Archives for February 2012

Getting ready to pick up my paint brush

Just for fun, I thought I'd share a new project that I'm starting: warning, this has NOTHING to do with mortgages. I'm going to attempt a black velvet painting. Not the paint by number stuff we did as kids, this painting is going to be over five feet tall. Here's my first draft (pencil) of the painting.




This is a recreation of a Mucha painting, and I'm sure he didn't imagine having this done on black velvet.  We'll see how she turns out!  I've made her wine glass larger and added a label to the wine bottle… who knows, maybe I'll paint West Seattle's Luna Park in the background (don't count on it!).

I'm having a tough time finding much material about "how to paint on black velvet". I cannot find a book and this is probably the best advice I've found on the internet for painting on black velvet.

I will share the final results with you…good, bad or ugly! 

What’s the difference between Fannie Mae Homepath and Freddie Mac Homesteps?

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.

[Read more…]

Do I have the best rate possible?

One of my preapproved first-time home buyers asked me if they have the “best rate possible”.  The phrase “best rate” can mean different things to different people, in my opinion, the most common definitions to a borrower would be:

  • best rate possible based on qualifying; or
  • lowest rate possible based on current market pricing.

Best rate based on qualifying means that your credit scores are as high as they can possibly be and you’re putting enough money down (or have enough equity) to where there are as few price adjustments to your scenario.

With FHA loans, there are no price improvements after a credit score of 720 or higher. There is a slight improvement to mortgage insurance premiums with FHA at 5% down. With FHA a 720 score with 5% down will provide you the “best payment”.

With conventional financing, you can see by Fannie Mae’s chart below that there are different price adjustments based on credit score and loan to value. The best pricing on this chart is with 40% down (or equity) with credit scores of 700 or higher. There are additional charts for conventional depending on program features, such as an adjustable rate or the Home Affordable Refinance.


Below is a chart from a lender showing various adjustments based on program, credit score and loan to value.


If you’re interested in obtaining the best rate possible based on qualifying, consider starting the preapproval process very early so that you have time to work on your credit, debts and/or down payment. I enjoy helping my clients develop a plan to put them in best possible situation based on their scenario. Sometimes this may take a month or two and sometimes it may be a year or more, depending on what my clients situation is.

Best rate based on pricing may be the very lowest rate available at that moment, which would take paying additional discount points and would increase your closing cost. Some might think “best rate” is lowest rate at the least amount of cost (par pricing or using rebate pricing).  Whether you want your rate priced with discount (higher fees/lower rate) or rebate credit to pay for closing cost (lower fees/higher rate) is up to the borrower. 

Keep in mind that mortgage rates are a moving target, much like buying stocks. Rates often change several times a day. A mortgage interest rate is only secure once it is locked. Once you pull the trigger to lock in a rate, rates may improve or deteriorate. You can lock in a rate once you have a signed around contract with a specific closing date if you’re buying a home. If you’re refinancing a home, you can lock in whenever you know what your approximate closing date should be.

Mortgage originators are restricted from advertising that they have the “best rate” since this is something a lender cannot guarantee. It’s impossible to know what all our competitors are currently offering in pricing and therefore, no lender can truly say they have the “best” or “lowest” rates.

As a correspondent lender, we work with several banks and lenders and utilize a pricing engine which compares their mortgage rates based on a borrower’s specific scenario so that we can select who has the most competitive pricing at that time available to our company for that borrower.

If you’re considering buying a refinancing a home anywhere in Washington, from Redmond to Walla Walla (and everywhere in between), I’m happy to help you with your mortgage needs. Click here for your personal rate quote.

I’m speaking at Mortgage Tech Summit next week!

At last year's Mortgage Tech Summit, I presented a session on my "talking" good faith estimates and rate quotes. This is something that I do for my clients to help review their personal mortgage scenario.

On February 9 and 10, I'll be in Scottsdale at MTS to share how I am able to work with clients I really enjoy from my blogging and other social media efforts. I'm often contacted by mortgage originators across the country wanting my advice on social media – here's your chance to learn from some of the folks I consider the best in our industry.  I'm honored to be one of the speakers in this line-up and can't wait to attend the other sessions.

If you're a mortgage or real estate professional, I encourage you to check out this event. Learn more at


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And of course, I will be checking my email and voice mail on breaks while I'm away. 

Should I Refinance my 4.5% Mortgage?

I'm pricing out a scenario for one of my returning clients where I helped them with their refinance for their home in Seattle in May of 2009 to a 4.5% 30 year fixed rate. During that time, 4.5% was the lowest rate any of us had seen. Now mortgage rates have been in the high 3s to low 4s depending on current pricing and scenarios.  I thought it would be interesting to share the quotes I've provided my client because I know many others have rates around 4.5% and may be wondering the very same thing: should I refi?

