Razing Colorado
Last week I got several calls for construction loans. The potential clients were looking to buy lots or older homes with the sole purpose of building a new home. FYI: there’s no such thing as “No Ratio Construction Loan” or “No Doc Construction Loan”. Some may have been looking to scrape, a trend that has consumed several areas of Denver.
Sunday’s Denver Post delivered this gem on scraping: Scraping down, building up
The move to replace smaller, older homes with larger, costlier ones took hold in Denver in the late 1990s. A Community Planning and Development Office map of residential demolition permits issued from January 2006 through May 2007 suggests the most activity now is in east-central Denver, specifically the Cherry Creek and Hilltop neighborhoods, and in two corners of the city.
In the southeast, the most affected areas are Observatory Park and Eisenhower Park. Northwest, the hot neighborhoods are Sloan’s Lake, Berkeley and West Highlands.
Yet the teardown trend raises a raft of social issues. Critics say it disrupts neighborhoods and thwarts residential affordability. A 2002 study by the Washington- based National Trust for Historic Preservation was co-written by Jim Lindberg of the organization’s Denver office.
Older neighborhoods are often the target of scrape-and-rebuild developers with good reason, said Lindberg. Many were designed for pedestrian traffic, not cars. Washington Park, for example, grew up in the era of streetcar commuting.
Most of the smaller homes deserve to be scraped. They’re usually energy inefficient, small, and not up to code. Did I mention that they were small.
Got $160 million?
Mortgage article from the Rocky Mountain News:
A German bank has pulled the plug on its deal to lend $160 million for a 41-story condominium project under construction downtown – the largest example in Denver so far of how the turmoil in international lending markets affects a local market.
Read the full story: Downtown highrise project loses lender
Lets go fry a turkey
Frying a turkey has always intrigued me. The people who fry their turkey every year for Thanksgiving swear by them. They say the turkey is juicier and it takes less time to cook. There is the down side that turkey fryers can cause a fire.
This Thanksgiving I got a wild hair and decided to give turkey frying a go. I did some research and found a relatively inexpensive ($60) fryer at Sears. The fryer is made of three components, a base, a connection to propane, and a 30 quart aluminum pot. Moreover, the fryer is made by a company, Masterbuilt, that’s fairly reputable and the construction was welded together so it seemed fairly stable. I picked up the requisite peanut oil and marinades at the grocery store.
I got off to a late start (3 PM) putting the turkey fryer together. After putting the fryer together, I realized that the propane tank was empty. Off to the gas station I went to get propane. When I returned I realized that there was still a lot to do. It was now 4 PM and the sun was going down fast. I put the oil in the 30 quart pot and started lit the fire. I thought the fire was full bore but halfway through I realized it was only at 50% fire power. It took almost an hour for the oil to hit 350 degrees.
Once the oil was hot enough I finally put the 13 pound turkey into the container and lowered the container into the pot very slowly. The last thing I wanted was a massive fire. The instruction manual says that you should cook the turkey 3 minutes for every pound. I followed the directions and 39 minutes later I pulled out the turkey. One problem. The internal temperature of the turkey measured a paltry 150 degrees. It needs to be 180 degrees for it to be considered cooked. Other than sushi I hate undercooked meat and I’m not a huge fan of beef so I don’t dig rare steaks. I threw the turkey back in the fryer for 10 minutes. When I removed the turkey the second time, it was 168 degrees internally. After 15 minutes of standing time and the internal temperature of the turkey was 177 degrees.
After carving up the turkey, I now know why people fry their turkeys. It’s definitely juicy. It’s definitely flavorful. It’s definitely something I’d do again and I definitely recommend that everyone give it a go.
Raising your “Profile”
Last year, I met a real estate agent by the name of Ron Buss with Coldwell Bankers. He was referred to me by a friend. I rarely go out of my way to meet with real estate agents mainly because my time is limited and I just don’t want the brain damage. Ron was different. He was a nice guy who seemed to actually care about his clients and the community. It was a good meeting but we went our separate ways.
From time to time, I’ll pick up the Washington Park Profile a local publication when I’m at coffee shops in the Wash Park area. Much to my surprise Ron Buss was featured in an article entitled You Can’t Stop Ugly, But Can You Slow Density? by Paul Kashmann. According to the article, Ron is taking a stand against re-zoning of properties to combat scrapes in the Wash Park area.
Many people have voiced concern in recent years that the accelerated real estate values in South Denver are changing the very nature of the communities in which we live.
Once coveted bungalows are being pop-topped, scraped and replaced by homes that are not only much larger than their predecessors, but also built in a different style, using materials foreign to our early 20th century streetscape.
