One of the biggest challenges I have recently encountered in the Denver real estate market is overcoming strict lender qualification requirements.  Buyers seeking to buy affordable Denver homes have become increasingly frustrated and discouraged with higher minimum FICO score requirements than what is normally allowed on FHA loans. 

Now finally a bit of good news for qualified buyers.  At a time when an estimated one third of Americans have FICO scores below 620, Wells Fargo and Quicken Loans have created programs to accommodate buyers struggling through a failing economy.  Although no big announcements were made, these two FHA-approved lenders loosened their “overlay” requirements on FICO scores making it a little easier for buyers to qualify for a home loan. Until now, if FHA requirements called for a 580 FICO score, both Wells Fargo and Quicken required nothing lower than a 620 score.  

These more stringent requirements have been a source of controversy for many years.  Overlays are not unique to Wells Fargo and Quicken Loans.  A number of other lenders embrace this methodology as a way of protecting themselves from defaults by borrowers with less than perfect credit.  Claims by the banking industry indicate that the Federal Housing Administration could request compensation for actual loss or damage caused by the defaults. 

Wells Fargo is the largest originator of FHA loans.  Quicken Loans follow close behind at number three.  The new standards embraced by both lenders are now more closely aligned to actual FHA minimums.  The program has the potential to become a working model for other banks and lending institutions. 

FHA loans are a more viable option for buyers who do not have a large sum of money available for down payment.  With a down payment requirement of only 3.5%, an FHA loan is a more attractive option for the majority of buyers, particularly today. 

The recession has caused many potential borrowers to buyers with 580 scores have solid incomes and generally good credit histories.

In an article posted on January 31, 2011, Ken Harney, correspondent for Inman News, stated that David Stevens, FHA commissioner, argues that a low credit scores are a result of the recession.  Even borrowers with solid incomes and good credit histories can be plagued with 580 credit scores as “they went through the recession and suffered some damage, such as short-term loss of income.”  A few late payments could have a major impact on even the most responsible borrower.  Stevens says lenders need to take a hard look at the issues and take more care in their underwriting practices.  Borrowers with a 580 score “do not present excessive risks of default”. 

Complaints against more than twenty lender were filed by The National Community Reinvestment Coalition.  The Coalition charged that overlays are stricter requirements than those set by FHA and discriminate against minorities violating federal fair lending and equal opportunity statutes. Criticism of standard lender requirements also came from other consumer groups, builders, and Realtors.

Wells Fargo’s new requirements allow borrowers with scores as low as 500 to 579 to qualify with a minimum of 10% down.  Borrowers with 580 to 599 FICO scores will need 5% down.  A FICO of 600 or more will only require a 3.5 percent down payment. Gifts from assistance programs, friends, or relatives will not be allowed in any of these circumstances. 

In order to encourage a more qualified buyer, lenders will require tighter debt-to-income ratios with lower FICO scores.  Monthly housing expenses can’t be higher than 31 percent while total household debt service cannot exceed 43 percent.  The household debt service ratio or DSR is the ratio of debt to disposable personal income. Debt payments consist of the estimated required payments on outstanding mortgage and consumer debt including credit and installment loans, car payments, etc.  The down payment requirements will help to keep unqualified applicants from obtaining a mortgage loan. 

Seller paid closing costs are costs associated with obtaining clean title, loan origination, underwriting, document recording fees, etc.  Closing costs are usually a little less than 3% of the purchase price which can add up to several thousands of dollars. 

Wells Fargo will offer these new programs directly to the borrower and will not be available through mortgage brokers, other wholesalers, or correspondent lenders.

In an interview with Tom Goyda, a Wells vice president and spokesman, Goyda told Harney that “these requirements are designed to ensure that we lend to customers who we believe will be able to manage their finances, given the anticipated ongoing challenges in the economy.”

Bob Walters is vice president for capital markets and chief economist at Quicken.  According to Harney, Mr. Walters confirmed that Quicken’s minimum FICO score requirements are down as low as 580 but not lower.  Funds for down payment must come from personal income and gift money will not be considered as part of the minimum required.  Walters also indicated that the debt-to-income ratios were similar to those required by Wells Fargo but he would not disclose any other specifics about their program. 

High unemployment figures and falling home prices have made it difficult for borrowers to purhchase a home in today’s marekt.  The program is designed to help provide homeownership opportunities to qualified buyers who have had temporary setbacks causing lower FICO scores.  Real estate professionals will greatly benefit from the program as well as tens of thousands of potential buyers.  These programs are not necessarily readily made available to buyers without prompting.  Make sure you know what to ask your lender or seek assistance from your real estate professional to help you ask the right questions.

