Archives for October 2007

Conforming Loan Limits will not be reduced through 2008

There has been quite a bit of speculation that the conforming loan limit might be temporarily increased before the end of the year to try to provide some relief for the jumbo market (loans over $417,000 for single family dwellings).    OFHEO has announced that the conforming loan limit will not be reduced through 2008

In our region, you’re probably reading this say, "Duh! Of course the loan limit shouldn’t be reduced".  Nationally, homes are depreciating.  Our home values have been less volatile than other parts of the country.    Conforming loan limits are set based on a certain percentage of the national home prices. 

"The conforming loan limit is adjusted annually through a calculation of year over year changes to the existing level of home prices based on data from the Federal Housing Finance Board’s Monthly Interest Rate Survey (MIRS)". 

In late November, OFHEO will announce the 2008 conforming loan limits.  There is still a possibility that loan limits may be temporarily increased.   Congressman Barney Frank, Chairman of the House Financial Services Committee, would like the conforming loan limits to be temporarily lifted to $625,000

OFHEO is now seeking additional comment on the revised guidance within 30 days of its publication in the Federal Register.

I have a suggestion for OFHEO, why not allow loan limits to be factored on a county basis instead of national?  This system seems to work just fine for FHA loan limits. 

You don’t need 20% down to buy a house: 100% and 97% LTVs

In light of the tightening guidelines in the mortgage industry, I can understand how a consumer might think they need to save up a hefty down payment to purchase a home.   The fact is, there are many programs available that allow minimum down payments.   Here’s a small sample:


Fannie Mae and Freddie Mac both offer 100% loan to value programs with either LPMI (lender paid mortgage insurance) or monthly private mortgage insurance.  Conforming loan limits do apply (currently $417,000 for a single family dwelling).   620 minimum credit score.   These programs may allow gifts from family as well.


The down payment for a FHA insured mortgage is approximately 3%.  Sellers can contribute up to 6% as long as the buyer is investing a minimum of 3% into the transaction.    Gifts from family are acceptable for the entire down payment and closing costs.   Loan limits do apply.   Very competitive interest rates with low monthly mortgage insurance (upfront mortgage insurance is financed into the loan).   FHA mortgages do not use credit scores (it does consider credit history) and do consider alternative credit for borrowers who have not established a credit history.


The original zero down loan created for Veterans.   Sellers can pay all of the closing costs if negotiated in the purchase and sale agreement (also referred to as "double zero down").  Interest rates are very competitive with conforming rates.  There is an upfront VA funding fee that is typically financed into the mortgage.  There is no monthly mortgage insurance.   

To find out if you qualify for one of these programs, contact a qualified Mortgage Professional in your area.   Be wary of any lender who instantly steers you away from FHA or VA financing.  This could simply be a case of them not being an approved lender and therefore they’re not able to offer it.

Regardless of what the underwriting findings are on any of these loans, when you’re buying a home, I strongly recommend that you have a minimum of 3-6 months of savings available in your accounts after closing.   Life happens…even when you own a home and it’s best to have an emergency cushion in the event you need it.

Ballard’s Farmers Market

Yesterday we found ourselves walking through Ballard through the Farmers Market and having a late brunch at Hattie’s Hat (I recommend their Migas).  It was a near perfect weekend: a sunny 65 degrees with autumn leaves.  Img_5952

October is National Breast Cancer Awareness Month

This is the time of the year when open enrollment for benefits takes place with many employers.   Considering this, I asked Jean Christensen from AFLAC to share a story with you regarding one of the benefits of AFLAC.   Jean shares a story of Michele, one of her co-workers who was diagnosed with breast cancer a few months ago.

I am a 40 year old mother of two, wife of one and friend of many.  As of July 9, 2007 my life was changed radically as I was diagnosed with breast cancer and bone metastasis.  One year earlier, I’d had a clear mammogram.  At that point I had to stop working as an Associate of AFLAC, have others cook and clean for my family and drive me everywhere. I went from being totally in charge of my life to being totally dependent on others for everything.

Now a one income family, in a hugely stressful situation, with the same monthly bills like mortgage, food, heat, cable, etc., who did we have to turn to?