For well over a decade, community meetings have been called to consider first a plague of haphazardly-designed second and third story expansions (pop-tops) offensive to the eye and disrespectful of neighbors’ sunlight; and more recently, scrape-offs of (frequently) viable homes to allow for construction of much larger residences that often contain multiple units where a single family home once stood.
Rather than continue bemoaning such changes without acting, Ron Buss – a realtor and West Washington Park resident – has decided to take matters into his own hands. Buss is spearheading a movement that could lead to the downzoning of a large portion of 18 blocks of his neighborhood from R-2 to R-1, to prevent construction of multiple-family units: the duplexes, tri-plexes and even four-flexes that have become commonplace in the area.
“The problem is the rate at which change is occurring – and the accompanying change in character and increase in density,” said Buss, noting that, “from December of 2005 to now, duplexes under construction and permitted are equal to the number from the past three years.”
Keep up the good work Ron!
Weekend Highlights
Are you underinsured? explores the amount of insurance coverage you need on your home. Often called HAZZARD or HOME OWNERS insurance, this type of insurance needed to replace your home. However, most people don’t carry enough insurance:
About six out of 10 homeowners carry less insurance than what is needed to replace their homes, estimates MSB, a Los Angeles company that provides data on construction costs.
The article uses the “La Grande Cannoli” the prized home of this year’s Parade of Homes to further their point on undersinsuring a home. The 8755 square foot home has a list price of $2,000,000, however,all the upgrades and features typically won’t be covered under most policies.
Weekend Highlights
Al Lewis of the Denver Post discusses the glut of condos in Colorado:
“Colorado’s inventory of unsold condos is at an all-time high,” said Gary Bauer, an independent real-estate analyst in Denver. According to Bauer’s analysis:
* Condo sales have slipped 1 percent year-to-date, compared with a year ago.
* The average price of sold condos year-to-date is down 1.5 percent to $185,000, compared with a year ago.
* Condo owners are increasingly renting their pads instead of selling them in a depreciating market.
Great article in Sunday’s Denver Post entitled Man’s dream house wasn’t dream project. The home was based on Frank Lloyd Wright design principles and carries a $1.4 million price tag. Includes a do’s and don’ts of home building.
DON’T
Be your own contractor. “People often think they can save 15 percent on a house by being their own contractor,” said Formissano. “What they don’t understand is the time and frustration involved. Besides, subcontractors rarely give their best bids to homeowner/contractors.”
Make a decision based on price-per-square-foot costs. “It’s an inaccurate way to decide what you can afford,” said Formissano, “because it doesn’t factor in all the project costs, like landscaping, driveway, septic system, etc.”
Get caught in the trap of multiple “small” upgrades. People tend to drive the budget up with “a little change here, a little change there,” because they rationalize that this is their one shot at building a dream house. “Most budgets are broken by $100 changes,” said Formissano, “not $1,000 changes.”
Pick a floor plan that has lots of angles or a complicated roof design. You can have an interesting house by aligning spaces on an axis, but as LeChevalier learned, the more complex the design, the higher the costs. And ultimately, construction complexity doesn’t add to resale value.
DO
Carefully select a builder. You want someone who listens to you and explains things to your satisfaction. Ask for references and check them out.
Make sure you have 5 percent to 10 percent of the project costs set aside for contingencies or extras. “If you’re building a $500,000 house, make sure you have $25,000-$50,000 set aside for an upgrade you really want or a problem that hikes the cost up,” said Formissano.
Make sure the floor plan works for you. Is the kitchen so far from the garage that carrying groceries will be like a marathon? Is the only way to access your closet through the steamy master bath?
Make decisions in a timely manner. As the house gets closer to completion, homeowners are asked to make more decisions in a shorter amount of time. Since time is money, dragging out a choice – for fear that a better one will appear tomorrow – will drive the budget skyward.
Weekend Highlights
This past weekend the articles on real estate were slim. Sally Stitch of the Denver Post had a great article on the Sloan Lake neighborhood: Downtown proximity, views lure diverse mix
History of Sloan Lake:
The neighborhood was settled before the turn of the century. By the 1920s, a large group of Orthodox Jews had moved in, wanting to live near the synagogues they had built.
In the 1970s, many of those same families moved to southeast Denver, and a strong Hispanic population replaced them in the small red-brick bungalows and ranch-style houses.
Today, the neighborhood is a rich mixture of young professionals looking for starter homes, aging boomers looking to downsize, old-timers who never left, a smaller-but-still-present Jewish population and a large group of Hispanic residents. People like Larry Ambrose, president of the Sloan Neighborhood Association, say the neighborhood offers great urban living with rich ethnic and socio-economic diversity.
