What is an escrow holdback?

mortgageporterhouseSometimes an appraiser may call for repairs to be done on a home typically for safety reasons. In a seller’s market, like the greater Seattle area is experiencing, it’s not likely that the seller will agree to make the repairs. If the buyer has enough funds, they may be able to do an “escrow holdback”.  An “escrow holdback” is when funds are heldback at closing to cover the estimated cost of the repairs. The buyer brings the amount of the holdback to escrow (or sometimes the lender) and the funds are held until after closing, when the work has been finished.

Typically the home buyer needs to obtain bids from licensed contractors (sometimes a couple of bids) and provide them to the lender. The lender will then review the bids and determine how much funds will need to be held back at escrow. Mortgage Master Service Corporation holds back 1.5% times the amount of the bid.

With an escrow hold back, the repairs need to be done fairly quickly after closing. We will typically allow up to 15 days for the work to be finished. Then the appraiser is sent back to property to confirm the items he/she required to be repaired meet requirements. The appraiser will provide the lender with a report (often referred to as a 442) and the lender will instruct escrow to disburse the funds to pay the contractors with any left over funds being returned back to the buyer.

Not every type of repair works with an escrow holdback so it’s important that when this type of scenario comes to light (typically after an appraisal), that it’s dealt with promptly.

 

What May Impact Mortgage Rates this Week: August 24, 2015

mortgageporter-economyMortgage rates are bouncing around this morning with the volatility in the markets largely due to an 8% drop in China’s market and dropping oil prices.  This morning, the Dow was down over 1,000 points and is now (8:53 am) down about 247. It’s been quite a wild day and it’s far from over. Remember, mortgage rates are based on bonds and may change several times a day.

Here are some of the economic indicators scheduled to be released this week:

  • Tuesday, August 25: S&P/Case-Shiller Home Price Index; Consumer Confidence; New Home Sales
  • Wednesday, August 26: Durable Goods Orders
  • Thursday, August 27: Gross Domestic Product (GDP); Inital Jobless Claims; Pending Home Sales
  • Friday, August 28: Personal Consumption Expenditures (PCE); Consumer Sentiment Index (UoM)

Mortgage rates are trending lower than what I quoted in my last rate post. As I write this post, August 24, 2015 at 9:15 am, I’m quoting:

  • 30 year fixed: 3.750% (apr 3.848%) priced with 0.660 points with principal and interest (p&i) of $1,852.46
  • 20 year fixed: 3.625% (apr 3.745%) priced with 0.532 points with p&i of $2,345.61.
  • 15 year fixed: 3.000% (apr 3.246%) priced with 1.199 points with p&i of $2,762.33.
  • 15 year fixed: 3.125% (apr 3.281%) priced with 0.578 points with p&i of $2,786.44.

Rates quoted above are based on a purchase in the greater Seattle – King County area with a sales price of $500,000, 20% down payment and a conventional loan amount of $400,000. The home buyers have excellent credit with credit scores of 740 or higher and the transaction is closing by October 1, 2015 or sooner.

Rates quoted are subject to credit approval and may change at any time. This is just a small sample of the mortgage rates and programs that I have available. If you would like me to provide you with a mortgage rate quote for your home purchase or refinance on your home located anywhere in Washington state, please click here.

Freddie Mac reports Mortgage Rates remain under 4

Yesterday, Freddie Mac’s PMMS shared that last weeks average conforming rates continue to be under 4.000%.  Last week, according to Freddie Mac’s survey, the average rate for a 30 year fixed conforming (FRM) mortgage was 3.93% priced with 0.6 points.

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What May Impact Mortgage Rates this Week: August 10, 2015 – Mortgage Rates trend LOWER

seatac_airportMy apologies for not getting this post published on Monday, as I typically do. On Monday, I dropped my son off at the airport for him to begin the next chapter of his life with his first “real job” in a new city (to him), Nashville. As I know I’ve mentioned before, I am so very proud of him.

This week the economic calendar is fairly light. Mortgage rates have been getting a boost from China revolving from the issues with their currency. When there are world issues, investors will trade the faster profits (hopefully) found in stocks for the safety with bonds, like mortgage backed securities.

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What May Impact Mortgage Interest Rates this Week: August 3, 2015

MortgagePorter-JobsReportIt’s the first week of the month and that typically brings us the Jobs Report on Friday morning. It is anticipated that 227,000 new jobs were added last month…we’ll see Friday if the numbers come in as anticipated. The Jobs Report is not just about how many jobs were added to the economy, it also reflects wages. Data that indicates potential inflation may cause mortgage rates to deteriorate.

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Student Loans and Qualifying for a Mortgage

mortgageporter_student_loansMy son graduated from Seattle University a few months ago and has recently landed his first “real job” in the tech world. I couldn’t be more proud of him!  Many first time home buyers, who have gone to college may be surprised to learn how student loans may impact how much mortgage they qualify for. Different types of mortgages have different guidelines with how they treat student loans and other debts with deferred payments. The guidelines below apply to both home purchases and refinances…and, of course, are subject to change.

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Freddie Mac Reports Mortgage Rates Down Last Week

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What May Impact Mortgage Rates this Week: July 27, 2015 – Mortgage Rates trending LOWER!

I’m back from my vacation, sailing the Broughton Islands in Vancouver, B.C. with my hubby and our (almost) 2 year old puppy, Hitch. Thanks to my great team at Mortgage Master for taking care of my clients while I was enjoying some time off. I’m relaxed, refreshed, recharged and ready to help you with your mortgage needs.

The Chinese stock market is taking a hit as the Shanghai Composite lost 8.5% overnight. This is giving mortgage backed securities a bit of a boost this morning. Check out the mortgage rates I’ve posted below.

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