This Seattle home owner has excellent credit (scores above 740) and has an estimated loan to value of 80% or lower. It's possible they may qualify for a Home Affordable Refi since Fannie Mae has securitized their mortgage, however they closed right at the time where it's possible the mortgage may not have been securitized before the May 31, 2009 cut-off. Once we run the loan through Fannie Mae's automated underwriting system, we'll know whether or not it qualifies to have the appraisal waived. At this point, I'm assuming not and therefore an appraisal fee is factored into the APR. 

Here's what I quoted as of 10:30 this morning on February 2, 2012:

3.750% will reduce the monthly payment by $150 and has estimated closing cost of $5620 (apr 3.909). My client will return to their current principal balance in approx. 15 months per the amortization schedule.

3.875% will reduce the monthly payment by $133 and has an estimated closing cost of $3660 (apr 3.891). My client will return to their current principal balance in approx. 14 months.

4.000% will reduce the monthly payment by $121 per month with estimated closing cost at $1779 (apr 4.080). My client will return to their current principal balance in approx. 11 months.

NOTE: Mortgage rates change constantly. For your personal rate quote on your Washington home, please click here.

The monthly savings is only one consideration. If this client were to sell in the near future, retaining his existing mortgage may be the better route as the payoff would most likely be lower with the existing mortgage for this scenario. However, if the home owner does not have plans on selling or is considering converting his home into a rental in the distant (more than 12 months) future, or if the home owner is going to use the extra monthly savings to pay off high interest credit card debt or to build savings, the refinance gains more value.

Whether or not someone should refinance is a personal decision where short and long term financial plans should be reviewed. 

If you are considering refinancing your home located anywhere in Washington, I'm happy to help you. Click here for your personal rate quote.

President Obama’s Refi Plan for Non-HARP Qualified Homeowners #MyRefi


On last week’s State of the Union Address, President Obama announced a plan to help underwater homeowners who do not qualify for a Home Affordable Refinance.  In order to qualify for a Home Affordable Refi (aka HARP 2.0) the home owner’s mortgage needs to have been securitized by Fannie Mae or Freddie Mac prior to June 1, 2009 and meet other qualifications.  If the home owner currently has a jumbo loan, they are instantly disqualified for HARP 2.0. since jumbo mortgages are non-conforming (not Fannie or Freddie programs). HARP is also restricted by existing conforming loan limits and in the greater Seattle area, the current conforming loan limit is $506,000.  Even if you have a conforming loan amount of $567,500 (last year’s conforming loan limit in Seattle), current HARP guidelines limit you to a $506,000 loan amount.

President Obama’s proposal is to help underwater home owners who have made their mortgage payments on time and who do not qualify for HARP 2.0 is to allow them to have an FHA insured mortgage without an appraisal.  FHA insured mortgages have different loan limits than conforming. In the Seattle area, the FHA loan limit is $567,500. Obama’s new refi program, should it come to fruition, will be limited to FHA loan amounts. 

FHA mortgages are a great program, however they’re also very expensive when compared to conventional loans.  This is because they have both upfront and monthly mortgage insurance fees, which are constantly being raised by Congress. FHA mortgages have both upfront and monthly mortgage insurance regardless of the loan to value of the property. 

As of 8:30 this morning, an FHA rate on a loan amount of $567,500 in Seattle – Bellevue with a 720 or higher credit score is 3.750% for a 30 year fixed rate (apr 4.767).  Principal and interest with the financed UFMIP is $2,654.46 and the monthly mortgage insurance premium is an additional $515.85 for a total (PIMI) payment of $3,170.31, not included property taxes and insurance.  This PIMI payment equals an interest rate in the low-to-mid 5% range if you compare it to a conventional mortgage.

NOTE: Rates quoted in this post are from February 1, 2012; for a current rate quote for your home located in Washington State, click here.

This program is also costly as Obama plans to pay for it by charging banks additional fees and we all know that this trickles down to the consumer. The Temporary Payroll Tax illustrates how banks have increased mortgage rates AND the cost to extend a rate lock commitment.

It’s reported that the new program will not require an appraisal or proof of income and will be available for primary residences only. Employment will need to be verified and mortgage payments must have been made on time for the last 6 months.  Although this is “Obama’s Refi Plan”, we have to wait and see if Congress approves it and how the big banks and lenders will embrace this program.

If you currently have an FHA insured mortgage, you don’t need to wait and see if Obama’s refi plan will help you. You may already be able to refinance with an FHA streamlined refi without an appraisal. 

If you would like to stay informed of mortgage programs like this, please subscribe to my blog (upper right corner) or follow me on Twitter and Facebook.  You can unsubscribe anytime!

If you are interested in a mortgage for a home located anywhere in Washington state, I’m happy to help you! I have been originating all types of loans at Mortgage Master Service Corporation since 2000.  Click here for your no-hassle mortgage quote on your Washington property.