Thankfully in 2003, I enrolled I the AFLAC Cancer Plan for $36.00/month.  Our first check from AFLAC was $7,000 upon my diagnosis and I know that the checks will keep on coming as I’ve seen over and over for others.  AFLAC’s average cancer payout of $40-$60,00 is life changing.

I tell you this story not to scare you, but to share with you my story.  I continue to fight the fight. 

The financial help that AFLAC brings is enormously comforting.  If you choose to participate in one plan, please, look at the statistics, hear this story and consider the cancer plan.

-Michele H., Woodinville– willingly shared with Jean Christensen and you.

AFLAC has been a great benefit to the employees at Mortgage Master.   My first processor is battling Stage 4 breast cancer and I know that AFLAC has been a significant help to her and her family.

I have enrolled in AFLAC and Mortgage Master is able to offer a Flex Spending program because of their participation.   

When you’re reviewing your options during benefits enrollment with your employer, please make sure you understand your options.   Hopefully you never need insurance or AFLAC…but you’re certainly glad that you have coverage when the unexpected happens.

If you’re employer does not offer AFLAC, or if you would like to learn more, please contact Jean Christensen at 206-819-8704.

Seattle-King County Third Quarter Foreclosures are Down

Property Shark reports that foreclosures in King County are down year over year and are down 24.85% from the previous quarter based on trustee sales.    New_trustee_sales_seattle_2 

Why have foreclosure numbers improved in our region?  Hopefully distressed home owners are contacting their lenders for help before it’s too late.  Banks do not want to own homes and many are willing to work with home owners who are facing difficulties with their mortgage and are possibly facing foreclosure.   Another possibility is that investors are seeking out and buying “pre-foreclosure” homes.

South King County is reporting the most foreclosures for the third quarter.


Don’t wait if you’re having difficulty with your mortgage payments.   The earlier you take action, the more options you may have. 

Friday Funny…Welcome to my world!


My neighbor sent this to me…we often bump into each other when we’re walking out dogs.  My dog is a 12 year old pug, Orson.   Welcome to my world!

I’ll never need to clean my computer monitor again!

Comparing Good Faith Estimates

Earlier a Mortgage Porter reader contacted me regarding working with their Builder’s Loan Originator.   They faxed their Good Faith Estimate to me to help review their closing cost fees associated with the rate.   You can click on either estimate for a larger view.   Here is the Builder’s preferred lender’s estimate 30 Year at 6.25% (APR 6.4246%):  Scan0002

Here is my estimate 30 Year Fixed at 6.25% (APR 6.442%):


When comparing good faith estimates:

  1. Make sure you’re obtaining the same lock periods (in this case, both estimates are for 60 Day Locks) and that you’re getting your estimates at the same time on the same day (I used a rate sheet from October 10, 2007).
  2. Add up all the costs shown in Section 800 of the Good Faith Estimate.   The total cost for the Builder’s GFE is $5200 and my GFE total cost is $4332.60.   This is a difference of $867.40 (my estimate has lower costs).
  3. Ask each LO if they will guarantee the closing costs shown in Section 800.   If they don’t, ask why not and listen hard.   There’s no reason a LO cannot back up the closing costs they promote on a GFE once a borrower is approved and the loan is locked. 

NOTE:  The Builder Lender’s APR is lower than what I’m quoting, yet my APR is higher even though my costs are lower for the same rate.   This is once again evidence why you DO NOT SHOP YOUR MORTGAGE BY APR.

I’m assuming the buyer has signed a purchase and sale agreement with the Builder who is offering a $5,000 closing costs credit if the buyer works with their lender.    They’re charging a 0.25% Discount Fee (shown on Line 802 of both estimates) where I would not.   The buyer should ask the builder’s lender why they’re charging a discount for that rate for 60 days when other lenders are not.   

When you’re receiving a credit from a builder, you certainly want to make sure that you are receiving the full benefit and that it’s not being absorbed by the lender.

Live at the Home Show

Marilyn Porter, President of Mortgage Master Service Corporation (also my boss and my sister-in-law) and me at the Seattle Home Show. We are located on Isle 1100.

Posted from my Treo.