Archives for June 2010

Historic Low Mortgage Rates May Help Seattle Area Homeowners

The mortgage rates we're witnessing today can help many Washington state homeowners if they take advantage by refinancing.  Even if your home's value has declined due to your homes in your neighborhood selling for less, you may still have options thanks to the Home Affordable Refinance program (set to expire in 2011) and FHA streamline refinances. 

Many of the home owners I'm helping with refinancing are:

  • reducing their monthly mortgage and creating more monthly cash flow to help with their budgets;
  • converting adjustable rate mortgages or interest only mortgage to fixed rates;
  • shortening their mortgage terms;
  • paying off second mortgage by including them in their refinance or paying off debts.

The Home Affordable refinance(HARP) is available for conventional loans that are securitized by Fannie Mae or Freddie Mac–this is different than who you make your mortgage payment to (the bank or mortgage servicer).   The Making Home Affordable Program allows for negative home equity and may not require an appraisal.  If your current mortgage doesn't have private mortgage insurance, then the new Home Affordable refi will not have mortgage insurance either–regardless of the loan to value!  This program is available for owner occupied, rental homes and vacation homes.   NOTE:  Second mortgages cannot be paid off with this program, however they can be subordinated.

Here's an example of HARP refi quotes (as of 12:30 today) based on a loan amount of $400,000 and an appraised value of $381,000 (roughly 105% loan to value) using a 30 year fixed with mid-credit scores of 740 and priced with zero points (origination or discount):

Owner occupied:  4.750% (apr 4.813) priced with 0 points.

Investment property/non-owner occupied:  5.125% (apr 5.360) priced with 0 points.

If your current mortgage is FHA, then you can opt for an FHA streamlined refinance.  If you have a little equity, you can opt to have an appraisal and finance up to 97% of the appraised value to include your closing costs and prepaids.   If your home does not have equity, and you have the funds available, a "no appraisal" option is available.  With the no-appraisal streamline FHA refinance, closing costs and prepaids cannot be financed.  Your loan amount is limited to your current balance less a possible credit of your original upfront mortgage insurance premium and your new upfront mortgage insurance premium can be financed.  

Here are FHA refinance rates (as of 12:30 today):

4.500% priced with 0 points (apr 5.090) appraisal optional.  Loan amounts up to $417,000.

4.750% priced with 0 points (apr 5.518) appraisal optional.  Loan amounts $417,001 – $567,500 in King, Pierce and Snohomish Counties.

FHA currently will allow up to an 85% loan to value for a "cash-out" refinance, which may include paying off a second non-purchase money second mortgage.  "Cash-out" would not be a FHA streamlined refinance and would require an appraisal.

If you have enough home equity, you may not need to do a streamline or Home Affordable refinance.  But it's nice to know your options!   If I can help you review your mortgage scenario, for a refinance or purchase, on a home located in Washington state, or if you would like your personal rate quote, please contact me!

Late Night Friday Funny

I just caught this funny video via Talon Title on Facebook  and had to share… Seattle's BLEAK!  Go Team USA–Go SOCCER!!

The Daily Show With Jon Stewart Mon – Thurs 11p / 10c
World Cup 2010: Into Africa – US Beats Algeria
Daily Show Full Episodes Political Humor Tea Party

It’s Official: Freddie Mac Reports Mortgage Rates at Record Lows

Mortgage rates continue to trend lower providing some of the lowest mortgage rates of record.   From the Alan Zibel of the Associated Press:

Mortgage company Freddie Mac said Thursday that the average rate for 30-year fixed loans sank to 4.69 percent, from 4.75 percent last week.

That's the lowest since Freddie Mac began tracking rates in 1971. The previous record of 4.71 percent was set in December. Rates for 15-year and five-year mortgages also hit lows.

This provides many Seattle area home owners a great opportunity to reduce their monthly mortgage payments by refinancing.   Even if your home has depreciated, you may qualify for a Home Affordable Refinance with loan to values up to 105% or an FHA streamlined refi with no appraisal.   Mortgages currently without private mortgage insurance (originally with an 80% loan to value with the first mortgage) may qualify to refinance without private mortgage insurance even if their new loan to value is over 80%.

