Job #1 for Buyers: Finding the Right Mortgage Professional

   Unless you’re paying cash, you need to get “pre-qualified” or, better, “pre-approved” for your mortgage loan before you start shopping for your home. Even before that, however, you need to understand the loan process and how to select the right lender. 

   Whether you’re buying a car, an appliance or a mortgage, it’s the nature of today’s marketplace that many of the people seeking your business are putting their financial gain ahead of your financial benefit. That’s why many industries, including real estate and mortgage lending, are licensed and regulated.

In the past, real estate agents have been described as just above used car salesman in terms of trust. But there’s a big difference. We Realtors could lose our license if it were proven that we didn’t put your interest ahead of our own. A used car salesman doesn’t even have a license to lose.

This is not to say, however, that there aren’t ways in which any professional can steer a client in a direction which benefits them at the expense of their client — whether financially or otherwise.

I remember before the financial crash of 2008 learning that loan officers earned a bigger commission from selling sub-prime loans than conventional loans, incentivizing them, in effect, to steer borrowers toward such loans even when they qualified for a conventional loan at a lower interest rate.

Back then, loan officers weren’t licensed or fingerprinted, as they are today. A felon could literally walk out of prison and represent himself as a mortgage broker and, as a result, get personal information, including Social Security numbers, from home buyers seeking a mortgage loan.

Today, every mortgage broker is licensed and must display his/her license number on their business card and on all advertising.  (Real estate agents don’t have to do that, but you know we’re licensed because we wouldn’t have access to the MLS without proving we’re licensed and we can’t be licensed without proving we have Errors & Omissions insurance to protect our clients as well as ourselves.)

But how do you select the best mortgage broker, the one most likely to serve you with the highest degree of fidelity and integrity and the lowest degree of self-interest?

Number one, do not find your lender on the internet. I have found few internet lenders to be worthy of my clients’ business. You are far better off using a human and local lender recommended by a Realtor whom you trust. Your Realtor will only recommend a lender who has a positive track record with other clients.  We have several trusted mortgage lenders on our smartphone app, which you can download free from the App Store or Google Play.  (Search for “Golden Real Estate.”)

One cautionary note: If your Realtor recommends only the lender with which their brokerage has a financial arrangement, be sure to ask for a second lender to interview. You may pay more using their lender.

Published March 9, 2017, in the YourHub section of the Denver Post and in four Jefferson County weekly newspapers.

Millennials Want to Buy, But Think It’s Harder Than It Is

Below is a link for a more readable image of the infographic at left, which has tons of insights about buyers under 35 and why they are not buying homes in the numbers that the older population did when they were under 35.

Here are some key survey results from that infographic that might surprise you.

* Millennials associate owning a home with the American dream more than any other generation.

* 33% of millennials expect to buy a home within the next 2 years.

* Only 34.7% of those under 35 currently own a home, down 50% from before.

* 91% of millennials report that they plan to own a home “some day.”

* Only 38% of millennials have more than $1,000 in savings.

* Median age for getting married is at a record high (29 for men, 27 for women), delaying the home buying decision.

Here’s what really caught my attention:

* 73% of millennials are unaware of low down-payment programs ranging from 3% to 5%. They’re also unaware of grant programs and the Mortgage Credit Certificate program that refunds 30% of your annual mortgage interest for the life of your mortgage — an amazing program!

The infographic describes six additional home buyer assistance programs that could also assist anyone, not just millennials, in buying their first home. Do yourself a favor and check out the infographic, then call a lender or me for more information.

Here's a link for a full-size image of the infographic at left: http://files.jimsmithrealtor.com/Columns/Millennials_infographic.htm. 

Published Dec. 8, 2016, in the YourHub section of the Denver Post and in four Jefferson County weekly newspapers.

Why Owners Who’d Like to Sell Their Homes Aren’t Putting Them on Market

[Published Feb. 9, 2012, in the Denver Post]

In recent columns, I’ve pointed out the rapidly declining inventory and the need for more listings.  There is no better time than right now to put a home on the market. Buyers, lured by record low interest rates, are snapping up the few homes on the market—when the price is right.

This is especially true in the lower price ranges.  When I did my monthly analysis on Feb. 1st, I found that 40% of all front range listings under $200,000 are under contract. That figure drops to 37.4% for homes between $200K and $300K, and to 29.5% for homes from $300K to $400K.

Between $400K and $500K, 22.4% of the listings are under contract, and between $500K and $600K the percentage is 20.9%. Above that price range, the percentage keeps dropping, so only 9.1% of homes priced over $1 million are under contract.  But that’s still a pretty hot market.

That raises the question, “Why aren’t more people who want to sell putting their homes on the market? Let me speculate on some of the reasons, and perhaps some readers will want to suggest their own reasons.

Reason #1: Sellers are “under water,” owing more than they can sell their home for.  This is especially true in the higher price ranges, as well in areas impacted by foreclosures and short sales.

Reason #2: Sellers are not under water, but they don’t have enough equity to produce the cash they’d need for a down payment on their next home. (Those who are wanting to buy under $420,000 may not know that with an FHA loan they can put down at little as 3.5%, or with a CHFA loan as little as $1,000.)  Observation: If you’ve been wanting to refinance your current home and have good credit but not enough equity for the refi, you probably do have enough equity to buy a different home at low rates with an FHA loan!

Reason #3: Would-be sellers want to wait until the value of their home increases. However, if these sellers expect to buy another home after selling, they need to realize that if they wait until their home’s value increases, then they’ll probably end up paying more for the home they purchase, so they might as well “take a loss” on their current home. It evens out in the end.

Reason #4: Sellers are worried about their job security and loss of income to support a new loan.

I’m sure there are many other reasons, and I’d love to read them on this blog. Or call me at 303-525-1851.