Archives for June 2008

Something New for You at Rain City Guide

Tomorrow afternoon, Dustin Luther is featuring Rain City Conversation: a live "call-in" show hosted by Dustin with the Rain City Guide community, including yours truly.  If the shows are anything like Dustin’s 4realz Roundtables, the conversations will be recorded and available following the show.   

For our first conversation, Dustin has invited all the Rain City Guide contributors to introduce ourselves–it should be a fun and entertaining way to get the ball rolling!  I hope you will call in and join us tomorrow at 4:00 p.m. PST.  For more information, click here. 

Update:  You can listen to our first RCG Converation by clicking the link below.

Are You Ready to be Hands Free with Your Cell Phone?

Earphone

I’m not rushing out to buy one of those gadgits that stick in your ear so it looks like I’m  talking to myself. Effective July 1, 2008 it will be illegal to talk on your cell phone the "old fashioned way" by holding the phone with your hand to your ear in the State of Washington: you will need to be "hands free" (hopefully your hands are on your steering wheel) when you are driving a car.

Possible future laws to make our roads safer could include the following for drivers:

  • no eating or drinking.
  • no primping (shaving, applying make-up etc.).
  • no reading (it is all ready illegal to "text" while driving in Washington).
  • no deep coversations, daydreaming or yelling at the kids.

I’m sitting on the fence with getting a new phone.  I’m real unhappy with my Treo 650 and I’m eyeballing the new iPhone.   I’ll figure out if I’m going to wire the car with a speaker or just use the speaker phone that I all ready have with the phone.   I don’t like to have things in my ears and I’m just not a fan of trying to tell if someone is "on" or not so I can’t see myself having a wireless ear phone.

What are you going to do to be compliant and hands free by July 1, 2008?

Happy Fathers Day

Tim Russert is someone whom I always enjoyed and I’m saddened that he passed away this past week.   What an incredible Dad and Son.   

In this video, he talks about a note he gave to his son when he was beginning college with three points of advice to work (study) hard, laugh often and keep your honor.   He also talks about how he and his wife often tell their son that he is very loved but never entitled.    Classic examples of real family values that I relate too and hope to impart on our children.

My heart and prayers are with the Russert family.

I wish my Dad, my Father in Law, my Out-Law’s and all a very Happy Father’s Day.

Join Me at 4pm Today at 4realz.net

Be part of the conversation with Dustin, David G from Zillow, Joesph Ferrara from Sellisius and yours truly as we discuss The Value of Home Values.  For more information or to join in (the more the merrier) click here

The last time I had an opportunity to chat with both David and Joe was Blog Tour USA…it involved a ping pong match at Zillows Headquarters.

The round table begins at 4:00 p.m. PST. 

Now is the time to buy a Seattle home

Or at least haggle according to Aubrey Cohen’s front page article in Friday’s Seattle P-I.  Would I buy a home right now in Seattle if I were in the market?  Quite possibly…especially if it’s a home that I desire and if it’s priced fairly.   The article states these factors for reasons home buyers interested in Seattle (I would include Bellevue/Redmond as well) should get into the market now:

  • Gas Prices.  Homes located near where jobs are will have stronger values.  Fewer people are going to want to commute thanks to how much it is to fill the tank.   
  • Mortgage interest rates are rising.   Glenn Crellin, director of the Washington Center for Real Estate Research at WSU states "waiting for the prices to get to their absolute lowest point while interest rates are rising doesn’t mean that the purchasers are going to be saving much of anything on the monthly payments". 
  • High inventory.  There are a lot of homes to chose from at lower prices.

According to this article, home prices in Seattle are only down 2.7% from a year ago; King County is down 6.2%.  The further away from "the city" you look for homes, the more the values have been impacted.   

Here are some additional reasons (not in the article) to consider "getting into the market" as a home buyer. 

  • The Conforming-Jumbo and FHA jumbo loan limits are only effective through the end of this year.   On January 1, 2009, the conforming limit will roll back to $417,000 and FHA (for King County) will be $362,950.  (Unless Congress passes an extension to the loan limits, which they may do at a reduced amount.  The fact is, at this time, we only know that the current loan limits are valid until December 31, 2008).   If you want a "non-jumbo" rate and your loan amount is $417,001-$567,500…your time is limited.
  • Underwriting guidelines continue to get tougher with lenders and private mortgage insurance companies.   Plus, the possibility of having your area declared a declining market will make financing even more challenging.
  • If you’re sitting on the fence, you are not alone.  There are many home buyers who are getting preapproved waiting for prices to reach their "price point".  As prices lower, more and more will be hopping off the fence and jumping into the market which will also prevent in-city home prices from declining as much as other areas.
  • Sellers are contributing towards closing costs.  I’m seeing more offers with sellers contributing towards closing costs for the buyer.  Buyers can use the funds to buy down their rate are reduce their closing costs.