Home buyers who have locked in rates this past week will probably never have the need to refinance while they own their homes. 

Don't expect mortgage rates to stay this low for long.  Do contact your local mortgage professional and see if refinancing makes sense for your personal scenario.  If your home is located in Washington state, I'm happy to help you with your mortgage needs.   You can follow me on Twitter to see what rate scenarios I'm quoting live.

11:00 a.m. update:  Receiving an intraday rate sheet with pricing for the worse from one of the lenders we work with.  (I'm glad I work with more than one–not all of the lenders have increased pricing  yet).  It appears to be a slight adjustment, however we've been averaging 2-3 rate sheets per day…and they all add up.

1:30 p.m. update: Receiving the 2nd intraday rate sheet from the same lender with pricing for the worse.   Pricing with this lender is worse by over 0.3% in fee or 0.125% in rate from this morning's lows.

Freddie Mac’s Home Affordable Refinance – Relief Refinance Mortgages

I've written about Fannie Mae's HARP program a few times here at Mortgage Porter, but I've neglected to write much about Freddie Mac's version.  This is partly due to the fact that when the Home Affordable program began, loans securitized by Freddie Mac required that you had to go back to your mortgage servicer: THIS IS NO LONGER TRUE.  In addition, Fannie Mae has a much larger market share than Freddie so I've been helping more Seattle area home owners who have lost equity with Fannie's program.   I'm pleased that Freddie Mac has expanded this program (Open Access) to not force home owners to return to the mortgage servicer which means, I can probably help you if your mortgage is owned by Freddie Mac (or Fannie Mae). 

Freddie Mac's program offers "borrowers who are current on their mortgage payments the ability to refinance to improve their financial situation when home values have declined…"   If you are behind on your Freddie Mac owned mortgage, you may qualify for the Home Affordable Modification.  I do not do loan mods.

Here's some information about Freddie Mac's Home Affordable "Relief Refinance" (if  you're mortgage is owned by Fannie Mae, click here).  Although some of these guidelines are similar to Fannie Mae, there are some differences.

In order to qualify for this program, your mortgage must be securitized (owned) by Freddie Mac prior to June 1, 2009 and be in first lien position.   To see if Freddie Mac owns your mortgage, click here.

The loan amount is limited to the mortgage balance plus the lesser of $5,000 or 4% of the current balance.  And the maximum cash back a borrower may receive is $250.   For example, if your current mortgage balance is $400,000, the most your new loan amount could be is $405,000.  You may find that you either need to bring cash in to close (typically a mortgage payment) or price the mortgage with zero points (while Congress still allows this as they're trying to ban rebate pricing). 

For King, Snohomish and Pierce counties, the maximum loan amount is $567,500 for a single family dwelling. 

This program is available for primary residences, second homes and investment properties.

If your original mortgage did not have private mortgage insurance, the new mortgage will not have private mortgage insurance even if your current loan to value is over 80%.

There must be a benefit to the borrower, such as a reduction in interest rate, replacing an adjustable rate mortgage with a fixed or a reduction in term.

Borrowers must be current on their mortgages with no "30 day late payments" in the last 12 months.

Second mortgages must be subordinated (they cannot be included or paid off with the refinance).  Most second mortgage lien holders are cooperating–but it is their call on whether or not they will permit the subordination to take place.

A full appraisal is required and loan to values up to 125% are permitted.

Income and employment are verified.  Minimum credit score is a 620.

The Home Affordable Refinance Program is scheduled to end in June 2011 2012.   If you're interested in a rate quote for your mortgage, at no obligation, to see if refinancing makes sense for your Washington state home, please contact me.

NOTE:  This post has been updated to reflect the extension of the HARP refi.

Happy Father’s Day

Dad I think I'm telling my Dad a secret or perhaps, wishing him a Happy Father's Day.  Or perhaps I'm whispering "It's Janette's birthday!" 

I believe this photo was taken at my Grandmother's home in the Renton Highlands…and that my sisters are both wearing my hanad-me-downs.  We all loved dressing up.  This photo must have been celebrating Father's Day or Dad's birthday.

