Home-Buyer Confusion

With the plethora of information one can find on the internet about real estate, today’s home buyers tend to be fairly knowledgeable about the home-buying process. However, there are still a few points of confusion, a new survey by Zillow of 1,000 potential home buyers finds. 

Here are the five main areas of confusion the survey revealed: 

1. Mortgage insurance: 41% of buyers think they will have to purchase private mortgage insurance, regardless of the amount of their downpayment. 
• Reality: Buyers only need to purchase PMI if their downpayment is less than 20 percent of the home’s purchase price.
2. Appraisals: 56% of the buyers said the purpose of the appraisal was to determine if a home was in good condition. 
• Reality: That’s the purpose of a home inspection; an appraisal estimates fair market value. 
3. Home owner’s insurance: 37% of home-buyers said that buying home owner’s insurance is optional. 
• Reality: Lenders require home-buyers to purchase homeowner’s insurance. 
4. Appreciation: About 42% of home buyers believe home values will appreciate by 7 percent a year. 
• Reality: Historically, home values in a normal market appreciate by 2 to 5 percent in a year. 
5. Ownership: 47% of home-buyers said a prospective buyer owns a home after the purchase contract is signed. 
• Reality: The purchase and sales agreement is the beginning of the closing phase, but it can be a long process until they finally take ownership. 

Source: Zillow Inc.

If you have any questions on the complicated and confusing home-buying process, sign up to receive a FREE interactive cloud-based presentation on the entire home buying process, created of course by Jonathan Ghaly. 

Mortgage Rates Hold Steady!

Lots of buyers are still taking advantage of the SUPER LOW mortgage rates right now. Believe me, in a year or two, you will be crying to me saying, "Jonathan why didn't you tell me how low interest rates really were?!"

This week: 30-year fixed-rate mortgage (FRM) averaged 4.11 percent with an average 0.8 point for the week ending October 20, 2011, down from last week when it averaged 4.12 percent. Last year at this time, the 30-year FRM averaged 4.21 percent.
15-year FRM this week averaged 3.38 percent with an average 0.8 point, up from last week when it averaged 3.37 percent. A year ago at this time, the 15-year FRM averaged 3.64 percent.

Denver Ranks 10th in Nation for Housing Market Strength

Out of 100 major cities in the U.S., Denver was in the top 10 for housing market strength. A study done by Hanley Wood LLC used housing values, job growth, rental market, number of foreclosures, expanding public transit systems, and local economy all as criteria for the study. Denver was strong in all 6 categories, with stable house values, slow but positive job growth, dwindling foreclosure numbers (as investors know), expanding lightrail system, and strong local economy - just go to Downtown or Cherry Creek any night of the week - you'll be asking yourself, "Where's the recession?". Restaurants and bars are always packed, which is always a good sign. With all of these factors, it's easy to believe that Denver ranked stronger than 90 other major cities in the U.S.!

Check out the very detailed and informative PDF study on Denver by Hanley Wood LLC here

How You Can Make 21% on Your Money Right Now

I have one question for you: what is your money doing for you right now?    Is your money sitting in the jacuzi of your 0.5% savings account at the bank?  Or is your money getting sick on the zany roller coaster of the stock market?  We're going to do a little case study today where I'm going to show you, using conservative numbers, how you can make 24% on you money right now with NO headache, NO sweat, NO stress. Are you ready? Keep reading below!

Case Study Rentals are HOT right now! No matter how many times I've already repeated it, I will continue to say it again and again, because I guarantee you 1-5 years from now, everyone will be saying, "Jonathan, why didn't you force me to buy a rental property back in 2011!" So here it is: Buy a rental property NOW! Vacancy rates are at record lows, interest rates have NEVER been lower in history, and renters are EVERYWHERE. I'm just going to use conservative numbers that investors would scoff at and say, "I can get much better than that" just to show you that owning a rental property and having someone else manage it WILL make you 20%-30% return on investment. Let's start.     1) Aurora and Southwest Denver have always been places investors have shark-frenzied because of 2 factors: low prices, and high rental rates.    2) But alot of people tell me, "Jonathan, the competition is too crazy. I can't compete with these cash bully-investors buying foreclosures." Agreed. But what if you could - instead of making 40% on your money - make 25% (still AMAZING) by just going up a tiny bit in price point?  It's the old nerd trick of getting away from the bullies - just go where the bullies don't care to go. If investors are spending $80,000 cash for a foreclosed house, spending $10,000-$15,000 fixing it up, and then renting or selling it and making a kill, what if you could buy a house at $110,000, get a property manager to rent and manage it, and STILL cashflow $500/month? My friend, there are still amazing deals like this out there, maybe not the slam dunk that cash investor bullies can get, but cashflow deals that still make YOU a killing that the stock market can't even touch.    3) Conservative case study in Six points: I'm crazy, but just for the sake of argument, let's over-exaggerate ALL the factors to make sure the numbers work.   1.  Price: In Aurora and Southwest Denver, there are several great and even updated 3 bedroom (for families) houses around $110,000 that are NOT foreclosures, short sales, or government owned homes.  So, let's put the price at $120,000 just to make sure.   2.  Rents: There are no 3-bedroom houses in South Aurora on craigslist right now for under $1200/month. So, instead of the market $1300-$1500 rent you could get, let's just say $1200/month.    3  Mortgage: The best way to cash-flow is to use the AMAZING interest rates right now. At 5.125%, your mortgage payment would be $522.71/month with a 20% down payment. Add taxes and insurance it will be $640/month at the most.     4.  Property manager: Figure the standard 10% of gross month's rent for property management fees so you don't have to get calls in the middle of the night, or deal with showings, etc (10% is my rate).  That would be $120/month.    5.  So, after paying mortgage, taxes, insurance, and property manager, you're making $440 cashflow per month (AT THESE OVERLY CONSERVATIVE NUMBERS!), with NO headache about tenants, NO stress about the stockmarket, and extra money in your bank.    6.  What you need: $20,000-$25,000 downpayment per house. At $440/month, you will be making 21% on your investment (if we add $2,000 for maintenance and vacancy rates), or $5280/year, and paying down the loan so you can eventually sell the house, or just pay it off and make $1100/month! Get 2 of these houses and you'll be making close to $1000/month NO HEADACHE cashflow.    -If you have this money sitting in your bank making 0.5% for you, it's time to MAKE IT WORK for you instead!  -If you don't have that much saved up yet, talk to your family, or your friends, make partnerships...you'll be surprised.    I can help you find and buy these houses, and I can manage them for you to get your money out of the jacuzzi and put it to work for you!   People will always need to rent...why shouldn't they rent from you??   Jonathan Ghaly Cherry Creek Properties 720.987.8998