Archives for September 2011

VA Funding Fee to be Reduced Effective October 1, 2011 [UPDATED: NOT!]

UPDATE: VA Funding Fees were only briefly reduced.

NOVEMEBER 8, 2011 UPDATE: VA Funding Fees are in a political tug-of-war. Per Circluar 26-11-17:

3. Possibility of Congressional Action.  VA believes it is highly likely that Congress will pass a bill keeping funding fees at their present level. 

Stay tuned. I was surprised to see that the fees were reduced when others are jacking fees up. 

VA mortgage loans that close on or after October 1, 2011 will have reduced funding fees except for IRRL (Interest Rate Reduction Refinancing Loan) transactions, which will remain unchanged at 0.50%.  A qualified Veteran with less than 5% down payment, using this benefit for the first time will see the funding fee drop from 2.15% to 1.40%. At a time when it seems many mortgages, like FHA and USDA, are increasing their mortgage insurance fees, it's nice to see VA do something that may have a positive impact.

Here is the VA Funding Fee table from Circular 26-11-12.


Also unlike conforming and FHA insured loans, VA is not restructuring their loan amounts.  In King, Pierce and Snohomish County, an eligible service person can purchase a home with zero down payment up to $500,000 with a VA mortgage loan.

If you are selling a home, be sure to consider VA buyers — especially considering that FHA and conforming loan limits are reduced.  VA loans are just as easy to close as a conforming loan.  Real estate agents, please don't steer sellers away from these transactions.  Why exclude any buyer in this (or any) market?

Buying Your First Investment Property

EDITORS NOTE: This post was written in 2011. Some of the programs, like Fannie MaeHomePath, may no longer be available.

With real estate becoming more affordable and mortgage interest rates at an historic low, it’s easy to see why some people are considering buying their first investment property.  Financing an investment property has more requirements to it than buying an owner occupied property because it carries more risk to the lender. However if you have enough income, plenty of reserves set aside and good credit, you may be surprised how easy the process can be and what programs are available.

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Risk and Reward: the Trade-offs of Buying a Distressed Home

Foreclosure Many home buyers are interested in taking advantage of the lower prices offered on distressed homes.  Distressed homes are those that are short sales or foreclosures (REO) and in the Seattle area, the sales price of distressed homes were discounted about 37.4% in August over a "non-distressed" home.

Something to keep in mind before you buy a "discounted" distressed home is that these transactions are not as "easy" as a traditional, non-distressed sale.  For starters, you're most likely dealing with a bank (and/or one of their representatives) as one of the selling parties. As much as you would think they really want to sell the property to get it off their books, they can leave you wondering where their heads are at throughout the transaction.  

This may be especially true with a short-sale if there are two mortgages on the property.  Sometimes the second mortgage/lien holder will take their sweet time approving the transaction and just prior to closing, only to demand that "someone" pay them thousands of dollars to close.  By the way, this extortion money payment must be disclosed on the HUD-1 Settlement Statement or it's fraud.  Even if the first and second mortgage are with the same bank/lender, please do not assume they won't play games with you or each other…it happens.

Something else that I've recently seen happen with distressed property is vandalism…just days before closing, someone steals the appliances or even takes plants from the garden. Vandalism could happen to non-distressed home as well but since most of these properties are vacant, they seem to be getting targeted.

Tums These transactions tend to take longer to close and may have more drama. Be prepared to have your rate lock extended, perhaps a few times!  If you're patient and can keep in mind that you're probably getting a discounted price, the rewards may be worth it if you can tolerate the risk and all that goes with it.

In my experience, I've found that Fannie Mae Homepath properties have had the least amount of issues especially when you factor in the attractive financing programs that are available for owner occupied and investment property.  

If you're considering buying a short sale or foreclosed home anywhere in Washington state, I'm happy to help you with the financing.

Conforming Loan Limits for Washington from October 1, 2011 until December 31, 2011

With the revised conforming loan amounts only being in effect until the end of the year, I'm going to stick with limits listing single family dwellings.  Conforming loan amounts below are scheduled to be in effect from October 1, 2011 through December 1, 2011 and are listed by loan limit.

$506,000:  King County, Pierce County and Snohomish County

$483,000:  San Juan County

$417,000:  Adams, Asotin, Benton, Chelan, Clallam, Columbia, Cowlitz, Douglas, Ferry, Franklin, Garfield, Grant, Grays Harbor, Island, Kittitas, Klickitat, Lewis, Lincoln, Mason, Okanogan, Pacific, Pend Oreille, Spokane, Stevens, Thurston, Wahkiakum, Walla Walla, Whatcom, Whitman and Yakima Counties.

I'm hoping that home owners "stuck in the gap" of yesterday's higher loan amounts and the pending loan amounts may be able to refi with a Home Affordable refi or what ever President Obama has up his sleeve with the recent jobs bill…we're waiting to learn more information about his proposal.

Once I learn of the 2012 loan limits (typically around November), which Fannie Mae has hinted could be even lower than what you see here, I'll be sure to share that information with you.

FHA Loan Limits for Washington homes from October 1, 2011 to December 31, 2011

UPDATE: This post is outdated – please check current loan limits listed on the links on the left.

It appears that Congress will not be passing an extension of the "temporary" higher loan limits any time soon.  Loan limits below are in effect from October 1, 2011 through December 31, 2011 and are for single family dwellings.  For a complete list, please visit HUD's site. I'll be updating my blog with 2012 FHA loan limits once they are made available (typically around November).

$506,000:  King County, Pierce County and Snohomish County

$483,000:  San Juan County

$384,100:  Clallam County

$362,250:  Clark and Skamania Counties

$342,700:  Chelan and Douglas Counties

$322,000:  Jefferson County

$316,250:  Island County

$307,050:  Kitsap County

$304,750:  Whatcom County

$295,250:  Skagit County

$293,250:  Thurston County

$271,050:  Adams, Asotin, Benton, Columbia, Cowlitz, Ferry, Franklin, Garfield, Grant, Grays Harbor, Kittitas, Klickitat, Lewis, Lincoln, Okanogan, Pacific, Pend Oreille, Spokane, Stevens, Wahkiakum, Walla Walla, Whitman and Yakima Counties.

NOTE: If you currently have an FHA High Balance mortgage that exceeds the loan limits shown above, you may still be eligible to refinance with an FHA Streamline refi (FHA to FHA) without an appraisal. If you have enough home equity, you may want to consider non-conforming (jumbo) programs.

The Low Down: Comparing FHA to Fannie Mae Homepath Mortgages

EDITORS NOTE: Fannie Mae is no longer offering the FannieMae HomePath mortgage program. If you are considering buying a Fannie Mae HomePath property (foreclosure that is owned by Fannie Mae) in Washington state, I’m happy to help you. 

If you’re thinking about buying a home with minimum down payment requirements in the greater Seattle area, you may be considering a property that is owned by Fannie Mae and eligible for the Fannie Mae Homepath Mortgage or using an FHA insured loan which most properties qualify for.  When home buyers contact me about a Fannie Mae Homepath mortgage, they often ask how it compares to an FHA insured loan. Both are great programs and the benefits may vary depending on credit score, down payment and the type of property.

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How long does a mortgage rate quote last?

When checking around for who has “the best mortgage rate” or just getting an idea of what mortgage rate you may qualify for based on your personal scenario, many will obtain a “mortgage rate quote“.  Mortgage rates change constantly, similar to the stock market, as they’re based on mortgage backed securities (bonds).

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My Online Resume

I love social media and technology. Here's a quick presentation I created using powerpoint and slideshare. Let me know what you think!