Colorado Springs Real Estate Blog

Colorado Springs real estate and homes for sale. Tips for buyers and sellers, statistics and analysis, great homes for sale and more!

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Choosing a Title Company in Colorado Springs

 

When buying or selling your Colorado Springs home you most likely do the appropriate research before choosing your real estate agent, your lender, your moving company and others. But did you know that you also have the right to choose your title company? In our previous posts we explained the importance of title insurance and how the costs are determined. So, it is critical to choose a reputable, experienced company to ensure that you have a smooth and hassle-free transaction.

Below are 9 questions you should ask when searching for a title company.

  1. Is my Money Safe? Make sure that the company has a fully staffed escrow and accounting department dedicated to protecting your funds. Ask for a written guarantee that the company does not disclose your personal information to anyone not involved in the transaction and find out if they carry fidelity coverage and errors and omission insurance.

  2. Is the Title Company Financially Stable? To make sure that the title underwriter is financially stable, check the Demotech website, which issues Financial Stability Ratings (FSRs) for title underwriters.

  3. Is the Title Company a Neutral Third Party? Some title companies are owned by lenders, real estate firms or builders which may cause a conflict of interest. Your Title Insurance company should be independent and unbiased to ensure that the transaction closes according to the terms of the contract, without any complications.

  4. Is the Rate Quoted Much Lower than What Other Companies are Charging? Below market premiums may indicate a lack of experience, subpar service or insufficient financial and accounting controls.

  5. In Addition to the Premium, are there Other Fees and Charges? Ask about fees for electronic delivery, overnight courier, cashier's check, release tracking, wire transfers and other charges that may add up to be more than the amount charged by reputable title companies. 

Make sure you have all the associated fees in writing before signing any agreement.

  6. Does the Title Company Conduct Thorough Title Searches and Report All Exceptions? Title companies are required to perform a "reasonable examination" for every transaction, which includes providing you with actual documents for any exceptions (e.g. liens, unpaid taxes). Your title company must identify, disclose and resolve all issues prior to closing.



  7. Is the Title Company Locally Owned and Operated? Beware of a title company which outsources production of the title commitment and portions of the closing process overseas. A local company will be more knowledgeable about Colorado Springs real estate laws and customs as well as the local real estate market.

  8. Are the Employees of the Title Company Licensed? In Colorado, title underwriters, agent companies and agents are licensed through the Colorado Division of Insurance. Any title company employee who provides rate information to the public must have a license. By Colorado law, sales people, title examiners and searchers must be licensed. The Division of Insurance also regulates activities and has the right to audit files, impose fines for improper actions, discipline agents and take other corrective action.

  9. Is the Title Company a Member of the American Land Title Association (ALTA)? The professional/lobbying organization for the title insurance industry is the American Land Title Association (ALTA). In 2007, ALTA launched the "The Title Industry Consumer Initiative" which details the association's strategy for improving industry oversight and educating and protecting consumers. You can learn more about the Consumer Initiative on the ALTA Web site.

Thank you to Sara Martin of Land Title Guarantee Company for providing the above information.

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Posted by on in Personal
Which Cell Phone Provider Do I Choose?

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So I'm driving around in the car this weekend with some new buyers from out of state.  They traveled with their cell phones, naturally.  As we drive, we notice that they keep losing cell phone service.  Their signal is weak and they can't get good connections.  They do not have AT&T.

A good friend of mine who lives in the East area of Colorado Springs, near Academy Blvd. and Maizeland, is constantly dropping cell phone calls and having to redial...very frustrating!  He does not have AT&T.

I mention this becuase it DOES matter who your cell phone provider is around here.  In Colorado Springs I have found that best service is through AT&T.  I have found their rates are pretty competitive.  I rarely drop calls.  I have good coverage throughout the area.  It is important...especially when your livelihood depends on it!

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titlefees

 

In our last blog post we talked about the necessity of buying title insurance for your home purchase. Now, we want to discuss the cost of title insurance, how it is calculated and how a little legwork on your part can save you money.

