Archives for May 2011

Considering a Mortgage Between $506,001 and $567,500 in King, Pierce or Snohomish Counties? Act Soon!

Our current FHA and Conforming High Balance loan limits are scheduled to roll back on October 1, 2011 unless Congress decides to act quickly and extend them.  In the greater Seattle area, the loan limit for a single family dwelling is $567,500, after September 30, 2011, the conforming limit is set to be reduced to $506,000.  The difference of $61,500 will impact home owners, home buyers and sellers alike.

If you are a home owner in King, Pierce or Snohomish County considering a refinance and your loan amount is higher than $506,000; effective October 1, 2011 your loan amount will be considered a non-conforming (aka a jumbo).   This will impact all counties in Washington State who currently have temporary "high balance" loan limits.

Notes dated after September 30, 2011, conforming loan limits are set to return to those as set forth per the Housing and Economic Recovery Act of 2008 (HERA).  For single family homes, conforming loan limits look like this as of October 1, 2011:

King, Pierce and Snohomish Counties: $506,000 from the current $567,500, a $61,500 reduction.

San Juan County: $483,000 from the current $593,750, a $110,750 reduction in loan limit.

Kitsap County: $417,000 from $475,000, a $58,000 reduction.

All other counties will have a maximum conforming loan amount of $417,000.

Lenders will start to implement this well before the September 30th deadline as no one wants to be left holding yesterday's high balance loan amount when the limits have dropped as they'd have a jumbo mortgage with a conforming rate.   Since the effective date is based on the Note date and not when an application is taken, this will cause the new loan amounts to appear sometime this summer in my estimation.

If you are considering a refinance and your loan amount is above the future loan limit and below the current (between $506,000 and $567,500 in Seattle or Bellevue) you don't want to delay!  Having less financing options available for homes may also impact appraised values as fewer people will qualify based on the jumbo guidelines.

If you are considering buying a home and you're not wanting to come up with the additional down payment required to make up the "gap" between the loan limits, you may want to try finding that home by early summer and close well before September 30, 2011.

If you are selling a home that would be ideal for a "high balance conforming" borrower (in the Seattle/Bellevue area, that would be a sales price of $700,000 to $500,000), I suggest you make sure you price your home competitively and consider all types of financing (including FHA and VA).  Once the new loan limits go into effect, you've lost a lot of potential buyers who may not be eager to come up with the additional funds to stay in the conforming or FHA market. 

If you're a Listing Agent, please do your clients a favor and accept FHA and VA offers.  

I'll continue to keep you posted as more information becomes available.

Which Utilities are Paid at Closing in Washington State

The Talon Group, a local escrow and title company, addresses which utilities are required to be paid at closing.

How much can Sellers contribute towards Closing Cost?

If negotiated in your purchase and sales agreement, a Seller may agree to chip in towards some or all of your bona fide closing costs, prepaids and reserves.  They cannot contribute towards your down payment.  The amount the seller can contribute varies depending on the program type and the amount of home buyer’s down payment. The percentage is based on the sales price and if the credit exceeds the closing cost, the mortgage originator can often use it towards discount points to buy down the interest rate.

[Read more…]

Income Limits and Property Qualifications for USDA Rural Loans


USDA is a government backed program that allows zero down payment on homes that are in a designated rural community for families earning less than a certain income.  A majority of Washington State single family residences (homes and condos) qualify…of course if you live in metropolitan areas like Seattle or Bellevue, odds are your home will not.   To qualify, families must be without "adequate housing" (may not own a home or adequate home), must have reasonable credit history and be able to afford the mortgage (29/41 is the debt to income ratio guidelines).  I've written more details about USDA home loans on this earlier post.

Income limits vary by county and the entire household income is considered (not just the primary borrowers or those borrowers on the mortgage) for determining if the income meets the guidelines.  This is separate from income considered for "debt-to-income" ratios.  USDA loans allow incomes up to 115% of the median income for the area.  Income limits vary on household size from 1-4 person or 5-8 person.

As of the publishing of this article, in Washington, the income limits by county are:

  • King and Snohomish Counties: 1-4 Person $92,600 | 5-8 Person $122,250
  • Island County: 1-4 Person $89,550 | 5-8 Person $118,200
  • Clark, Kitsap and Thurston Counties:  1-4 Person $82,650 | 5-8 Person $109,100
  • Pierce County:  1-4 Person $80,050 | 5-8 Person $105,650
  • All other Washington counties:  1-4 Person $74,050 | 5-8 Person $97,750

You can check current USDA income limits by visiting the USDA site (clicking here)…be sure to click the "guaranteed" option.   Income limits can and do change.  You can also use USDA's income eligibility calculator which will factor in deductions to income.  You're looking for the "guaranteed" results and not "direct".

Income used to determine if a family is under the household income limits includes all those (18 years and older) who will be living in the home regardless of whether or not they're on the mortgage.  Incomes of children over 18 who working AND who are full time students are not factored.

USDA_001 Once you've determined that you meet the household income limits, the next step is to see to see what communities in your area are eligible for USDA financing.  You don't have to go too far from Seattle or Bellevue to find homes that do qualify for this type of mortgage.   Using the USDA site, under "Property Eligibility" click "Single Family Dwelling".  From there you can either enter a specific address or click on the map to narrow down your search. 

Sellers and real estate agents who are working in neighborhoods that qualify should be sure to include this program as an option they'll consider for financing on their offers. 

