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Here's a great update I heard from my friend Todd Kooi at Bank of Colorado. Amidst all the negative info we get from media, here's the real scoop on the American economy! Check this out! ---Lisa Y


Todd Kooi NMLS #: 554489 Senior Mortgage Loan Officer Bank of Colorado Phone: (720) 480-0280 todd.kooi@bankofcolorado.com www.bankofcolorado.com/tkooi 1888 W Eisenhower Blvd Loveland, CO 80537


This past week was filled with so much good news. The biggest of which was the signing of Phase One of the U.S. and China trade pact.

This trade deal is a very positive development for the U.S., China, and the world, and paves the way for future business investment and other trade deals around the globe. This also removed what was a big uncertainty for many months.

The economic data was already amazing with the following reports coming in better than expectations:

  • Small Business

  • Retail Sales

  • Philly Fed Index

  • Initial Jobless Claims

And speaking of better than expectations, we also watched the start of corporate earnings season and most of the big banks handily beat expectations.

All of this good news has pushed Stocks to all-time highs, but at the same time Mortgage Bonds and home loan rates remained right at the best levels in three years... remarkable.

Bottom line: the U.S. economy remains quite strong with zero chance of a recession anytime soon, yet at the same time home loan rates have not moved higher, giving many an incredible opportunity to purchase or refinance a home.

If you or someone you know has questions about home loans, give Todd Kooi a call.

HOW TO BUY A HOUSE WHEN YOU STILL HAVE A STUDENT LOAN


by ALY J. YALE OCTOBER 1, 2019 in MORTGAGES

(used with permission from BankRate.com)


The majority of millennials don’t own a home — and many have student loans to blame for that. According to a recent survey from Bankrate, a whopping 61% of millennials don’t yet own a home, and nearly a quarter of them say student loan debt is the culprit.


Data from the Federal Reserve shows that 43% of college grads have taken on student loan debt, and as of 2018, the average debtor still owes between $20,000 to $25,000 on their balance.


These debts hold back potential homebuyers two-fold: first, through higher debt-to-income ratios that lenders steer clear of, and second, by making it harder to save for a down payment.

Fortunately, as difficult as it may seem, student loan debt doesn’t preclude you from buying a house. While it does make the process more challenging, there are ways to make it happen. And your financial foundation? That’s the first step.


If you’re looking to buy your first house, but student loan debts are holding you back, this guide can help you navigate the process and come out on top.


Step 1: Improve your debt-to-income ratio


One of the best things you can do to improve your chances of getting a mortgage loan is to lower your debt-to-income ratio. Your debt-to-income ratio (or DTI) is one of the most important factors a lender will look at when evaluating your application. They want to ensure you have the cash flow to handle your new mortgage payment, while also staying current on all your existing debts (student loans included).


For most mortgage loans, you can’t have a DTI higher than 28% on the front-end in order to be considered a good candidate. On the back-end, which includes your estimated mortgage and housing expense, 36% is the max. If you don’t fall under this threshold, then there are a few things you can do to improve it:


  • Pay down your debts where possible. Work on whittling down your student loan debts, credit card debts, and other balances. Use your tax refunds, holiday bonuses, or any extra funds you have to make a dent; even a small reduction in balances can help.

  • Increase your income. If you’ve been at your job a while, you may be able to ask for a raise. If not, a second job, side gig, or freelance work may be able to help supplement your income and improve your DTI.

  • Refinance or consolidate your student loans. By refinancing on consolidating your student loans, you can lower your monthly payment (and the interest you pay), improving your DTI in the process.

  • Enroll in an income-based repayment plan. Income-driven repayment plans allow you to lower your monthly student loan payments so that they’re more aligned with your current income level. These typically allow you to make payments as low as 10-15% of your monthly income. Don’t know what your current DTI is? Use our debt-to-income ratio calculator to get an idea.

Step 2: Increase your credit score


Your credit score also plays a big role in your mortgage application, as it tells lenders how risky you are as a borrower. A higher score will typically mean an easier approval process and, more importantly, a lower interest rate on your loan.


Making consistent, on-time student loan payments is a good way to build credit and increase your score. Additionally, you can also:


Lower your credit utilization rate. Your credit utilization rate is essentially how much of your total available credit you’re utilizing. The less you’re using, the better it is for your score. (Credit utilization accounts for 30% of your total score).

Pay your bills on time. Payment history is another 35% of your score, so make sure to pay every bill (credit cards, loans, even your gym bill) on time, every time. Set up autopay if you need to, as late payments can send your score plummeting.

Keep paid-off accounts open. The length of your credit history matters, too, accounting for 15% of your score. Leaving long-standing accounts open (even once paid off) can help you in this department.

Avoid new credit lines. Don’t apply for any new credit cards or loans as you prepare to buy a home. These require hard credit inquiries, which can have a negative impact on your score.

Finally, make sure to check your credit report often. If you spot an error or miscalculation, report it to the credit bureau immediately to get it remedied.


Step 3: Get pre-approved for a mortgage before you house hunt


Hunting for that dream house is definitely the most exciting part of the process, but before you can start, you first need to get pre-approved for your mortgage loan. For one, a pre-approval lets you know how big a loan you’ll likely qualify for, which can help guide your home search and ensure you stay on budget. Additionally, a pre-approval can show sellers you’re serious about a home purchase and may give you a leg up on other buyers.