Happy Fathers Day to all the Dads and a very Happy Birthday to my baby Sister, Janette (pictured in the pink dress).  

How to Shop for a Mortgage Originator When They Won’t Provide a Good Faith Estimate

I just received this excellent question on a post I wrote at Rain City Guide about why Loan Originators are hesitant in issuing a Good Faith Estimate without all the required information:

…I am a new buyer with a question regarding the GFE. I am brand new to this world, so I apologize if this is a dumb question.

I read that I should shop around to a few banks and get a GFE to see who can give the best deal. I was pre-qualified by my personal bank but my Loan Officer denied me a GFE. She stated she cannot give me one until my offer is accepted for a home.

How am I supposed to shop around for the best deal, if they won't give me a GFE until I've found a home & been accepted? My intent of the shopping around is to be ready when the home comes along.

I've been meaning to write a post about how to select a mortgage professional since my original articles on this topic are a little out of date with the introduction of HUD's Good Faith Estimate at the start of this year.

Currently, if a mortgage originator issues a good faith estimate without the property address (when someone is shopping for a home), the addition of a property address does not create a "changed circumstance".  The only time a mortgage originator can issue a new or revised Good Faith Estimate after the initial GFE is if there is a qualified "changed circumstance".   Since the 2010 GFE has certain liabilities associated with various fees that are quoted, a mortgage originator is at risk for having to shell out hard earned cash if there are differences between the Good Faith Estimate issued and the HUD-1 Settlement Statement at closing.  I say "currently" because I do hope that HUD recognizes this significant flaw and that they correct this soon because a home buyer does not have their future home address will be hard pressed to obtain a Good Faith Estimate from any mortgage originator–which defeats the purpose of why HUD created this document!

So how can a home buyer "shop" for the person who is going to help them with one of their largest debts secured to where possibly their most significant asset?   Here's what I recommend:

  • Ask for a rate quote sheet or work sheet.  Lenders may have different names for this but HUD does allow us to provide rate quotes as long as they do not look like a good faith estimate.   If you are going to do this–it's imperative that you do in a short amount of time and provide each LO the same criteria as rates are a moving target.  Currently we're experiencing 2-3 rate changes per day. 
  • Determine if your mortgage originator is licensed or registered and if this is important to you.  Licensed Mortgage Originators are held to higher standards per the SAFE Act than Registered (bank or credit union) Mortgage Originators. If you visit you can verify a license and see your mortgage originators history.
  • Consider what type of mortgage company the mortgage originator works for.  What this boils down to is do they have in-house underwriting?  Where are the decisions on your loan going to be made?  Is the processing down in a far away "processing center" or does the processor work in the same office with the loan originator.   There are differences between correspondent lenders, mortgage brokers, mortgage banks and credit unions.
  • Google your possible mortgage originators.  A Google search may reveal rants or raves about the person you're considering to help you.  You may learn more about the mortgage professional.  Just enter their name into the search box–you might have to add the word "mortgage" if their name is common.
  • Is the mortgage originator or their company affiliated with a builder (the seller) or real estate agent's office?   If the mortgage originator is a builder's site agent, they may be naturally more incentized to look out more for who feeds them the most business–which isn't you.  If they are cozied up in the real estate agents office, make sure they are committed to not disclosing information that you may not want the real estate agent to have (for example, the maximum amount you may qualify for).   If you're comfortable with not having someone intendant of attachments to work with, then this point may not be a huge issue…but it is something to think about.

These are just a few suggestions to help you select your mortgage originator.  Mortgage rates and closing costs are important, but there are other considerations to factor as well. 

If I can answer your questions or help you with a mortgage for a home located in Washington state, please contact me.  I've been originating mortgages for the past ten years and I'm happy to help!

Refinancing Guidelines Need to Loosen Up for Housing Recovery

This subject has been gnawing at me for a while and I’m actually surprised I haven’t written about it here before.  In order for the housing market to really start recovering, I believe that the underwriting guidelines need to relax.  Whoa–you say, isn’t that what got us into this mess in the first place?  Well, I’ll argue that it was more of folks being able to buy more than they could afford (via stated income) that drove up prices and put them into homes where they could never afford the the payments over folks who used home equity by consolidating debts or doing who knows what with the cash (hopefully they banked it…in a safe place).