The title insurance industry is unique in that regulation by the state serves as a natural check on profits. Rates by title companies are ultimately set in response to competition in the marketplace. However, if the competition does not lead to fair rates, the state steps in stating that rates cannot be “excessive, inadequate, or unfairly discriminatory”.

There are a number of things you can do to monitor the cost of your title insurance. Below are five steps you can take.

  1. Do your research. Title insurance is a two-part transaction. The first part covers the property’s history to determine if there are any unpaid loans or liens. The second part insures you against future discoveries or problems with the property. Insurance companies are allowed to set their own rates, so it pays to spend some time comparing policies to make sure you get the best possible deal. Visit Home Closing 101 to find title insurance companies in Colorado Springs who are members of the American Land Title Association.

  2. Ask about add-on fees. These may include mail and courier charges, copy fees and fees for searches and certificates. You have the right to ask a company to reduce or drop these fees.

  3. Ask about a “re issue rate.” If your home has been refinanced or sold within the last 5 years, you may qualify for discounts up to 50%.

  4. Ask about Endorsements. An endorsement is a rider attached to a Mortgage or an Owner policy to expand or limit the policy coverage. Attaching an endorsement to the policy adapts the coverage to meet the needs of the insured. Examples of common endorsements are: Condominium Endorsement, Mineral Endorsement, Encroachments on Easements, just to mention a few. By issuing an endorsement, the insurer may take on additional risk normally not covered under the policy. A premium is usually charged for issuing any endorsement.

  5. Don’t rely on a single recommendation from your real estate agent. Ask for two or three companies that he or she recommends.

For a list of title insurance companies in Colorado and their fee schedules visit DORA or Colorado Department of Regulatory Agencies or Network Closing.

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2014 Housing Market at a Glance

This year the Colorado Springs housing market started off a bit slow.  From January to mid March we Realtors were all scratching our heads wondering where all the buyers were and why houses were taking longer to sell.  At at some dark point, which no one cares to admit, we even began to wonder "is it me?  is there something more I could be doing?"

But around mid March things changed back to normal.  Buyers came out to buy, and houses began to sell at their usual pace. Springtime sales gradually heated up transitioning into a typical, busy and productive Summer.

Here is how our Colorado Springs housing market fared, through the 3rd quarter of this year:

          -  Single Family Home Sales Up 1.2% over last year

          -  Average Sales Price of a Single Family Home Up 2.6% over last year; to $250,928

          -  Total Homes for Sale (active listings) Down 5.9% from last year

          -  Condo/Townhome Sales Up 5.2% over last year

          -  Average Sales Price of a Condo/Townhome Up 1.5% over last year; to $168,948

          -  Total Condos/Townhomes for Sale (active listings) Down 11.2% from last year

 

To summarize:  Home sales have increased slightly over last year. Home prices have increased slightly.  There is less inventory for sale now than there was last year at this time. And although we started off the year a bit slow, we have made a nice recovery.  Whew!  Nice to know we're still on track!

 

 

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We are in the process fo putting together our Q3 newsletter. When we do this, we take a comprehensive look at the Colorado Springs Real Estate market. This means comparing and contrasting a multitude of statistics, some of the outcomes make it into the report others do not. I am currently working on what I think is an interesting comparison, Number of Sales vs. Average Sales Price.

Not surprisingly, lower priced areas tended to have a higher volume of sales but as you might expect, buyers were a little discerning. In other words they looked at things like neighborhood quality, amenities, quality of schools and all of the other perameters you might expect when they chose where to buy. The table and charts below show just how and where Colorado Springs Homes Buyers decided to live:

Colorado Springs Real Estate Market Statistics
Number of Sales vs. Average Sales Price
January 1, 2014 Thru September 30, 2014 (Q1-Q3)

Area Number of Sales Average Sales Price
Fountain Valley 954 $177,024
Powers 893 $207,070
Northeast 801 $219,517
East 638 $171,812
Briargate 567 $288,275
Central 552 $188,665
Southeast 544 $132,878
Southwest 532 $310,355
Tri-Lakes 437 $376,404
Northwest 395 $293,638
Falcon North 271 $260,009
Northgate 219 $353,542
Old Colorado City 201 $180,604
West 191 $270,385
Black Forest 149 $423,762
Mark Sheffel 102 $215,074
Falcon 92 $197,275
Manitou Springs 60 $314,325
Ute Pass 36 $233,561

 

I think the chart that accompanies this data is even more interesting as it does a better job of illustrating the gaps in certain areas.

