Avoiding Mortgage Insurance and How to Take Advantage of a Bridge Loan

Avoiding Mortgage Insurance and How to Take Advantage of a Bridge Loan

Welcome to Ask the Colorado Dream House Team with Dan Polimino! On today’s show, Dan gives a market update covering home sales and an increase in average home prices. He’s also discussing loan programs that allow you to avoid Mortgage Insurance with little down, construction loans for new builds, and bridge loans that allow you to close on your new home before you sell your old one.

Today’s Dream Home Spotlight is on a beautiful new build in Quail Creek. Wonderland Homes is offering seven brand new home plans in Quail Creek ranging from 1,995 to 2,841 square feet – not including optional finished basements. 

Full Transcript.

00:01                                     Hello everyone and welcome to Ask the Colorado Dream House Team. I’m your host, Dan Polimino coming at you from Denver Colorado live on Tuesday. Hope you're all doing well and welcome to the show. This is everything about real estate. We answer your questions and help you strategize the real estate market whether you're buying selling or investing in real estate. The information we give you here is from years of experience and thousands of transactions. So we hope you find it helpful wherever you are in the country. And as always you can leave questions right here on Facebook. You can e-mail us at team at Colorado Dreamhouse dot com or you can give us a call. And of course if we can help you we'd be happy to talk to you. Two things we like to accomplish every show we want to give you some market information that you can use.

00:50                                     We call it news you can use and we like to answer your questions. All right so the October numbers are out. Now if you go back and you look at some of the posts that I did in October people were asking the question is the market cooling off. Is there a change or is it just seasonality. Now my answer at that time was we've had three successive months of decreased sales. We've had three successive ones of decrease prices. If it happens for a fourth month then I think we can say that the market has cooled off well it's actually a mixed bag result because while we had less sales again in October the average price went up by about 4 percent. So the number of homes sold decreased by 9 percent for a fourth month in a row.

01:46                                     However as I said the average price of a home bumped up by about 4 percent to an average of 4:37. So again if you're thinking about moving to Denver real estate here is not cheap. Just a basic three bedroom single family home in Colorado will now cost you 430$7000. Some other numbers that you can use. We inventory inventory is a big deal because it talks about the number of homes on the market for sale. And as of right now there are only 50 to 100 homes active on the market. That is a 20 percent drop from September. So we thought that there would be a real bump in inventory that people would put their homes on in October didn't happen. In fact inventory decreased by 20 percent only 4400 homes came to market in the month of October.

02:45                                     That's not a lot. As I said it's down about 20 percent. The other interesting stat is that of the 4400 homes that came to market 50 100 went under contract. So a 50 100 going to contract 44 come to market. That's a deficit of about 700 homes so inventory in the month of October decrease by about 700. Those are the numbers you need to know what does it all mean. Yes I think there's a cooling off of the market and it's not just seasonality.

03:17                                     I think that this is going to be a bit of a flattening of the market. And listen folks that's OK because we couldn't sustain nor could any city sustain double digit growth month after month after month. It's just not sustainable. That's what happens when you get a bubble. All right. Now on to your questions I hope that's news you can use the Colorado dream house team. We are trying to save money for a down payment but we are worried we will not have enough money to buy a house. Do you have any tips. Well the obvious tip is save save save and save. Don't take that vacation. Don't buy that new car.

03:57                                     Don't go out to dinner. Take the money and put it aside. But you don't need as much as you think. OK so that's the real nugget today. There are loans today where you can buy a house for one percent down. So let's just say the house you're looking at is five hundred thousand. That means you have to bring a down payment of$5000. Now can you save$5000. Sure you can. You can do some of the tips I just gave you but in a calendar year I bet you can say$5000. Now the question is why has she been I mean 5000 doesn't seem like a lot. 1 percent down doesn't seem like a lot. Well here's the catch the lender will contribute 2 percent to your down payment so they'll contribute ten thousand dollars while you contribute$5000 for a total of$15000 down or three percent in equity.

04:53                                     Some of these deals come with no mortgage insurance which will save you money. So again if you want to find out about what programs are out there that can help you contact us at the Colorado dream comes to excuse me and we'll tell you. I mean one of the most valuable things that we do for our clients whether you're buying a jumbo property or you're a first time homebuyer is we find you cheap money. All right. Dear Colorado dream house team. We have been looking for a while but have not been able to find a home on the resale market. We're thinking about building but don't understand how construction loans work. Can you help short answer yes we can help and construction loans are complicated. A lot of the big lenders just chase your Wells-Fargo your bank of America.

05:46                                     They don't want to get involved with a land purchase and a construction loan they just don't like those. They are more about resale origination but your smaller local banks your first bank your Vectra your key bank. These these smaller local banks will actually do construction and land loans some of them don't don't do land loans at all like if you just want to buy a piece of land and sit on it they're going to ask for 30 or 40 percent down and they really don't want to be involved. What they want is for you to buy the land and take out a construction loan all in one. Roll that all into one and then have one close and have a 30 year mortgage on top of that. This is a complicated area. There are a lot of rules and stipulations about how much you put down if you're buying land only how much you put down if you're doing the land and construction loan.

06:42                                     Is it a one closed system. Is it a two closed system. Are the rates higher or the rates lower. What do you need to qualify. How is the builder pay. How is the person who owns the land pay all complicated questions. So I would encourage you to call us at the Colorado dream house team and we'll walk you through it and we actually have some vacant land for sale. All right dear Colorado dream house team. I

07:08                                     have heard you talk about bridge loans before but can you explain again how they work. We would love to buy a home before we sell our home. So this we're going to buy a home before we sell our home is more and more popular because of the low inventory situation when you don't have a lot of homes to sell you're worried about where you're going to go. And so many people have opted to say I want to find where we're going to go first and I want to find the next home first and then I'll sell my home. However there's a catch. They need the money out of their home in order to purchase this home which is why we've been pushing people to bridge loans or home equity loans. They both act very much the same whether we're talking about a home equity loan or a bridge loan.

07:51                                     They are taking the equity out of your current home. They are loaning it to you for a short period of time three to six months. You are then taking that money and using it as your down payment on your new home. Once you close on your new home and you move in you put the old home up for sale once the old home sells you pay off that bridge loan. Pretty simple. We've got a lot of banks that we're working with that have either a bridge loan or a home equity loan in place that can get the money out of your house in as little as 10 days to three weeks. So again contact us about that because that could be an option for you. Call us at the Colorado dream homes. You might want to tell you about a home we've got on the market.

08:39                                     It's incredible house up in the Broomfield area. If you know the quail Creek subdivision new sub area by Wonderland homes are really really nice high end finishes in upgrades. It's 1 3 7 5 2 rare a 10 lane beautiful home the hardwood floors granite quartz. Really nice color scheme and finishes open floor plan. Check it out. Good to Colorado. Dream house dot com forward slash Raritan. And if you're looking for a single family home in the five hundred thousands that may be that first home check out Raritan lane in Broomfield on our Web site. All right. Well that's it for today. Everybody have a great week. We'll talk to you again on Thursday.

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