I'm pleased to offer USDA financing as an option for borrowers who meet the criteria since there is no private mortgage insurance and the program is a 30 year fixed rate. If you have any questions regarding USDA or other mortgage programs for financing homes located anywhere in Washington State, please contact me, I'm happy to help!

Happy Mothers Day


I love this photo of Mom keeping us girls together on a visit to Disneyland many years ago.


Happy Mother's Day!

Pottery Sale Today at Moshier Art Center in Burien

DSC00507 Many delightful and crafty creations of pottery are on sale today at Moshier Art Center in Burien. 

I believe the sale ends at 3:00 and I'm sorry to say the photos I took inside the center came out blurry!  

I'm hoping that my Mom (one of the artist aka "potters") has some photos that I can update this post with.

Here's more info on the B-Town Blog.   Moshier Art Center is located on the east side of 1st Avenue at 430 South 156th, Burien (right by Moshier Field).

Their next sale is scheduled for December 3, 2011… just in time for the holidays!


USDA Zero Down Financing Available in King, Pierce, Kitsap and Snohomish Counties

12/10/11 EDITORS NOTE: Like many mortgage programs, some of the guidelines and features to USDA loans have changed since the original publishing of this post.  This is a good thing to keep in mind whenever researching mortgages on-line.

USDA Guaranteed Rural Housing loans are administered through the USDA to provide financing in areas that are designated as “rural” for families under certain income limits.  Qualified borrowers can purchase a home in a USDA approved area with 100% financing and if the appraised value is higher than the sales price, the home buyer can actually finance their closing costs too (USDA will consider the higher of the two).  It’s a pretty sweet deal for the right home buyer.

Program highlights:

  • 103.5% financing based on the appraised value
  • 30 year fixed rates with government pricing
  • No monthly mortgage insurance.  There is a one-time guarantee fee (similar to a VA funding fee or FHA upfront MIP) of 3.5% which is financed into the new loan.
  • No down payment or first time home buyer requirements
  • 29/41 debt-to-income ratios (exceptions available with compensating factors)
  • Closing costs may be financed into the new USDA mortgage (based on appraised value).
  • Seller contributions allowed for all closing costs and prepaids
  • Gifts from disinterested third parties allowed
  • Primary residence (owner occupied) only
  • Home buyer may not own other adequate housing
  • Single family dwellings or HUD approved condos
  • Subject to household income limits.  Currently (5/6/11) in King County and Snohomish County, the income limits for a 1-4 person household is $92,600 and 5-8 person household is $122,250.
  • No loan limits (income limits factored with debt-to-income ratios will create a loan limit for each specific scenario).
  • Escrow hold backs for repairs allowed up to the lower of 10% of the loan amount or $10,000.

As I write this post, a majority of Washington State qualifies for this government backed program, including Bonney Lake/Lake Tapps, Enumclaw, parts of Maple Valley, North Bend, Duvall, Bainbridge Island, Vashon Island and Gig Harbor.   Click here to see if a specific property is eligible.

EDITORS NOTE: Rates posted below have been EXPIRED for YEARS!!!  Please click here for a current mortgage interest rate quote.

Let’s compare FHA and USDA financing to would look like for a qualified home in Fall City with a sales price of $350,000 utilizing a 30 year fixed rate with 720 mid-credit scores and with the seller paying closing costs and prepaids:


  • Current rate: 4.375% (APR 4.820)
  • Mortgage payment (excluding property taxes & home owners insurance): $1,808.66
  • Down payment required: $0


  • Current rate: 4.250% (APR 5.189)
  • Mortgage payment (excluding property taxes & home owners insurance):  $1,999.34
  • Down payment required: 3.5% = $12,250 (may be gifted by family member)

The USDA mortgage payment payment is $190.68 less per month and cash needed for down payment is $12,250 less than the FHA scenario.

If you are considering buying a home located in a rural community that qualifies, USDA financing could be a prime choice!

If you would like more information about buying or refinancing your home located anywhere in Washington, please contact me.  I’m happy to help!

NOTE:  areas below that are not orange are currently eligible for USDA financing!



Student Loans: Subprime Financing of the Future?

My son is getting ready to start college this fall and although I've done my best to plan and save to help out for his education, I'm not able to foot the entire cost. Like many parents, the 529 I've been religiously plunking away at was butchered when our markets crashed… I've continued plunking every month to this account but it's really a drop in the bucket. I'm very proud of him and he has earned a nice academic scholarship that will help go towards the expense.  He's going to have to take out some student loans and it's something I'm not thrilled about. 

I recently watched a show on CNBC about the student loan crisis and it has me very very concerned.  It's appalling how much it smacks of the subprime crisis.  Some of the stories on the show revealed how predatory some of the student loan companies and some colleges can be when they have a young student wanting "the American dream" and I'm not talking about home ownership, I'm referring to a college education.  Many justify the huge expense because payments are deferred and they believe they'll graduate with employers knocking down their doors.  Some students use their student loan money to buy pizza, beer…even go on a shoe shopping spree.  I understand that students need money for food, but should this be financed?  If they are receiving "student loan money" for essential food, should they only be allowed to use credits on campus?   I'm rambling….

I plan on sharing some of my personal thoughts, experiences and opinions as I venture down this road with my son.  I'll also address how student loans can impact borrowers when they on obtaining a mortgage: first time home buyers.

Any tips from parents of college grads?