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The Rueth Team - Denver's Top Mortgage Company

Loans: from calling to closing


By Nicole Rueth - August 4, 2020

Buying a home can be extremely exciting, but for many buyers, it can be confusing and even overwhelming. The process can also be lengthy, but it does not have to be as daunting or stressful as you might think. Arming yourself with information and the right mortgage team ahead of time can go a long way toward making the process much easier and more enjoyable. 

If buying a home is one of your goals in the near future, here are six steps to help you navigate the process of securing your dream home sooner than later:


1. Complete a loan application
This is where you will sit down with your mortgage team, discuss your situation as well as your goals for the home you’re looking for, and start to make them a reality through a pre-qualification letter. A mortgage pre-qualification is a high-level overview of your credit and capacity to repay a home loan, and will allow your mortgage team to pinpoint exactly what your price range should be. The meeting is typically brief and is where a loan officer will ask you questions to get an overall assessment of your credit and financial situation as well as the long term goals for the home. Once you know how much you are pre-qualified for, you’ll be able to confidently look at homes that fall within your budget. 

2. Get organized for pre-approval
Before you begin the mortgage pre-approval phase, it’s important to get organized with all of the documents a lender will need to underwrite your loan. Anything you can do to prepare in advance will reduce the turnaround time for your approval once you find the right home and are ready to make an offer. When you’re ready, you’ll want to be able to hand over all your paperwork at once so you can make an offer quickly. Your mortgage team should provide you with a list of all the documents required ahead of time in order to make the process as smooth as possible and eliminate any potential surprises. After reviewing the loan documents, your pre-qualification letter will be upgraded to a pre-approval letter, which lets sellers know you are a serious buyer. In a hot market like Denver, it’s common for sellers to entertain multiple, competitive offers, so the winning bid often goes to the buyer who is already pre-approved because it lets the seller know you are serious and ready to buy.  

3. Find your dream home and make an offer
Whether it’s your first home or you’re a seasoned homeowner, you’ll know when you’ve found the right home, and you’ll want to act on it quickly. This is where many lenders can drop the ball by taking too long to get everything approved, which can cause you to lose out in a competitive market. Your mortgage team should set you up for success with a solid pre-approval, so you and the seller already know you are ready to go and set up for a quick closing. As far as the offer itself goes, your real estate agent will know the ins and outs of how to structure it, which will include any potential contingencies that must be satisfied before the deal is complete, such as appraisals, inspections and final loan approval. 

4. Underwriting, disclosures and appraisal
Once the home is under contract, your mortgage team will disclose your loan, lock in your interest rate and order the appraisal. This is a busy time, so this is where being as prepared as possible will help things go smoothly and ensure a successful launch of the loan process. Working with a reputable mortgage lender goes a long way to ensure speed and accuracy in the underwriting process. The underwriter is the key decision-maker, and they will closely evaluate all the documentation prepared by the loan processor in your loan package, and cross-check to see if the borrower and property match the eligibility requirements of the loan. 

5. Loan approval and closing disclosure
As underwriters review your documents, it’s common they may ask for additional items to clarify the facts and ensure standards are met as defined by industry guidelines. Don’t panic - your mortgage team will ensure you know exactly what they need to get the celebrated ‘Clear to Close’ as quickly as possible. You will receive your “Initial Closing Disclosure” three days prior to closing, then once received, the title company and your mortgage team’s closing department will work together with a host of third parties to provide the “Final Closing Disclosure” 24 to 48 hours before the closing date. 

6. Cash to close
The final closing disclosure reflects your required cash to close. The cash to close will need to be in “good funds” which is either a cashier’s check or a wire transfer from your bank. Once that is complete, it’s closing day! The closing meeting will take a couple of hours, and your mortgage team will work with you, your real estate agent and the title company to ensure your loan documents and loan funds are waiting for you in advance. Once everything is signed, your participation in the closing is done, and it’s time to celebrate! The very last closing items happen in the background, and the title company will complete the recording and funding. 

There you have it! The mortgage process doesn’t have to be intimidating or overwhelming, and now that you have these key tips, you’ll be well prepared to feel more comfortable about what to expect along the way. Your home is likely the most expensive asset you will purchase in your lifetime, but having a trusted team by your side each step of the way will make the process more exciting and less stressful. Contact The Rueth Team today for more information on how you can leave the stress behind with Fairway Mortgage. 
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Can Rates Go Lower?