 

Colorado Springs Real Estate Statistics

If you would like to receive a copy of our Quarterly Market Report, sign up here

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Do I Need an Appraisal to Sell My House?

Sellers often ask me if they should get their home appraised before putting it on the market.  Here is my answer to that:

An appraisal is an expert estimation of the quality and price of the property. It is more detailed than the market analysis, which your Realtor will do. Typically, appraisals cost around $400.  They are a good idea if you live in an unusual market, one where home values fluctuate a lot.  Let's say you live in a neighborhood where homes range from $200,000 to $650,000.  Then an up-front appraisal is a good idea.  It will help Buyers to see the value in your home without questioning the overall market in your area. 

On the other hand, if you live in a neighborhood where most of the homes are alike, similar in age and size, then an appraisal might not be necessary for you to have done up-front.   Here, it's pretty safe to conclude that your home's value will be consistent with those around you.

Either way, once you have a contract on your home your Buyer will most likely be getting an appraisal done for the purpose of satisfying his loan.  His mortgage lender will order an appraisal prior to closing, to make sure the contract price and condition are satisfactory for the new mortgage.

Ask your Realtor what they think you should do.  A good agent will shoot straight with you and not spend your money unnecessarily!

 

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titleins

One of the questions Colorado Springs homebuyers most frequently ask us is, “Why do I need title insurance?” Title insurance is just one of the many things that appear on your home buying settlement sheet, but it’s also one of the most important.

The Colorado Springs property you are buying has probably gone through several changes of ownership over the years (unless it’s new construction). One of the necessary procedures during the home buying process is a title search.

The search must be done before any property changes owners in Colorado so that the deed can be recorded and registered to the new homeowner. The search reviews the “chain of title”—the history of everybody who has owned the property through its present owners. What title insurance does is protect you against any expected discoveries that may arise during the title search. For example, there may be unpaid real estate taxes or mortgages, outstanding liens, or errors in the legal description of the property.

Title insurance guarantees that, if any issue in the ownership records arises during the search, the insurer will either fix the problem, compensate you for any potential loss or defend you against any action that may occur as a result. Title insurance protects you against matters that have already occurred and that were not caused by any wrongdoing on your part. It gives you peace of mind knowing that once the buying transaction is complete, you are protected against any claims on your property.

There are two basic forms of title insurance: Owners and Lenders. 
Owner’s title insurance covers you as owner of the property, and the policy is generally issued for the amount you paid to purchase the property. Lender’s title insurance covers your lender’s interests in the property and is usually issued in an amount equal to the loan. In Colorado Springs, the buyer and seller may negotiate who pays for the Owner’s title insurance policy. The buyer generally pays for the Lender’s title insurance policy.

Coming soon: How are the rates for title insurance calculated and how much will it cost?

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Posted by on in East Neighborhood
5135 Mayweed Court

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This listing is personal for me.  I sold the house to these sellers back in 2006.  Over the years they have become more than clients.  They are friends.  Their home is lovely.  It sits on a 1/3 acre lot at the end of a cul-de-sac and is tastefully landscaped including auto sprinklers.   The home features 5 bedrooms, 3 baths and over 2,100 total square feet.  It includes rich hardwood floors, new vinyl windows, updated kitchen with hickory cabinets and ceramic tile counters, air conditioning, covered rear deck, a workshop, storage shed and even a new roof!  And this home is just one block from the neighborhood park! 

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Monument, Colorado is a small town located in the Tri-Lakes Region of northern part of El Paso County, approximately 15 miles north of Colorado Springs and 50 miles south of Denver.