Denver Mortgage Options

Obtaining a mortgage in Denver is easy.  Whether you plan on occupying, renting, flipping, or refinancing your Denver home, there are a number of lenders available for buyers considering a Colorado relocation or local move.  Finding the right lender should be your primary focus.  Each lender will have a set of loan products and terms to offer.  Whether you are choosing to work with a Denver mortgage company, credit union, commercial bank, or hard money lender, make sure you ask the right questions. 

For borrowers, particularly those with less than perfect credit, speaking with a lender can seem a little intimidating.  Regardless of your financial situation, seek out a dependable, reliable lender who will provide you with the best product and terms to fit your financial situation.  You will need time to research lenders and ask questions.  Do not wait until after you find your perfect dream home to start talking to a lender.  Being proactive can be in your best interest and help prepare you to negotiate your own best deal. 

Below is a list of lender types along with a basic description of their roles in the lending world.  In most cases the same lender can fit into one or many of these lender types simultaneously. 

Direct Lenders

This is a lender that once again, originates their own loans, whether through third party funding or through its own money.  A direct lender can be a portfolio lender or a mortgage banker and lend directly to the consumer without the use of a third party agent or broker.

Mortgage Broker

 A mortgage broker is a middle man of sorts.  They do not make loans but rather work with several lenders in order to present the best products and the best terms to borrowers.  Brokers are agents of wholesale lenders.  A wholesale lender may also work as a retail lender and offer similar products directly to the consumer.  Brokers are paid through one or a combination of fees associated with your loan, add-ons to interest rates, and points. 

Wholesale Lender

A wholesale lender is a bank or other financial institution that provides loans through a third party like a mortgage broker or credit union.  It is less expensive for a mortgage banker to make a loan through a third party.  In some cases, a loan through a third party company may be a better deal than what you might be able to get directly through the retail division of the same bank.

Retail Lenders

A retail lender is a bank who deals directly with consumers.  Whether you are buying, refinancing, or taking out an equity line of credit (HELOC), they make the loans and provide the money directly to the borrower.  Big box institutions like Wells Fargo, Chase, or Bank of America, to name a few, have both a wholesale and retail division. 

Warehouse Lenders

Warehouse lenders finance the origination of loans by mortgage lenders through short term lines of credit.  The loans themselves are used as collateral to obtain the short term financing.  The mortgage lender then sells the loan on the secondary market and pays the short term line of credit back to the warehouse lender once these loans are sold.  This allows a smaller lender or bank to stay liquid while making new loans.  Warehouse lenders are paid when the loans are sold and may sometimes also receive a cut on the sale of each loan.

Mortgage Bankers

Mortgage bankers borrow money from warehouse lenders in order to originate loans.  The bank is not using their own money to originate these loans so they can close more new loans while selling closed loans to investors.  The loans are often sold through Fannie Mae and Freddie Mac.  Once they sell the loans they originate, they pay the borrowed short term money back to the warehouse lender. 

Portfolio Lenders

These lenders do use their own money to fund the origination of loans.  Because of this, portfolio lenders can set their own terms and are not restricted by investor demands.  This gives them tremendous flexibility, making them a preferred lender for niche borrowers, those borrowers that don’t fit the typical lender requirements.  Borrowers with less than perfect credit but strong financials are a good fit for a portfolio lender. Since portfolio lenders are often looking at borrowers who may otherwise be considered a higher credit risk, you can expect to pay a higher rate of interest for their services.  However, a solid borrower could fall into the niche category by a number of influencing factors.  For borrowers that have good credit and strong finances, a low interest rate is still possible with a portfolio lender.

Hard Money Lenders

A hard money lender is usually a private individual that funds loans with their own money.  Hard money lenders typically offer short term loans with high interest rates that require larger down payments, sometimes in excess of 25% or more.  These loans are designed to be paid back quickly and can be an excellent option for investors given the right market conditions. 

Correspondent lenders

Correspondent lenders work directly with investors or sponsors like Fannie Mae or Freddie Mac.  The investor will purchase mortgages made by the correspondent lender providing it meets certain criteria.  If a loan does not meet such criteria, the lender must keep the loan or find another investor.  In some cases, the correspondent lender may keep the loan for a small period of time until it becomes attractive enough to a potential sponsor.  Correspondent lenders are paid through points issued with each loan.

The Highlands Ranch new homes community, BackCountry, now has a new semi custom homes builder.  Joining SheaHomes and Richmond American Homes in this master planned community is an award-winning semi custom home builder, Paragon Homes.  Paragon is a highly acclaimed builder along the Front Range known for their attention to detail, quality styling, and value.  The home in Paragon’s collection selected for BackCountry will embody the unique look and feel of the community.    

