Archives for December 2012

The Fed says….Mortgage Rates to Remain Low

2012-08-20-0845This morning FOMC announced no changes to the current Fed Funds rate (this is no surprise). The Fed has decided to keep the Fed Funds rate at 0 – 0.25% until the unemployment rate is under 6.5%.  This may be some good news to home owners who have HELOCs as many of them have rates tied to the prime rate, which is based on the Fed Funds rate.

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Are First Time Home Buyers Missing Out?

A recent survey shows that those buying their first home are making up a smaller percentage of home buyers. From US News:

The Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, released last week, found that first-time home buyers were purchasing only 34.7 percent of the homes sold in October. That’s down from 37.1 percent in September, and is the lowest percentage ever recorded by the survey.

This decline surfaces as purchases of non-distressed homes—houses that are not in foreclosure—have increased dramatically in 2012. The report shows that the vast majority of the homes being sold are regular purchases—accounting for 64.7 percent of all houses sold in October, up from 55.7 percent in February. The increase is a sign of strength in the housing market, as fewer people are buying homes in foreclosure.

The article continues to speculate that part of the reason why first time home buyers are not participating as much as other buyers is partly due to tightening underwriting guidelines. If someone has been considering buying their first home, I highly recommend they get started with the pre-approval process early. 

Lenders want to avoid another mortgage meltdown and want to make sure that borrowers qualify for the new mortgage. That might sound like a silly or obvious comment, however during the “subprime era” many home buyers did not qualify for the mortgage. Ultimately, underwriting guidelines are intended to measure a borrowers capability to repay the mortgage and to not have the home become a “distressed property”. 

Underwriters are looking for a borrowers financial strengths and weaknesses when reviewing an application for a mortgage. In an article I wrote a few years ago, I compared this to a chair with each leg of a chair representing a financial quality that underwriters consider: credit, employment, income and assets.

First time home buyers don’t need to be discouraged, they do need to be prepared. Mortgage rates are extremely low making this a great opportunity to buy if one wants to.

I’ll share some tips on what first time home buyers can do in a follow-up post.

Stay tuned!

Mortgage Update for the Week of December 12, 2010

iStock-000020911287XSmallMortgage rates continue to be very low levels. Freddie Mac has been reporting average interest rates for 30 year at under 4% for the last year with 15 year fixed rates being under 3% for the last six months.

While the Fed works at keeping rates at artificially low levels, Congress is considering increasing the guarantee fees to new conventional mortgages to help fund programs that have nothing to do with Fannie Mae, Freddie Mac or even the housing recovery. The guarantee fees (aka g-fees) are factored into the pricing of a mortgage rate. FHA mortgage loans are also becoming more expensive in 2013 with the increase of mortgage insurance premiums.

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2013 FHA Loan Limits for Washington State

HUD has confirmed that 2013 FHA loan limits will remain unchanged from 2012. 

King County, Snohomish County and Pierce County

  • 1 Unit: $567,500
  • 2 Unit: $726,500
  • 3 Unit: $878,150
  • 4 Unit: $1,091,351

Benton and Franklin Counties:

  • 1 Unit: $275,000
  • 2 Unit: $352,050
  • 3 Unit: $525,550
  • 4 Unit: $528,850

Chelan and Douglas Counties:

  • 1 Unit: $342,700
  • 2 Unit: $438,700
  • 3 Unit: $530,300
  • 4 Unit: $659,050

Clallam County:

  • 1 Unit: $384,100
  • 2 Unit: $491,700
  • 3 Unit: $594,350
  • 4 Unit: $738,650

Clark and Skamania Counties:

  • 1 Unit: $418,750
  • 2 Unit: $536,050
  • 3 Unit: $648,000
  • 4 Unit: $805,300

Island County:

  • 1 Unit: $381,250
  • 2 Unit: $488,050
  • 3 Unit: $589,950
  • 4 Unit: $733,150

Jefferson County:

  • 1 Unit: $437,500
  • 2 Unit: $560,050
  • 3 Unit: $677,000
  • 4 Unit: $841,350

Kitsap County:

  • 1 Unit: $475,000
  • 2 Unit: $608,100
  • 3 Unit: $735,050
  • 4 Unit: $913,450

Kittitas County:

  • 1 Unit: $328,750
  • 2 Unit: $420,850
  • 3 Unit: $508,700
  • 4 Unit: $632,200

Mason County:

  • 1 Unit: $310,000
  • 2 Unit: $396,850
  • 3 Unit: $497,700
  • 4 Unit: $596,150

San Juan County:

  • 1 Unit: $593,750
  • 2 Unit: $760,100
  • 3 Unit: $918,800
  • 4 Unit: $1,141,850

Skagit County:

  • 1 Unit: $373,750
  • 2 Unit: $478,450
  • 3 Unit: $578,350
  • 4 Unit: $718,750

Thurston County:

  • 1 Unit: $361,250
  • 2 Unit: $462,450
  • 3 Unit: $559,000
  • 4 Unit: $694,700

Whatcom County:

  • 1 Unit: $375,000
  • 2 Unit: $480,050
  • 3 Unit: $580,300
  • 4 Unit: $721,150

Adams, Asotin, Cowlitz, Ferry, Garfield, Grant, Grays Harbor, Lewis, Lincoln, Okanogan, Pacific, Pend Oreille, Spokane, Stevens, Whakiakum, Walla Walla, Whitman and Yakima Counties:

  • 1 Unit: $271,051
  • 2 Unit: $347,009
  • 3 Unit: $419,425
  • 4 Unit: $521,250

Related post: 2013 Conforming Loan Limits for Washington State

Seattle PI reports Surging Home Prices in King County

This week Aubrey Cohen from the Seattle PI reported that sales prices in King Count jumped up just shy of 20% last month:

The median price of a King County house that sold in November was $385,000, up 19.7 percent from a year earlier and 4.1 percent from this October, the Northwest Multiple Listing Service reported Wednesday. The median price in Seattle was $425,000, up 18.1 percent from last November and 1.2 from October.

Some non-distressed homes continue to experience bidding wars as inventory remains low. Here are some tips on what you can do to prepare for a “bidding war”.

Experts speculate that part of the jump in sales price could be from home buyers taking advantage of extremely low mortgage rates to buy a higher priced home.

If you are interested in buying a home, whether it’s your primary home, a vacation home or an investment property, I strongly recommend getting preapproved first. Being preapproved will help give you an advantage over unprepared buyers. 

If you are considering buying a home anywhere in Washington, I’m happy to help you with your mortgage needs. I have helping people buy and refinance homes in Washington at Mortgage Master Service Corporation since April 2000.

Does Santa qualify for a Reverse Mortgage?


EDITORS NOTE: This post is a re-print of an article that I wrote a couple years ago. With the holidays upon us, I couldn’t resist the opportunity to share this again and also remind my readers that we do offer reverse mortgages at Mortgage Master Service Corporation.

If Santa and the Mrs. would like to add a steady tax-free income each month while he’s volunteering, making toys and traveling around the world, he may want to consider how a Reverse Mortgage could benefit their lives.

Reverse mortgages can be a financial tool for Seniors who would like to have access to additional funds.   A reverse mortgage is essentially a loan against home equity for borrowers who are at least 62 years old.

Unlike a traditional mortgage where you make monthly payments, a reverse mortgage pays from your equity.   Instead of paying down your balance every month, your loan is actually growing as it provides tax free income to the Senior.  The mortgage is paid off when the last senior leaves the home.  Here is a calculator to see how much cash you may qualify for utilizing a reverse mortgage.

Reverse mortgages are easy to qualify for as long as their is enough equity in the property:

  • Youngest borrower must be 62 years of age or older.
  • No income or credit score requirements.
  • Counseling is required from a HUD approved agency (no cost to the borrower).
  • Property must be the primary residence.  (It does not need to be mortgage free).