The area was first settled in the 1860s. Its settlers came primarily from Iowa and Germany. Monument first became a town in 1870 when Henry Limbach purchased 160 acres and registered as a town with the Colorado land office of the department of the interior.

In the early days monument was actually called Henry's station after Henry Limbach. When the Rio Grande railroad was built in 1871, the name was changed by Limbach and the railroad to Monument. This name was chosen because of the large monument rock situated at the base of Mount Herman. This rock can clearly be seen from the town.

monument rock

The town of Monument has not forgotten its founder Henry Limbach, there is a park at the center of town bearing his name, Limbach Park.

limbach park

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Posted by on in Central Neighborhood
212 S. Garo Ave.

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Check out my new listing!  This all brick rancher is located in an established neighborhood and features 3 bedrooms, 2 baths and over 1,800 finished square feet!  Includes front and rear yard landscaping, auto sprinkler, oversized concrete patio, formal living room with wood fireplace insert and brick hearth, formal dining room, original wood floors underneath carpet, finished basement with huge family room and separate bedroom with private bath!  Great location...walk to nearby shopping!  This home is obviously in need of some updating, but it has great bones!

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Buying a Colorado Springs area house for $250,000

I saw this funny comic on one of the real estate groups I follow on social media. Lots of people were getting some chuckles from it, but it got me thinking. I am fairly certain the average sale price in the greater Colorado Springs area is around $244,000. Can you find the house this couple in the comic is looking for in Colorado Springs....? 

So I went on a hunt for "close to downtown" (I chose what I thought would be 30 minutes or less) houses with 4+ bedrooms, good size lots (.2+ acres) and safe neighborhood (now that could be up for negotiation, but I think in general this is a VERY safe city overall and people should investigate crime if concerned... sexual offenders, violent crimes, etc... weren't not immune to crime, but it's really a great city!).  And here is what I found.... 

currently available - 76

under contract - 82

sold in the past 6 months - 262

Inventory generally starts slowing down here August (school starts) through about February.... so summer months will provide more inventory. While we have a cost of living higher than many parts of the south and midwest, it's nice to know it's pretty reasonable to live here. 

So, here's a little summary of what that $250,000 will cost you monthly... with 3.5% down (FHA minimum), borrowing $241,250 at a 4.166% interest rate and estimated tax, insurance, and mortgage insurance in your payment, you're looking at $1737/month payment. If you are VA and put nothing down, you'd be borrowing $257,875 because you rolled in your VA funding fee) looking at a $1556/month payment. Obviously all of those payments will be lower the more you are able to put down. 

Want to be close to downtown... like walking distance...? Well, that is a little tougher to find, plus you're looking at older homes (be prepared for a bit more maintenance). There is nothing with 4 bedrooms, 2 houses with 3 bedrooms are under contract withing walking distance of downtown. NOW.... add in the Manitou Springs and Old Colorado City areas, plus remove the .2 acre lot requirement and there are 37 houses. 

Okay, I know that was a lot, but there are many things we can do to help tailor a search in the MLS... especially when those large national sites are sometimes out-of-date. Let us know how we can help in your home search! I know from experience this summer, the nice ones under $250,000 disappear quickly or have competing offers.... it's a good price range! 

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colorado springs real estateOne of the first things people notice when they visit Downtown Colorado Springs is the unique street names like, Tejon, Wahsatch and Cache La Poudre. We have the wife of our city's founder General William Jackson Palmer to thank for these truly memorable names.

Queen Palmer suggested that the streets of Colorado Springs should be named after iconic elements of Western geography. This was meant to honor her husband's railroad career and the areas he had explored while choosing train routes.

For example, street names like Cache La Poudre, Cucharras,Huerfano, Vermijo, Cimarron, Costilla, Moreno,Kiowa, Bijou, Platte, Boulder and St. Vrain were all creeks or locations Palmer had explored while building his railroad.