Facts on Sloan Lake:Sloan’s Lake:
Boundaries: West Colfax to West 29th avenues, Sheridan Boulevard to Irving Street
Who lives here: Young couples; older, long-time residents; professionals; Orthodox Jews; Hispanics
Why it’s cool: Million-dollar views of Sloan’s Lake, Front Range and the downtown skyline; proximity to downtown and the mountains; more R-2 lots than anywhere else in the city; predominantly brick construction; more bang for the real-estate buck in Denver
Why it’s not: Small houses (1,000-square-foot average), often not updated; low-performing public schools; rental properties (duplexes, triplexes) that often are poorly maintained by absentee landlords
Schools: Denver Public Schools, including Cheltenham and Colfax elementaries and Brown elementary, which has a new International Baccalaureate program; Lake Middle School; and North High School
Rentals: A house on the lake: $2,200/month; half a duplex: $900-$1,200/month
Housing: Median home price $247,050; average price per square foot: $212.90
Weekend Highlights
Here are the real estate and mortgage highlights over the weekend:
- With rates on the rise and a cooling housing housing market, this article discusses how builders are switching their focus from Single Family Residences to Townhomes and Condominiums.
The cooling housing market has homebuilders throughout the nation girding for fewer sales, larger inventories and stiffer competition for people in the market for new homes.
Rising mortgage rates and overbuilding are largely to blame, yet the pace of construction continues as builders rebalance their holdings, move from single-family to attached-home projects, and search for lucrative niches to fill.
- The cooling housing market is also a reason for apartments increasing their rent and their occupancy rate.
The Denver area’s vacancy rate was 7.4 percent for the first quarter, compared with 7.9 percent for the fourth quarter last year, according to the Apartment Association of Metro Denver. The rate has been steadily dipping since the end of 2004, when it hit 10 percent.
…
The surge in apartment rents and occupancies in the West is the result of rising mortgage rates and home prices, which have pushed potential buyers to rent instead, said Caroline Latham, owner of Novato, Calif.-based RealFacts. Read more - Al Lewis’ column discusses short selling your home when foreclosure is around the corner.
Crack park gets a makeover
When I read the Denver Post this morning, I needed to do a double take.
One of Denver’s oldest neighborhoods on downtown’s northern edge is experiencing a renaissance as new housing lures young professionals.
Hundreds of housing units are planned or are under construction in Curtis Park, a historic urban neighborhood that, until recently, was known more for its notorious public housing project than for its upscale urban pioneers.
Apparently Curtis Park aka Crack Park is a hotbed for development. I recall fondly the days when vagrants, bodegas and the buses headed for Mexico, were the main attraction to Curtis Park.
1003: The Loan Application
The Uniform Residential Loan Application is commonly referred to as the 1003 (ten-oh-three) throughout the mortgage industry. When the loan application is completed accurately, the data obtained provides sufficient information for the underwriter to make an informed decision about the borrower(s).
The application is divided into sections to make it easier to complete and understand. They are as follows:
- Type of Mortgage and Terms of Loans
- Property Information ampersand Purpose of Loan
- Borrower Information
- Employment Information
- Monthly Income ampersand Combined Housing Expense Information
- Assets ampersand Liabilities
- Details of the Transaction
- Declarations
- Acknowledgement ampersand Agreement
- Information for Government Monitoring Purposes
Type of Mortgage ampersand Terms of LoanThis section identifies the loan program requested and the term of the loan in months.
Property Information ampersand Purpose of LoanThis section identifies the subject property’s common address and legal description including the year the property was built and the number of units within the property. The purpose of the loan and the occupancy status are included in this section. The section also addresses other informational items such as whether the loan is a construction loan, construction permanent loan, or a refinance loan. Finally, this section includes the name and manner in which the title is held, the source of the down payment and the settlement charges.
The Borrower Information contains all of the personal information of the primary borrower and co-borrower. The information needed to complete this section includes the following: Name Social Security Number Home Phone Birth date Years of Schooling Marital Status Number of Dependents and Ages Current Address Former Address if residing at Current Address less than 2 years If there is a co-borrower this information will need to be supplied as well.
- D. Year Built — The year the subject property was built
- E. Purpose of the Loan — The reason you are applying for the mortgage –(1)Purchase or (2)Refinance
- F. Property Will Be — (1)Primary Residence — Borrower will live in the property. (2)Secondary Residence — Borrower will use the property as a vacation home and it will NOT produce income.
(3)Investment — The borrower will NOT occupy the subject property; it will be used as an income producing property.
G. Complete this Line if Construction or Construction-Permanent Loan
- Year Lot Acquired — The year the lot was purchased
- Original Cost — The purchase price of the lot
- Amount Existing Liens — Total balance of ALL mortgage liens on the subject property
- Present Value of Lot — Present market value of the lot
- Cost of the Improvements — The dollar amount of the construction costs for the proposed new home
- Total (a+b) — (a)Present Value of Lot + (b)All the Cost of Improvements
L. Estate Will Be Held In — Indicates how estate will be held.
- Fee Simple — Indicates an estate under which the owner(s) is entitled to unrestricted use of the property.
