removal of inaccurate, outdated, unverified or unverifiable information.

Myth # 7: I can create a totally new credit file by getting a Federal Tax ID number or changing a few numbers on my social security number.

There are credit repair companies out there that let you believe you can obtain a completely new credit file by doing this. Beware! This is a fraudulent scheme! It is a criminal offense to lie on a credit application. If you are caught doing this, you will suffer the consequences.

Myth # 8: If I build enough good credit, it will offset my bad credit and make me creditworthy.

Today, computers compile a point score to determine your creditworthiness. There is no longer a human element that can determine your creditworthiness by your character or current situation. Therefore, any negative credit information can hinder your ability to get future credit. However there are things you can do to help improve your score. First and most importantly, review your credit report for accuracy and dispute any inaccuracies! You are entitled to a free credit report each year. AnnualCreditReport.com is the ONLY authorized source for the free annual credit report that’s yours by law. Based on a study done by PIRG (Public Interest Research Groups), 70% of consumer credit reports contain incorrect information, so there is a good chance you may find errors on your report that can be removed. Secondly, strive to bring recent past due accounts current. Remember from Myth 1, the old accounts will be removed automatically after a maximum of 7 years from the date of last activity. Also work to reduce the balances owed on revolving credit accounts to 50% or less of your approved credit limit. Approximately 35% of your credit score is determined by past delinquencies and 30% is determined by your revolving debt ratio (balance due / credit limit). Because past due accounts and Revolving Credit Debt Ratio equal 65% of your total credit score, these are the accounts that you should address first to make the biggest impact on raising your credit score.

Myth # 9: It is illegal for creditors to remove negative accounts on my credit report. The law requires these items stay on the credit report for at least seven (7) years and in the case of bankruptcies, 10 years.

The law states that negative information can appear on your credit report for a maximum of 7 years, 10 years in the case of bankruptcies. Creditors and credit bureaus may choose to delete negative items anytime they see fit, however they cannot let them say on longer than the maximum amount of time.

Myth # 10: Nonprofit organizations like Consumer Credit Counseling Service (CCCS) can help me restore my credit.

While these agencies may be non-profit, they still charge for their services. Oftentimes, seeking help from these agencies can prove to be a red flag for creditors and your credit can be treated similarly to a Chapter 13 bankruptcy. Again, if you seed credit help, beware of the many credit repair scams that are out there. The Credit Repair Organizations Act requires credit repair organizations to give you a copy of the “Consumer Credit File Rights under State and Federal Law” before you sign a contract. They must also give you a written contract that spells out your rights and obligations. Read these documents before you sign anything!! And before signing, know that a credit repair companies cannot do the following:

• make false claims about their services

• charge you until they have completed the promised services

• perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees.

Before you sign a contract, be sure it specifies:

• the payment terms for services, including the total cost

• a detailed description of the services the company will perform

• how long it will take to achieve the result

• any guarantees the company offer

• the company’s name and business address

Today, nearly 70% of Americans are denied credit because of their credit scores. At Pink Realty we see this all the time, so we understand the credit help that’s needed. Our Colorado Springs realtor work with many people that are trying to buy homes, but just don’t qualify because of their credit score. This is why our agents work with several reputable lenders that work with these buyers at NO charge. They help you understand your credit report and your credit score. They will work with you to help you improve your score. So, before you spend your hard earned money on what might be a fraudulent scam, call us at 719-393-7465 (Pink). We can put you in touch with a lender who will work with you to get your credit where it needs to be so you can buy that home you want to buy! You can reach Pink Realty at 719-393-7465.

When it comes to purchasing homes, buying a foreclosure is one of the best ways to create equity. Many times, you will find foreclosed houses for sale listed as half of what they are actually worth. After purchasing one of these homes, you can rent them out to generate positive cash flow, or flip and sell to generate an immediate profit. Yes, foreclosures can be a great way to create equity (or just get a create deal on a home), but many of us do not know a lot about foreclosures. Let’s take a look at what foreclosures are and how you can go about finding a great deals of Colorado Springs Foreclosures.

Before we talk about how you can find a foreclosed house, let’s first discuss what a foreclosure actually is. A foreclosure occurs when an owner cannot make payments on their home. If payments become severely overdue, the property is seized and sold. Many times, when foreclosures are resold, they are resold much below their actual value, making them the perfect find for home buyers.