Here's Why I Know

By Nicole Rueth - August 1, 2020

Can Rates Go Lower? 

I have been watching the 10 YR Treasury drop for the past year to it's current historical lows... indicating our rates "should" be even lower than they are.  Mind you.. this indicator is not a forward indicator but a daily moving target, sometimes erratic in nature.  Having said that, our mortgage rates on average had traveled 180 bps over the 10 YR Treasury.. so as it moved so moved mortgage rates.  To show that in numbers.. the 10 YR Treasury in April 2019 was 2.41 while rates were 4%.  In April 2020 the 10 YR Treasury was .61, while our 30 yr mortgage rates were 3.25%... if they followed the trend, they should have been 2.5%.  This was due to lending and economic risk in addition to lenders setting rates higher in order to slow down the demand for refinance loans. 

​I have also been watching as the FEDs have been buying more mortgaged back securities at lower levels.  They moved from buying the 3% coupon rate to the 2.5% coupon rate to now the UMBS 30 yr 2% coupon rate.  What's next?  a 1.5% coupon?  This will try to drive rates lower as the FED yields it's power over the housing market through the most powerful way it can.. buying mortgage back securities. 

​There are also economic indicators that show signs of where we are headed.  As you know, for the past several years I have been talking about the economic indicators used to forecast an economic recession.. such as manufacturing and shipping declines, unemployment, consumer confidence, and the inversion of the yield curve.  What we did not see coming was a pandemic that created unnatural pressures on lenders and interest rates while trying to solve the issues of joblessness.  

​Then there's the stock market.  There was a time when the stock market and interest rates were closely correlated.  As people feared instability or increased risk in the market, they would move their money to the safety of bonds.  That increase in demand would raise prices (much like the bidding wars in today's housing market).  As prices increase, "yields" .. or our mortgage rates, go down.  As of late, the stock market has been divorced from the economy.  The valuation of stock prices based on a price per earnings basis right now rivals that of the Dot Com bubble.  

While there is no crystal ball.. no telltale for where rates will be in a week, in a month, in a year; there are educated guesses.  Based on another record, one that broke my heart, passing 150,000 deaths in the United States, we know that we have more economic unrest coming BEFORE we get to stability.  This economic unrest will keep the Fed's buying Mortgage Backed Securities and a downward pressure on rates.

So where will rates go?  They will go up once a viable vaccine is in place and we can all go back to work and our kids can go back to school.  But between now and then, rates have the opportunity still to go lower, providing our buyers greater affordability and a lower monthly payment, and our homeowners the ability payoff higher interest debts, reduce their monthly payment and tighten up their budget.  

BOTTOM LINE: 

This is an incredible time to be advocates for our clients, to be in real estate.  Ultimately, rates shift daily as market news either confirms expectations or surprises the market.  So let's remember, helping our clients enter into homeownership today helps them build security for their financial future.  And right now, more than ever, the home is a safe place, one that should provide joy, peace, and stability.  

 

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5 Tips To Prepare For Buying Your 1st Investment


By Nicole Rueth - June 24th, 2020

So you want to invest? 

Beginning to invest in real estate can be a very exciting but also overwhelming! There's a lot of moving pieces and so many options. 
Here are the five steps that will help you step forward on the right foot. 

With so much uncertainty around us; every one of us is seeking security, longevity, stability.  Real estate gives us a secure roof over our heads.  But now, maybe you’re considering expanding homeownership into real estate investing. But how do you know if you’re ready to take that first step.  I want to share five tips that will put you on the path to building wealth through real estate.  