Mountain ranges inspired names like; Sierra Madre, Cascade, Tejon, Nevada and, Wahsatch, Sawatch and Weber.

Another interesting fact about downtown Colorado Springs streets is that some streets are significantly wider than others. This is because Palmer wanted horses pulling wagons or carriages to be able to easily make a U-turn.

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Posted by on in Real Estate Statistics & Analysis
2014 Market at a Glance

Colorado Springs home prices rose in August 2014 with a month to month decrease of 3.26%, and a year to year increase of 1.53%, making the average sale price $258,398 and the median price $230,000. The number of Colorado Springs homes sold compared to August 2013 has increased 0.54%, with 7,546 units sold year to date. The number of Colorado Springs homes for sale compared to August 2013 has decreased 3.18% with 4,111 units active.  With decreasing inventory (meaning homes for sale), sellers should see a faster home sale!
 

Single Family/Patio

YTD 2013

YTD 2014

+ / -

 Closed Sales

7,641

7,546

-1.24%

 Median Sales Price

$220,000

$230,000

+4.55%

 Months Supply of Inventory

3.84

3.70

-3.70%

 

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Posted by on in General News

Colorado Springs Known as Little London

In the early days of Colorado Springs, the city was known as "Little London". At one point there were actually over 2,000 immigrants from Great Britain living in El Paso County, that was 1 out of every 5 residents.

 

This phenomenon was due in large part to the fact that much of the money raised by William Palmer to develop both Colorado Springs and the "Denver and Rio Grande Railroad" came from English Investors.

 

Colorado Springs residents evidently became "quite British" according to Patricia Farris Skolout, in her book "Colorado Springs History A to Z. Residents carried umbrellas, celebrated English holidays, flew the English flag on Queen Victoria's Birthday, played cricket and rugby. The police in Colorado Springs at that time were even called "Bobbies".

little london bobbies

Vestiges of our British past still exist today. For example, The Broadmoor Hotel still hosts afternoon teas from Monday through Saturday. One of our favorite bakeries is the "Little London Cake Shoppe" and many of the streets northeast of the Broadmoor Hotel are named for the old polo grounds that were housed in that area. So, although the name "Little London" and the atmosphere are long gone, you can still find pieces of that history, if you know where to look.

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Briargate HomesBriargate is a popular community located in the northern part of Colorado Springs, Colorado. This area is a master planned community and features a wide range amenities. Additionally, this area is close to I-25 and The United States Air Force Academy.

We have looked at the last six months of sales (March 2014-August 2014). In this period we saw a high sale of $915,000 and a low sale of $145,000. The average sales price in the area is $316,756 this makes the median price $305,000.

For this article, we are going to take a look at what you can get $10,000 above and below the median price $295,000 and $315,000. Here is a look at the numbers:

 

 

Briargate Homes $295,000 to $315,000
39 Number of Sales
3,078 Average Square Footage
4.2 Average Number of Bedrooms
3.5 Average Number of Baths
2.3 Average Garage Size (spots)
8,199 Average Lot Square Footage
$99.22 Average Price Per Square Foot

 

And here are some pictures of what those homes look like.

 

"Based on information from the Pikes Peak REALTOR Services Corp. ("RSC"), for the period March 1st. 2014 through August 31st. 2014 .  RSC does not guarantee or is in any way responsible for its accuracy.  Data maintained by RSC may not reflect all real estate activity in the market."

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VAReUseYou can obtain another VA loan after you have experienced a short sale, foreclosure or deed-in lieu foreclosure with an existing VA loan. But there is no guarantee…you must determine how much (if any) entitlement you have left previous post to learn and meet the necessary salary and credit qualifications. Remember that your credit score will be “dinged” for having undergone a short sale or foreclosure and it may take time to rebuild. However, the VA program is one of the most lenient in granting loans to veterans who are applying for a mortgage after a foreclosure.

First of all, you need to wait 2 years from the time of your foreclosure in order to apply for your new VA loan. Then you must determine your remaining entitlement. The full VA entitlement (the amount the government guarantees the lender) is $417,000, with $36,000 as your primary entitlement and $68,250 as your secondary entitlement. The VA guarantees one quarter of that amount if you should default and does not require you to have mortgage insurance.