In addition, reverse mortgages are non-recourse (the borrower can never owe more than the appraised value).

Santa and Mrs. Claus can use a reverse mortgage to:

  • receive a lump sum of money (with no payments due until the last borrower leaves the home).
  • receive a monthly tax free payment.
  • purchase a primary residence.

The money can be used for anything they wish from bridging the financial gap between what they planned for retirement and the reality of retirement to vacationing or what’s on their Christmas list.

I’m pleased to be able to offer Reverse Mortgages and the Family Opportunity Mortgage programs both designed to help Seniors. Questions?  Please contact me or your local Mortgage Professional.

HUD extends FHA’s Flipping Waiver through 2014

HUD recently announced they will extend the “anit-flip waiver” through December 2014. Without this waiver, home buyers would not be able to use FHA financing for homes that are considered being “a flip” ( a property that is quickly resold at a much higher price).

From the Federal Register:

Prior to the waiver, a mortgage was not eligible for FHA insurance if the contract of sale for the purchase of the property that secured the mortgage was executed within 90 days of the prior acquisition by the seller, and the seller did not come under any of the exemptions to this 90-day period specified in the regulation.

Through the regulatory waiver, FHA encourages investors that specialize in acquiring and renovating properties to renovate foreclosed and abandoned homes, with the objective of increasing the availability of affordable homes for first-time and other purchasers, helping to stabilize real estate prices as well as neighborhoods and communities where foreclosure activity has been high. The waiver is applicable to all single family properties being resold within the 90-day period after prior acquisition, and is not limited to foreclosed properties. Additionally, the waiver is subject to certain conditions, and mortgages must meet these conditions to be eligible for the waiver.

The Waiver continues to be limited to sales meeting the following conditions:

  • All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
  • In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the Waiver will only apply if the lender meets specific conditions and documents the justification for the increase in value.
  • Seller must be by the owner of record
  • Property may not have been a repeatedly “flipped” over the past year
  • Property was marketed openly and fairly
  • The Waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program. [Reverse Mortgages]

When a home is being resold 20% or higher than what the seller purchased the property for in less than 90 days, often times a second appraisal will be required and the seller will need to show documentation to support the increased value in the home, such as receipts for the improvements made. A property inspection report will also be required by the lender to assure the quality of the improvements made to the property. Any health or safety issues disclosed by the property inspection will need to be corrected.

If a home has been re-sold withing 91-180 days at more at 100% or more than the seller’s acquisition cost, the same conditions will apply.

NOTE: If a second appraisal is required, the home buyer is not allowed to pay for it per HUD. And you can pretty much count on that second appraisal being required. Thanks to LO Comp being passed by the Fed in 2010, your friendly mortgage professional is not allowed to pay for the appraisal either.  

Investors (aka Flippers) who are reselling in a short period of time for a much higher amount than their acquisition cost should be prepared for the cost of the second appraisal when the buyer is using a FHA mortgage for financing. They should also retain detailed records of improvements (including all receipts) when they’re planning to quickly resale a home. The seller’s acquisition cost is the sales price of the home, plus the seller’s closing cost, including real estate commissions. It does not include any repairs. 

If you are considering buying a home located anywhere in Washington State, I’m happy to help you! Click here for a mortgage rate quote for homes located anywhere in Washington.  I’ve been originating home loans at Mortgage Master Service Corporation since April 2000, including FHA insured loans.

Mortgage Rate Update for the week of December 3, 2012

mortgageporter-economyNot everything that impacts mortgage rates are scheduled economic indicators, like what I’m sharing with you below in this post. Sometimes Congress tacks on fees that are priced into interest interest rates too. For example, the House of Representatives just passed a new “G-Fee” to help fund an Immigration Bill, HR 1629. This “G-Fee” will impact new Fannie Mae and Freddie Mac mortgages. Why new home buyers and people refinancing have to pay for this bill which does not relate to mortgages during a time housing is trying to recover puzzles me. Click here to see how your House Rep voted on this bill.

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