- Leasehold — Indicates an estate in real property wherein the mortgagor does not actually own the property, but rather has recorded a long-term lease; the expiration date of the lease should also be included in this section
IV. Employment HistoryThis section is designed to identify at least a two-year employment history for the borrower(s). It identifies potential factors like stability, tenure, and the line of work of the borrower(s).
If you would like us to assist you in completing the 1003 application over the phone, give us a call at the number listed at the top of the page.
The 1003 is the starting point for the entire loan process. Wherever you go to apply for a loan, be it at your local bank, or with a mortgage broker, or even on the Internet, all lenders insist on a completed 1003 application. It is the standardized form designated by Fannie Mae and is a pre-requisite for a real estate loan.
K. Source of Down Payment — The source of the funds the borrower(s) is using for the down payment and/or closing costs on the subject property loan. These funds can be personal funds, gifted funds, etc.
Information needed in this section is as follows:
- Borrower’s Name — Full name with middle initial including Jr. or Sr. if applicable
- Social Security Number — Borrower’s Social Security Number
- Home Phone Number — Borrower’s phone number at their present address
- DOB — Date of birth in MM/DD/YYYY form
- Yrs. of School — The number of years of education the borrower has completed in whole numbers
- Married, Unmarried, or Separated
- Dependents — The number of dependants and their ages
- Present Address — The complete property address where the borrower currently resides. A full two-year residence history is needed
- Own or Rent — Does the borrower own or rent at the present address or any other addresses in the 2-yr residence history
- The borrower’s complete mailing address if different from the present address
- Mortgage Applied For — Type of Mortgage Requested
- Agency Case Number — FHA, VA or USDA/RHS Case Number
- Lender Case Number — Lender’s Internal Case Number
- Amount — Dollar Amount Wanted
- Interest Rate — Rate the Borrower Expects to Receive
- No. of Months — Term of the Loan in Months
- Amortization Type — Either Fixed Rated, Graduated Payment Mortgage(GPM), Adjustable Rate Mortgage(ARM), or Other
- A. Subject Property Address
- B. No. of Units — The number of units contained within the subject property
- C. Legal Description of Subject Property — The method of geographically identifying the subject property; see preliminary title commitment or purchase contract for legal description
— The property address that will be secured by the mortgage loan. If the property address is not known, put TBD (To-Be-Determined)
J. Manner in which title will be held — The type of tenancy.
- Joint Tenants — An ownership of a property by 2 or more individuals who have equal, undivided interest in the subject property
- Tenants in Common — An ownership of a property by 2 or more individuals, each of them having an undivided, but not necessarily equal, interest in the subject property
- Single Tenant — The ownership of a property by one individual.
- Name and address of the employer — A full two-year employment history is needed
- Self-Employed — Mark here if the borrower is self-employed
- Yrs. on the Job — The length of time the borrower has worked in their current line of work in years and months
- Years employed in this line of work — Length of time in the current profession in years only
- Position — Current job title and position
- Business Phone — The phone number of the borrower’s employee, not a cell phone unless the borrower is self-employed
- Other Income — If the borrower has a second/part-time job and they are using the income for purposes of qualification, they must included a 12-month history and be able to demonstrate the income will continue.
H. Complete this line if this is a refinance loan
- Year Acquired — Year the subject property was purchased
- Original Cost — The purchase price of the subject property
- Amount of Existing Liens — The total balance of ALL the mortgage liens on the property
- Purpose of the Refinance — (1.) No cash-out rate/term — The borrower is refinancing the subject property to include the payoff of existing mortgage(s), the closing costs, and/or prepaid items/reserves with zero net proceeds to the borrower at closing. (2.) Limited cash-out rate/term — The borrower is refinancing the subject property to include the payoff of the existing mortgage(s), the closing costs, and/or prepaid items/reserves and receives industry acceptable cash at closing that is usually less than 2% of the loan amount. (3.) Cash-out — The borrower is refinancing the subject property to pay off the existing mortgage(s) for the subject property, to pay any closing costs associated with the loan, and/or to receive additional cash proceeds at closing for any personal or business matters.
I. Title will be held in what name(s) – The name(s) of the individual(s) who will be vested in title to the subject property
III. Borrower InformationThis section identifies information about the borrower(s) such as names, social security numbers, and at least a two-year residence history. This section falls under the regulations of the Equal Credit Opportunity Act (ECOA). When concerning martial status, the borrower may only be asked, “Are you married, unmarried, or separated?” In a community property state, the applicant may further ask, “If unmarried, are you single, divorced, or widowed?”
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