Suppose you have $50,000 in unpaid VA loans remaining on your foreclosed property. A VA-approved lender will subtract that $50,000 from $104,250 ($36,000 + 68,250), which is your full entitlement amount. The difference is $54,250. You can then multiply $54,250 by four to calculate how much you may be able to borrow with no money down—a total of $217,000 ($54,250 x 4).

Veterans who want to use their second-tier entitlement must seek a loan amount of at least $144,000. If you are interested in applying for a VA loan, whether it’s your first, or a subsequent one, we at Springs Homes can refer you to a trustworthy lender who is familiar with the process.

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valoanseceretMany veterans are not aware that they can qualify for more than one Veterans Administration loan at a time, depending on circumstances. They can take solace in the fact that many lenders are also not aware of this situation.

The VA loan limit for veterans who wish to buy real estate is $417,000. This is the base amount—the limit may be higher in areas where housing prices are more expensive. Here in Colorado’s El Paso and Teller counties, the $417,000 limit applies; in our neighbor to the north, Denver County, it is $425,000. The loan limits are reevaluated every year.

When considering a VA loan, many veterans start by going online at the Veterans Information Portal for their Certificate of Eligibility (COE). If you are applying for your first VA home loan, your entitlement is for a mortgage of $417,000, assuming that you have adequate income and credit to qualify.

VA entitlement has two parts: basic and bonus. If you have not previously applied for a VA loan, your basic entitlement is $36,000—that is the amount the government insures—but is is not necessarily the total amount of the loan for which you are eligible. Lenders will generally loan up to four times your available entitlement without your having to pay a down payment. So if your basic entitlement is $36,00 you are entitled to $144,000 ($36,000 x 4) providing that your income and credit meet the lender’s requirements. Bonus entitlement comprises a loan up to an additional $68,250 x 4 ($273,000). This amount, sometimes referred to as Tier 2 or additional entitlement, is used only for VA loans between $144,000 and the conforming limit of $417,000.

Here are some examples of how veterans can apply for multiple VA loans. If they buy a home for $200,000 and then receive orders to relocate, they are eligible to apply for the remaining $217,000 with 100% financing to purchase a home at their new base. If the home at the new base is $300,000, they can apply for the additional $83,000 if they put down 25% of that amount ($20,750).

If you have a lease in place for your existing home before you move, that amount will be credited to your income you apply for a loan at your new base.

Coming soon: Can you get a VA loan after a foreclosure?

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triheadThe Tri-Lakes area is located in Monument, Colorado just minutes north of Colorado Springs. This area grew because it is convenient to both Colorado Springs and Denver. Lots sizes in this area are larger as are the homes and their prices.

We have looked at the last six months of sales (March 2014-August 2014). In this period we saw a high sale of $1,230,000 and a low sale of $125,000. The average sales price in the area is $399,557, this makes the median price $366,000.

For this article, we are going to take a look at what you can get between $325,000 and $400,000. We chose this range because it's about $40,000 above and below the median price. Here is a look at the numbers:


 

Numbers are for homes that sold between $325,000 and $400,000
94 Number of Sales
3,463 Average Square Footage
4.2 Average Number of Bedrooms
3.4 Average Number of Baths
2.6 Average Garage Size (spots)
37,676 Average Lot Square Footage
$103.60 Average Price Per Square Foot

 


And here’s some pictures of what those homes look like.

For more information on the Tri-Lakes area, give me a call at 719-492-1577

"Based on information from the Pikes Peak REALTOR Services Corp. ("RSC"), for the period March 1, 2014 through August 26, 2014 .  RSC does not guarantee or is in any way responsible for its accuracy.  Data maintained by RSC may not reflect all real estate activity in the market."