Typically, there are four stages to a foreclosure. If a home owner goes 60 days without making a loan payment, they will enter into the first stage of foreclosure known as the ‘notice to accelerate’. During this stage, the owner will receive a notice from their lender letting them know that their payments are past due and must be brought up to date. If the owner fails to respond to this notice they will enter into the second stage of foreclosure – the ‘demand letter’. This letter will be delivered to the owner by a lawyer, letting the owner know that the foreclosure process will begin if they do not soon bring their payments up to date.

If the owner still does not respond, the lender will receive a notice of default, letting them know that the lender has filed for a formal foreclosure from the court. Once again, the owner is given an additional 20 to 30 days respond. If there is still no response after the given time, a final notice of sale will be delivered, letting the owner know when they must move out and when the house will be auctioned off.

If you are looking for a great deal in the Colorado Springs area, you may want to consider looking at these foreclosed houses. Begin by asking your real estate agent about foreclosures in the area. If there are any available, your agent will take you around to look at each. It is generally recommended that, before you look at homes, you ensure that you have a secure financial backing. Foreclosed houses are hot sellers, so if you are interested in a home, there is no time to waste.

Once you find a home you are interested in, you can submit your bid. Generally, the lender who repossessed the home will create a starting bid of which you cannot bid lower. Once you have made your bid, it will be considered against other bidders. You will be noticed once a decision has been made.

If you win the bid for your home in Colorado Springs, your next move is to perform an inspection. Do not skip this step. While some foreclosed homes are in excellent condition, many need repairs. And when it comes to buying a home, it is best to know what to expect beforehand!

If you are looking for homes for sale in Colorado springs area, you may want to start by looking at foreclosures. Foreclosures can get you a great deal on your home and can also be a great way to earn equity. Speak to your realtor about foreclosed houses and see what homes are available in the Colorado Springs area.

Homeowners whose homes have been put up for foreclosure are unfortunate but investors are somewhat lucky to find these deals on the market. Even with a “run-down” property, an investor can flip it and make a decent amount of money on its resale. The process of colorado springs foreclosures is somewhat simpler than other areas of the country as there is no need for a court appearance by neither the lender nor the borrower.

How does a foreclosure work?

When a borrower has defaulted on a loan, the lending institution issues a notice to the borrower and trustee. The lender requires a 3-moth reinstatement period to give the borrower the chance to pay the debt. When this time period elapses, a trustee’s sale is publicized, typically in the form of an auction. All costs related to the foreclosure and the principal amount is deducted from the winning bid. The balance is then given to the borrower.

Why foreclosures are good news for investors

A foreclosure is a good opportunity for an investor to snag real estate. This is especially true about Colorado Springs foreclosures. Though the market has experienced a dip in prices, the housing values in Colorado Springs are at a steady rise ranging from 2% to 6%. In addition, defaulted banks are willing to sell foreclosures at lower than normal prices in order to recoup what they have lost. They aren’t interested in real estate, they are more interested with lending money to new buyers.

There is actually an even better situation for investors as it relates to foreclosures. There is the instance when a property is sold in pre-foreclosure which means less cost and time. The buyer has more power to negotiate as the seller is willing to forego equity on the property to evade the tarnish to their credit report.

What are the steps that a buyer should take?

As a buyer, you should do a lot of research to find the right property. If you are planning on using the property as a primary residence, then factors such as the school district, the crime rate, local amenities, long-term plans for the area and comparable properties in the area should all be considered. When a property is decided upon, the next step is to approach a bank to get pre-qualified for a loan.

During this time, it’s recommended that you avoid making huge purchases. Lenders use your debt-to-income ration to establish what you can afford. It will include monthly housing costs, car payments, credit cards, student loans, etc. Additional debt will negatively impact the amount the lender will finance.

The next step is to either contact the seller or go to the auction to submit an offer. The ideal price will take into account the fact that banks hardly want less than 90% of the loan balance. Also, you should get the property professionally inspected. It makes no sense getting a “money pit” that has a lot of shortcomings which will end up costing a lot of money to fix. Keep this in mind when negotiating a price.