  1. Build your credit! There’s no quick fixes when it comes to your credit, which is why planning ahead is key. One of the first steps to qualifying for a loan is pulling your credit and mortgage credit reports have the longest look back. If you’re thinking about purchasing property make sure you keep your accounts open, even if you don’t actively use them. On the accounts you do use, build a long history of paying your bills on time and keeping your balance low.
  2. Know your goals. Are you building your portfolio? Focused on retirement? Or creating current cash flow? Depending on your reason you may want a different property, loan product or type of tenant. Set up clear goals to help narrow your search and add clarity to the process.
  3. Know your rules. Create guidelines for what type of property you are going to invest in.  There are so many different options that it can be overwhelming. I personally seek out brick side by side quadplexes in North Denver with each unit having a yard that can be afforded by two people working minimum wage jobs. Why? Because Walmart is always hiring! But seriously, even during the worst of COVID they had job openings. Not one of my renters missed a monthly payment this year.  
  4. To House Hack or not? That is the question! By living one year in your investment property, you can qualify for lower interest rates and have to put less into a down payment. But are you ready to move? Is your family in a position to do so? For those getting in the game later in life, house hacking may not be the most appealing option. However, if you are in your 20’s or 30’s, this can give you an advantage. It very well might be the key to building your investment empire.
  5. Find Your A Team. Now that you have set the stage for success, make sure you have a team of professionals to bring the win home for you. Having a great Realtor will ensure that you find the perfect property at the price you need it at. While a trusted lender will get you qualified for the loan to make ownership possible. Your team should explain each step of the process to you making sure you know exactly what all your options are.


Ready to jump in?

Let us help you plan out the best next move towards for your financial goals. Join us as we dive deeper into all things investing at our monthly Building an Investment Empire class. Everyone is welcome! Beginners and seasoned investors alike!  RSVP Here 
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Defending Denver's Appreciation

Why I Disagree with Westword and CoreLogic

By Nicole Rueth - July 11, 2020

Why I Disagree with Westword and CoreLogic

CoreLogic released a report this week that Westword quoted and everyone is talking about. CoreLogic estimated Denver to lose 10% by Spring of 2021.  Yep, your clients are reading this and questioning if now is the right time to buy.  (P.s. maybe use this article to push your sellers .. we NEED the inventory!)

But back to buyers…

CoreLogic’s report released on July 7th, highlights data from May showing national appreciation up .7% month over month and 4.8% year over year… this is incredibly strong for May and especially a May inside a pandemic.  For reference, CoreLogic forecasted a 5% year over year gains until the most recent few months. 

Frank Nothaft, Chief Economist for CoreLogic quoted “Pending sales and home purchase loan applications are higher than in May of last year and reflect the buying activity of millennials.  By the end of the summer, buying will slacken and we expect home prices will show declines in metro areas that have been especially hard hit by the recession.”   Nothaft expects home price growth to stall in June and remain that way throughout the summer predicting a .1% price decrease in June and a year over year decline of 6.6% by May 2021.  This will be the first decline they’ve predicted in 9 years and is predicated on an increase in unemployment rates.

So let’s talk about Denver.  Megan watches a 7 county area and she posted a positive monthly median price change of 2.1% and a year over year median price change of 3.7% in June.  DMARs 11 county area also showed gains of 1.73% month over month and 4.56% year over year for June.. much stronger than CoreLogics estimated .1% loss.  This really isn’t a surprise since historically Colorado runs hotter than national housing numbers.  

Other supporting statistics include: Colorado has seen a net 2.6% population gain year to date… fueling buyer demand.  Our unemployment is lower at 10.2% in May compared to the US at 13.3% (16.3% after adjustments).  Our wage growth prior to COVID was #2 in the nation.   Colorado has the 5th highest percentage of millennial population.  PLUS.. on the housing side… our June 2020 Pending was 27% higher than 2019 as well as the average for the last 6 years. On the flip side our Active Listings were 33% lower than last year and 43% lower than the last 6 year average. 

Just for fun let’s compare the home value loss we saw in 2008, the bottom of the Great Recession.  Nationally housing lost 18% of their value in 2008.  Comparatively, DMAR stats shows our 11 major counties lost 11.2% in value.  In 2007, 2009 and 2011 we lost only 1 to 3%, as our market stabilized and poised itself for an incredibly strong recovery. 

Back to 2020.. from May to June our MOI was cut in half in every price category for detached homes as buyers turn their focus to more space, additional office space, a backyard, less shared accommodations, etc.  The attached could pull away and its effects on overall appreciation numbers will be felt.  From a lending perspective, attached dwellings receive higher interest rates because they are a riskier product.  They tend to be first to lose value in a down market and last to gain value in an up market.  With the additional pressures of a health pandemic, and the increase in new construction condos recently hitting the market… this is the wild card that I will be keeping an eye on. 