BackCountry also features the Front Range’s most prominent custom builders.  Some of these include Advanced Building Concepts, Malibu Homes, Ades, Design Builders, Wall Custom Homes and Terracina Custom Homes.  The best of the best home sites have been reserved for these luxury custom homes.  According to BackCountry’s most current newsletter, as of November 9^th, 2010, 5 out of 6 lots released on Houndstooth Court were quickly reserved.  These homes feature half-acre plus walkout sites backing directly to the 467 acres of private open space. 

If you have not visited BackCountry, it is definitely worth a look.  Although the homes seem to sit a little close together for my personal liking, it is still a beautiful community with some amazing amenities.  What you see as you pass the community from Wildcat Reserve really does not do it justice.  With more than 8,000 acres of open space, approximately 467 of which are exclusive to the residents of BackCountry, it is really like nothing else available in the area.

Discerning buyers in the market for luxury homes should definitely take a look at BackCountry.  A resort like community awaits you in this truly unique community in Highlands Ranch.  For more information or a personal tour of the community and available homes, please contact us at 720-375-2962.

Just one of a few meticulously maintained Denver homes with recently painted exterior and interior. Period molding and details add authenticity to older Denver real estate. Original fireplace and wood floors, large molding, original built-ins, tall ceilings, remodeled kitchen, updated and in perfect move-in condition. Beautiful blend of new and old updates and features. Professionally decorated by interior designer and it shows!

Anyone new to the Denver real estate market looking for hot Denver neighborhoods will want to check out Bonnie Brae. This community offers a quaint, small town feel only minutes from downtown. Stately and historic, or new and old homes beautifully coexist in this popular neighborhood. Bonnie Brae real estatecan include the cozy Cape Cod or a more traditional Tudor style design. Small brick ranches, like the one below, can sit across from a larger new construction home. Somehow it all seems to work together. Read more about the Bonnie Brae neighborhood here.

Home prices in Bonnie Brae can range anywhere from about $229,000 for a 717 square foot ranch to $2,300,000 for 2 plus story home with over 6,000 square feet.

Click here to see some Bonnie Brae homes for sale.
Click here to see some Bonnie Brae condos for sale.

For more information about Bonnie Brae real estate or other Denver homes please contact us here.

If you are relocating to Denver what you will find is simply an amazing place to live, work, and play. Colorado real estatethroughout the Denver metro area offers a variety of architectural styles and price ranges. The average median household income is just over 15 percent higher than the national average. And the Rocky Mountains serve as the ultimate playground for residents. Apart from an ocean, we really have it all.

Most visitors to Denver CO are surprised to find we have relatively mild seasons. Denverites and their visitors enjoy 300 plus days of sunshine year round. Low humidity and an overall dryer climate means even the hottest summer day or the coldest winter day is still surprisingly tolerable. I do not enjoy the cold too much myself and yet even I have grown to love and even look forward to our winter months. There is nothing like the still quiet of freshly fallen snow.

Choosing a place to live can be a challenge when you do not know your way around. If time permits I enjoy taking my clients on a general tour of the area so you can become familiar with amenities, retail shopping centers, medical facilities, grocery stores, restaurants – well you get the idea. Looking at houses online is easy and accessible from your own living room, no matter where you are in the world. Google Earth has come a long way in providing us with the opportunity to glimpse into areas we have never ventured. Still, there is no substitute for really getting a feel for a neighborhood than driving through it.

Parents with school aged children will be happy to know that the Denver metro area has a number of excellent schools districts. Douglas County School District serving Highlands Ranch, Lone Tree, Parker, Castle Rock and other parts of the South Metro Denver area, is among the top districts in the state. Cherry Creek Schools serve the neighborhoods of Cherry Hills Village,
Greenwood Village, Homestead, Willow Creek, and other surrounding areas. Littleton Public Schools serve the neighborhoods of Centennial, parts of Greenwood Village, and other surrounding areas. These are just a few of the many options available in Metro Denver. Click here to learn more about Denver Public Schools, Denver Charter Schools, and Denver Private Schools.

The Douglas County School District is proud to be known as forward-thinking and innovative. Now, residents served by the district may once again have the opportunity to use option certificates or vouchers towards private school tuition in lieu of public education. It’s an interesting concept that is a main topic of conversation with parents of school-aged children and acceptance of the proposed vouchers is varied.

The District’s board committee, the Choice Taskforce, has come up with a plan that will offer parents and students more options in school choices. The Taskforce meets fairly regularly, gathering information so that they may provide recommendations and suggestions to improve the quality of education in our district and how to better serve the community in alternative choices.

Douglas County residents have always looked for more choices for their children’s education and until now, Charter schools filled the void for some. The District believes this will allow public schools more autonomy by creating an opportunity to explore partnerships with private schools, expanding local programs and national programs.

Seven subcommittees make up the Choice Taskforce and they are as follows:

1. Neighborhood School Autonomy
2. Open Enrollment Reform
3. Online Learning
4. Contract Schools
5. Option Certificates
6. Home School Programs/Partnerships
7. Charter Schools

Each subcommittee works toward a specific focus or topic area.  The suggestions are presented to the Board and District the latter part of each year. 