Helping someone keep their home by taking advantage of the lower interest rates prevents a foreclosure or short sale.  Yes, we have the Home Affordable Refinance Programs (HARP) thanks to President Obama–but many don’t qualify and many who do are not taking advantage of this temporary program.   FHA Streamline refinances now require an appraisal OR no closing costs can be financed–how is that better for American home owners during this time? 

If it were up to me, I would make it possible for home owners who have demonstrated they pay their mortgage and debts on time and who have documented steady employment to have their appraisals waived and closing costs financed so they don’t have to dip into their hard earned savings to finance their refinance.  Now this does happen sometimes with Fannie Mae’s HARP program…but not with Freddie Mac (which requires an appraisal and limits closing costs) and not with FHA.

Why penalize home owners who’s property values have plummeted because their neighbors sold their homes via short sale, lost it due to a legitimate foreclosure or plain walked away from their obligations?  Why punish home owners who have been making their payments and who qualify on every other point EXCEPT the appraised value?  If their payment is being reduced, it helps stabilize the neighborhood and reduces the risk of default for the mortgage servicer.  Loan to values need to be eliminated on rate-term refinances where a tangible benefit for the home owner exists.

We also need to eliminate the securitization factors of when Fannie or Freddie bought the existing mortgage for it to be eligible for a HARP refi.  I recently had a client where it showed on Fannie Mae’s site that he indeed has a mortgage owned by Fannie Mae–it was not until we received an error message trying to underwrite it through DU (the automated underwriting system) that we called Fannie Mae to discover that the loan had been securitized (purchased by Fannie Mae) one day too late to qualify (March 1, 2009).  This person’s loan closed in December 2008, was sold the the bank and then took months for Fannie Mae to purchase.  This means this upside-down home owner does not qualify to reduce his payment by $250 per month.  Imagine what the $250 a month would do for him and/or the economy.  It gives him some probably needed monthly financial wiggle room and he just might spend a little more which helps our economy too.  (Loans need to be purchased/securitized by Freddie Mac no later than May 31, 2009 to qualify).

These are just a few thoughts that have been a bee in my bonnet… or worse!   Don’t get me started on home owners with existing mortgages that have private mortgage insurance hitting a brick wall when trying to do a HARP refi (most pmi companies are not cooperating) or not being able to include second mortgages (even “purchase money”) in a HARP refi.   Or how FHA insured loans will soon be more expensive for borrowers seeking to refinance or purchase with the increase of the annual mortgage insurance premium.

Please contact your elected officials in Congress if you have had issues with obtaining financing…they are making originating loans tougher and tougher as I write this post. 

I’m afraid it’s going to get worse before it will get better.  Many people who need help and who would qualify for the refinance with exception of the appraisal…are not able to get it.  Many don’t want to risk the cost of the apprasial (around $500) to attempt a refinance in these economic times.

King County Assessor’s Office Adds Photos of Properties

The King County Tax Assessor’s office has recently added photos to your tax records–including historic photos if they’re available.  These photos are from a home I owned in South King County on North Lake (by Weyerhauser’s corporate office) from 1999 – 2005.  It’s pretty cool to see the home when it was a classic funky lake cabin back in October of 1967.

Where the camper and carport is in this photo was  my son’s bedroom and my office when I lived there years ago.  Below you can see they added a bedroom and my future office became the garage.


Here’s the now picture they have of this view (the lake is on the other side):


To see what photos King County has of your home (and it never hurts to review your tax records) visit this site: and find your property by entering your address or tax parcel number.  If you need help finding your tax parcel number for your home in King County, please contact me. 

Once you locate your property, click the “My Property Detail” tab and scroll down.  You should see more photos and floor plans, if they’re available. 

Note: the above photo is not from the county…just one from when we lived in the home.

No guarantee how the photos will be…but it’s fun checking them out and they’re free.  You may also be able to order photos from of your home from the Washington State archives if your home was built prior to 1930 which may have a better quality (not taken for tax purposes).

Hat Tip to West Seattle Blog via Twitter