For now, I feel confident that our market will remain strong overall, giving our buyers continued appreciation and a safe place to call home.  Will that appreciation flatten?  It could.  But will they lose 10%?  Outside of the move away from downtown condos… I can’t see that happening.

Want to read the CoreLogic Report, here’s the link:

https://www.corelogic.com/insights-download/home-price-index.aspx




Did you watch the Market Update Megan Aller and I did on Friday?
We dove into this topic as well as Megan’s detailed real estate data and my macroeconomics, helping you be the best advisor you can for your clients.  If you missed it, click the video below to hop over to our private Facebook group.  If your not a member yet, just ask and we’ll make that happen right away! 

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Passive Income Isn’t a Myth

Why real estate produces passive income and diversifies your investments

By Nicole Rueth - July 1, 2020

At 38% of all homeowners, millennials are changing how America looks at homeownership. They are shifting the lens from the protection of a roof over their head and having it fully paid off to activating leverage to promote financial growth and opportunity.

Not only are millennials now the largest homebuying group in America, but they’re also the most educated with at least 79% having at least a bachelor’s degree or higher. There should be no surprise that the most educated generation in American history approaches financial decisions and investments differently than their ancestors, thanks to traumatic events like 9/11 and the 2008 market crash, the rise of social media, and extremely high student loans. An alarming recent study by Investopedia Affluent Millennial Survey reported, “46% of millennials say they aren’t saving enough money and 39% say they expect to be forced to work beyond retirement age.”

Believe it or not, expensive taste in coffee and avocado toast is NOT to blame for their economic outlook. For perhaps the first time in U.S. history, the millennial generation is worse off than baby boomers were at the same stage in life. “Millennials earn 20% less than baby boomers,” cites a study by Young Invincibles. Life, experiences, and trauma affect how generations behave, especially with their hard-earned money.

If you’re in real estate, you know how different millennials are in their approach to purchasing a home. They’re interested in the long-term investment of a home, plan to live in homes longer, and tend to focus on convenience and quality over the square feet. What they may not know is purchasing a home can create something they are ALL searching for - passive income, and it’s your job as a real estate agent to explain how it works.

You’ve read the numerous articles and blogs of entrepreneurs who live off “passive income” by investing in products or properties which add to one’s income without having to do a thing. For the most part, it’s true! Real estate investment properties can provide additional income, but you need to be smart and have a detailed financial investment plan, not an emotional “feeling” for a property.

It’s not a myth. Check out my interview with millennial Ryland Pyciak who just purchased his second home and - with my help, of course! - is on course to eventually own 4-6. Ryland knows his generation doesn’t have the same retirement options as his parents did with generous pensions, and he’s doing something about it.

Passive income will flow into your bank account if you purchase the right investment property, are tactical about any upgrades and repair work, and can provide a good home for a family who is willing to pay rent. It’s not as easy as simply buying a home and watching your bank account grow, but you can certainly reach that point with help.

My No. 1 advice for anyone who wants to get into investment properties: Build a trusted team of advisors. Not just your best friend who enjoys interior design. A professional team with an experienced mortgage lender and a real estate agent, whose advice you can trust to be sure your investment money turns into income. After all, all investments are inherently risky and you can’t afford to employ a losing strategy from the get-go.

Not only will you be able to call and ask for advice on unexpected issues you’ll face as an investment property owner, but you’ll be able to leverage our network of trusted contractors who can complete jobs well, on-time, and for a fair price.

As millennials debate where they should stick their money, the stock market is probably the last place they’ll put their dollar after the disastrous effect COVID-19 had on the markets and the constant ramblings of recessions. Alternatively, the real estate market is showing itself to be resilient in the face of pandemics as Denver homeowners see regular annual appreciation.

As the younger millennials start building their wealth as they start their careers, they’ll view a mortgage as an investment in their future and an opportunity to get out of sky-high renting. What they may not know is renting rooms out to their friends and family will provide the passive income dream they’re all chasing.

As a homeowner and investor myself, I know firsthand the personal and financial benefits of owning homes. I only wish I got into it way sooner like Ryland!

If you know someone who has mentioned moving into a dream home or who is interested in entering the investment realm, tell them to give me a call. We can develop a personalized plan with options on how to best leverage their resources to see long-term gains. As Denver’s top mortgage lender, The Rueth Team is here to help people find homes and earn financial security.
 
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