When applying for pre-approval, you’ll need to:

  • Provide information regarding your income, debts, past residences, employment, and more. You will also need to agree to a credit check.

  • You’ll need to know what down payment you can offer. If you’re going to use gift money from a loved one, you’ll need a gift letter (from the donor) saying it doesn’t need to be paid back.

  • You’ll have to provide some documentation. Your lender will need recent pay stubs, bank statements, W-2s, tax returns, and other financial paperwork in order to evaluate your application.


If you want your pre-approval application to go smoothly, go ahead and gather up your financial documentation early, and have it ready to go once your lender requests it.


Step 4: Consider down payment assistance

If your student loans are making it hard to save up that down payment (and you don’t have gift money coming from a family member or other donor), then you’re not completely out of luck. In fact, there are actually a number of assistance programs that can help you cover both your down payment and closing costs on your loan.


The assistance usually takes one of four forms:

  • A down payment grant. These are interest-free and do not need to be repaid 

  • Forgivable second mortgages. These are technically second mortgage loans (on top of the one used to finance your house) but are forgiven if you live in the home for  a certain number of years. 

  • Traditional second mortgage. There are also programs that give you assistance via a low-interest loan. These need to be paid off monthly, just as your initial loan does. 

  • Matched savings programs. These programs encourage you to save up funds in a dedicated down payment savings account. Then, the institution or agency offering the program matches those funds (usually up to a certain point).


To qualify for these programs, you might need to:

  • Be a first-time homebuyer

  • Have an income below a certain threshold

  • Complete a homebuyer education course

  • Be a military member, veteran, or public servant (teacher, firefighter, EMT, etc.)

  • Commit to a certain level of savings each month

Agencies may also consider your credit score, debt-to-income ratio, and other financial factors when evaluating your application for assistance. The location you’re buying in (and its median income) could also play a role.


Step 5: Look into first-time homebuyer loans and programs


In addition to down payment assistance programs, you can also leverage one of the many first-time homebuyer mortgage programs that are out there — both through the federal government and state-based agencies. All of these programs offer low interest rates, and several require no down payment at all. This can be hugely beneficial if you’re dealing with a heavy student loan burden.


Federal Options


Talk to your lender about these special programs and how you might qualify:

  • FHA Loans

  • VA Loans

  • USDA Loans

  • Conventional Loans

  • 203k Home Renovation Loans

  • Good Neighbor Next Door Loans



Another option: State first-time home buyer programs


Individual states also have their own first-time home buyer programs and assistance offerings. Many of these help with closing costs, down payments, and more. There are also state-backed loan programs that can reduce your interest rate, lower your monthly payment, and help you save significantly over the course of your loan if you qualify.

You’ll find a full list of state-specific resources at HUD.gov.


Step 6: Find a co-borrower


If you have a fellow grad or a friend or family member who also wants to get out of the rent race, teaming up to buy a house could benefit you both. In this scenario, they become your “co-borrower,” applying for the mortgage loan jointly with you.

The advantage here is that it would allow both of your incomes and credit profiles to impact the application. That could mean a higher loan balance, an easier approval process, or a lower interest rate if they have a solid financial foundation. You can also pool your savings for a bigger down payment — another step that will lower your monthly housing costs and save you big on long-term interest.

If you don’t want to outright purchase a house with someone else, you could also ask a friend or relative to become a co-signer or guarantor on your loan. This would allow lenders to consider their income and credit on your loan application, but it wouldn’t actually give them ownership of the property.


The bottom line


Student loan debt can be a drag, especially if you’re trying to buy a house. Fortunately, there are options. By taking advantage of the right loan programs, working on your credit and DTI, and teaming up with the right partners, you can improve your chances significantly (not to mention, lower the cost of buying a home — both up front and for the long haul).


SEE THE FULL ARTICLE at

https://www.bankrate.com/finance/mortgages/student-loan-debt-and-afford-mortgage.aspx

Every year, ‘Black Friday’ is a highly anticipated event for eager shoppers. Some people prepare for weeks, crafting and refining a strategic shopping agenda, determining exactly when to arrive at each store, and capturing a wish list of discounted must-have items to purchase. But what about buying a home? Is there a ‘Black Friday’ for the home-buying process? Believe it or not, there is.


According to a new study from realtor.com, the week of September 22 is the best time of year to buy a home, making it ‘Black Friday’ for homebuyers.


Get more home for your money THIS WEEK - September 22-28!

After evaluating housing data in 53 metros from 2016 to 2018, realtor.com determined that the first week of fall is when buyers “tend to find less competition, more inventory, and the biggest reductions on list price.


The report explains,

“During the first week of fall, buyers tend to face 26% less competition from other buyers, and they are likely to see 6.1% more homes available on the market compared to other weeks of the year…nearly 6% of homes on the market will also see price reductions, averaging 2.4% less than their peak.”
What’s so different about the first week of fall?

George Ratiu, Senior Economist with realtor.com says,

“As summer winds down and kids return to school, many families hit pause on their home search and wait until the next season to start again…as seasonal inventory builds up and restores itself to more buyer-friendly levels, fall buyers will be in a better position to take advantage of today’s low mortgage rates and increased purchasing power.”

Call me if you want to know more about how prices, listings, and buyer competition stack up during the first week of fall in Northern Colorado!


Bottom Line

If you want to take advantage of the ‘Black Friday’ of home buying, contact a local real estate professional so you can learn about the benefits of making your next move this fall.