If you are considering buying a home within the next 6 months, I strongly encourage you to begin the preapproval process now.  The more time you have to prepare, the better position you’ll be in to make an offer.   Plus, I’ve heard that some in-city homes, when priced right, are having multiple offers–buyers should be armed with a preapproval letter to present a stronger offer. 

It’s also very important to work with an experienced real estate agent who will look out for your best interest (I do not recommend going directly to the listing agent for any home you wish to buy…they represent the sellers interest–not yours).   If you need a referral to a real estate agent in King, Pierce or Snohomish counties, contact me, I’m happy to help.

PS:  I help Washington State home buyers with preapprovals and mortgage planning, too!  (My husband thinks I should remind my readers of this point more often…and I like to keep him happy).

Just for grins, here is a lesson in how to haggle (if you work with a professional real estate agent, you can leave the haggling to them), compliments of Monty Python, The Life of Brian.

Is 5% Down Available for Homes Priced from up to $600,000?

EDITORS NOTE – August 30, 2009: Mortgage guidelines are constantly changing–please make sure to get updated guidelines from a local mortgage professional.  This post was written under DU 7.0 and at this time, we are utilizing Fannie Mae/DU Version 7.1.

In King, Snohomish and Pierce County, FHA Jumbo will allow you to put 3% down as long as your loan amount is $567,500 or below.   The buyer's required investment is 3% of the sales price (which can be gifted from a family member) and the seller can contribute up to 6%.   Utilizing a FHA Jumbo, one could by $585,000 with as little as 3% down or up to around $595,000 with 5% down and still be within the FHA loan limits.  The debt to income ratios are typically around 43%.   Click here for more information on FHA Jumbo.

At 5% down with a sales price of $585,000, the FHA scenario would look like this:

Principal and interest @ 6.375% (APR 7.140%): $3,514.50 plus monthly mortgage insurance of $231.56 for a sub-total (not including taxes and home owners insurance) of: $3,746.06.

Amount needed to close estimated at $43,000.  Buyer required investment = $17,550 (3% which can be gifted from a family member).

A conforming-jumbo will allow a 90% loan to value but good luck finding a second mortgage that will accommodate that–most second mortgages are limiting their total loan to value of 85%.  Private mortgage insurance is an option up to 90% loan to value with a loan amount of $567,500.  With a sales price of $600,000, 10% down would provide a loan amount of $540,000.   At 10% down, the seller can contribute up to 6% as long as the buyer has invested a minimum of 5% of their own funds into the transaction

Principal and interest @ 6.125% (APR 6.373%): $4,555.10 $3,281.10 plus monthly mortgage insurance in the amount of $316.85 for a sub-total (not including taxes and home owners insurance) of: $4,871.95 $3,597.95.

Amount needed to close estimated at $73,000.  Buyers required investment: $30,000 (5% which must be their own funds–gifts from family not included in the 5% down).

Fannie Mae just released DU 7.0 which promises to provide fewer loan approvals and more "expanded approvals".  Before 7.0, 45% was the maximum debt to income ratio. This new version was released on May 31, 2008.

Note:  Both scenarios are assuming mid-credit scores of 720 or better.  A 719 will cause the rate to be 0.125% higher for the jumbo-conforming example or to cost 0.500% more in fee.   For FHA, the rate would remain the same with a 719 score (and down to a 620 mid score).

I think you'll agree that we'll be seeing more FHA approved buyers than before…this is why Sellers and Real Estate Agents should learn more about FHA and be open to FHA buyers…it's not the FHA of yesteryear in fact, FHA is the future.

Have You Co-Signed for a Mortgage?

If so, you may want to check in with the person you co-signed for just to make sure every thing’s okay.   In the event they’re not able to meet their mortgage payments,  you certainly don’t want the "foreclosure man" to show up at your door.   The quote below is about a foreclosure in Kirkland where someone co-signed for a friend and the foreclosure man is knocking, as reported by Erik Lacitis of the Seattle Times:

"I just thought I was doing a friend a favor by co-signing," she said. "And then he was going to refinance and get my name off the loan. I can’t afford for this to happen."

No one ever expects to go into foreclosure and much like the person above, intentions Nommag72008are to refinance the co-signer off the mortgage.   However when things go wrong and someone is not able to make the payments, the co-signer is on the hook.  Unfortunately, the co-signer may not have the same lead time as the borrower in dealing with a foreclosure situation as many who are dealing with this type of situation are living in denial.

Nearly five months can elapse while the various legal steps are taken, and right up until the morning of the auction, the foreclosure can be stopped if an arrangement is made with the lender. Only about 20 percent to 30 percent of foreclosed homes in the Puget Sound area actually are sold at auction, based on statistics from the counties.

Foreclosures are on the rise in the Puget Sound area so if you have done a friend or family member a huge favor by co-signing on a mortgage, you may want to give them a friendly call to see how they’re doing.

Hat Tip to Marlow Harris of 360Digest.