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colorado springs home loansThe world of home financing is a multi-faceted one and we at Springs Homes would like to help you understand the ins and outs of the mortgage world. Much of the confusion and seemingly random nature of the home loan and mortgage process has to do with where the money comes from and how it flows. In this article we will discuss the various roles played in this process.

 

 

 

 

 

  In general, there are three “tiers” in Mortgage Lending. I am going to refer to them as follows:

  1. The Origination Stage
  2. The Middle Man
  3. The Secondary Market

The Origination Stage:

There are five types of lenders in the Origination Stage:

1. Correspondent Lenders are companies that actually loan homebuyers the money they need to purchase a home. They have their own money and their own underwriters.

2. Direct Lenders are the “Big Guns” of the mortgage world, e.g. Chase and Wells Fargo. They have a division which functions as a Correspondent Lender in the Origination Stage. (This is confusing because they also have a department that packages the loans and offers them for sale to the secondary market.) They also have their own money and underwriters.

3. Brokers shop Direct Lenders to find you the best mortgage. They do not have their own money or their own underwriters. Once you have chosen the mortgage you want from the ones offered, brokers present your file to that lender and wait for approval.

4. Portfolio Banks originate loans, finance and keep some of them, and sell some to the Secondary Market. First Bank and ENT Credit Union are the major Portfolio Banks in Colorado.

5. Sub Prime: These lenders loan money that does not meet the guidelines of FNMA, FHLMC, GNMA. Rates and fees are usually high to offset the risk of the loan.

The Middle Man:

Once the loan is closed in the Origination Stage, lenders sell the loans to The Middle Man (or one of the Big Guns), like Wells Fargo or Chase. Those banks then package loans into huge portfolios of similar loans and sell them to the secondary market while retaining the servicing, another income stream for the Middle Man. Because FNMA, FHLMC,GNMA have a list of strict guidelines for the loans they purchase, each file is reviewed before it is added to a portfolio. These auditors are dedicated to reviewing each file. If the file doesn’t meet all the guidelines, the loan will be kicked back to the original lender. If the file is rejected for any reason, the Originating Lender is required to buy the loan back. The Originating Lender is then holding an “unsellable” loan, restricting their liquidity. This is why mortgage companies are fanatic about following all the rules.

The Secondary Market:

The secondary mortgage market is comprised of private and government agencies, which buy mortgage loans.

Fannie Mae (Federal National Mortgage Association, or FNMA) buys portfolios of conventional loans, with or without Private Mortgage Insurance from Direct Lenders.

Freddie Mac (Federal Home Loan Mortgage Corporation or FHLMC) buys portfolios of conventional loans, with or without Private Mortgage Insurance from Direct Lenders as well as portfolios from banks, savings and loans as well as Direct Lenders.

Ginnie Mae (Government National Mortgage Association or GNMA) buys portfolios of government loans, e.g. Veterans Administration (VA) and Federal Housing Administration (FHA) from Direct Lenders.

The purpose of the secondary market is to allow Originating Lenders to lend more money to potential homeowners. By purchasing loans from the Middle Man, Fannie, Freddie and Ginnie provide liquidity to those lenders, who can now offer more loans. Both Fannie and Freddie are limited to purchasing loans of $417,000 or less—this figure is reevaluated every year.

Once Fannie, Freddie and Ginnie have purchased the loans, they are converted into mortgage securities and bonds and offered as trading commodities. Because Ginnie Mae handles government guaranteed loans, their yield is generally higher than those of Fannie Mae or Freddie Mac.

There are of course multitudes of exceptions and guidelines can change daily, making explanations a challenge.

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Posted by on in Powers Neighborhood
4381 Crow Creek Drive

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Built in 2003, this charming 2-story home shows pride of ownership inside and out!   Features 3 bedrooms, 3 baths, over 1,400 finished square feet, custom  interior paint, wood floors in kitchen and dining room, gas fireplace with travertine tile surround, built-in T.V. niche, upper level loft, updated bathrooms, air conditioning, oversized patio, tasteful landscaping with lush lawn and mature fruit trees, and even a dog run!  Great Springs Ranch location...walk to nearby elementary school!

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