At a recent meeting the Option Certificates subcommittee presented a draft to the Taskforce and the Board for further consideration and discussion. Similar to our current Charter Schools, it has been suggested that Douglas County consider adopting a private school as a “contract school”. In order to participate in the program the private schools would still undergo the same rigorous process as our Charter schools.

Exactly how these vouchers would work is not quite clear. In the most basic of terms, the per capita amount public schools receive would be made available to those parents looking for an alternative educational option for their children. A portion of their allocated money would go to cover private school tuition in one of the approved contract schools. Any balances after the disbursement of the money would have to be covered out of pocket by parents.

Some parents find this an exciting opportunity for their children. While others worry about how the shift in public funding to the private sector might affect our already struggling public schools. The verdict is still out on this one and no decisions have been made.

Highlands Ranch homes offers residents a number of incredible amenities. From events in the many parks available in the area to a choice of 4 state-of-the-art recreation centers, there is something here for every member of the family. The Northridge Elementary neighborhoodis popular for it’s award winning Northridge Elementary School located in the Douglas County School District. Residents of this lovely, older neighborhood can enjoy close proximity to the Northridge rec center and Northridge Park.
 

This Highlands Ranch cul-de-sac home has a newer roof, new furnace and A/C, and new double pane vinyl windows for your peace of mind. A warm and inviting freshly painted interior greet you as you enter into the living room of this home. A fireplace is the main focal point of this room with vaulted ceilings and an open veiw to the raised dining room.

The dining room is large enough to accomodate a table that seats 6 and there is still room for a sideboard or buffet and hutch. The kitchen is open to the dining area and features a window over the sink, newer countertops, and white cabinets. Sliding glass doors lead out to a wrap around deck and outdoor living space that all sit above a beautiful backyard. The yard features a dog run which is located behind a fenced area around the side of the home, along with a separately fenced garden space.

There are two bedrooms on the upper level with large windows that bring in the sunshine! The larger master bedroom has a window seat and a good size walk-in closet. Built-in cabinets in the upper hallway are perfect for your linens and towels.

Downstairs a garden level basement is perfect for your private office with bath or can be easily used as a third bedroom.  If you are looking for Highlands Ranch homes, come see this one in person. Don’t miss out on a great opportunity!

Buyers Looking for “The New Cozy”

A Life Less Complicated

Many Denver homes tell a story about a simpler and less complicated lifestyle.  Stepping outside of your “buyer shoes” and taking the time to appreciate the history behind the older and more characteristic homes in Denver you begin to see how society and life in general has changed over the years.  In 1950, the average new single family home was only 983 sq. ft.  In 2009, studies showed that in the U.S., the average new single family home stood at about 2438 sq. ft. 

One Bedroom Per Person

There is something special about walking into a home that someone lived in during the 1800’s or early 1900’s.  Even updated, you can still see evidence of another time, another lifestyle.  Features that make a home more obsolete in this day and age are all over Denver neighborhoods.  In 1950s America, it was normal for a home to have one bathroom, and children often shared a bedroom with siblings.  Today, buyers are more demanding as private individual spaces for everyone in the family seems to be a high priority for most.  Private master-suites, one secondary bedroom per child, and even one bath per bedroom are often sought after feature.  This is quite a departure from the two bedrooms, and one bath homes of yesterday.

A More Mystical View

Have you ever walked into a home that made you “feel” a certain way?  I hear it all the time from my buyers.  Homes seem to have their own vibration and energy, adding to the unique personality of the structure.  Like a living thing, a home holds the memories and story of those that lived there before as it awaits another family, a new story, and more memories.  More than just 4 walls and a roof, it is the heart of its owners; a living book whose story is written in real time, second by second and day by day.   

The “new cozy”

More than ever McMansions, originally built in the 1980’s, are growing in popularity.   In Denver, you can easily spot the trend as small and quaint 1950’s ranches sit alongside a vertical, and in comparison, behemoth McMansion.  Some of these newer structures maintain the integrity of the neighborhood, while others provide a startling contrast.  McMansions are the “new cozy”, somehow providing a stronger sense of security, a fortress for a single family wanting to create their own private community.  Changing trends in the larger home market shows buyers seeking for these larger homes are also looking for seclusion.  A McMansion secretly tucked behind an iron gate and quietly covered by larger trees becomes a cozy private world for its inhabitants. 

The Denver real estate market has its share of distressed properties.  If you are looking for a larger home, there has truly never been a better time to buy.  More and more million dollar homes are now selling well below their true value.  If you need to sell, you may get a little less for your own home  but what you will gain from buying now will make it a wash.