Archives for June 2013

Friday Funny

I can’t remember the last time I shared a “Friday funny”… I’m sure it was well before HUD-1’s awful attempt of the 2010 Good Faith Estimate, Dodd-Frank or HVCC regulations.  This was circling around our office and I just had to share this!

mortgage humor

Happy Friday!

NEWS FLASH: House Key Opportunitiy Program is no longer available

I just received this message from the Washington State Housing Finance Commission regarding the state bond program “House Key Opportunity”:


We have been informed by our investment bankers that due to market conditions, we can no longer offer a 2.5% (government) and 2.75% (conventional) interest rate for the House Key Opportunity Program. As of June 25, 2013 at 4:00 p.m. we will no longer be taking House Key Opportunity Program reservations. All existing House Key Opportunity Program reservations will be honored.

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The 7/1 ARM

With the 30 year fixed rate trending higher over the past few weeks, some may be considering an adjustable rate mortgage (ARM) for the lower rate. An ARM may be worth your consideration if you are planning on not retaining the home or mortgage for longer than the initial fixed period. When contemplating an ARM, you should also factor the CAPS which limit how much the rate can adjust when the fixed period is over and on future adjustment dates.

In today’s post, we’ll compare the 7/1 adjustable rate mortgages to a 30 year fixed – please remember that the rates quoted below are subject to change… and they WILL change (probably before I’m able to publish my post).   For your personal rate quote for your home located anywhere in Washington, please click here.

The 7/1 adjustable rate mortgage has a fixed rate for seven years. After 84 months, the rate may adjust up or down no more than 5% (this is the first “cap”).  The highest or lowest the rate may ever adjust in it’s lifetime is limited by 5%.  After the first adjustment, at 84 months, the rate is fixed for 12 months and then may adjust up or down annually, on the anniversary of the first adjustment date, no more than 2%.  The annual adjustments are limited by the lifetime cap and by the “floor” (the very lowest the rate can adjust).

Rates quoted are as of 7:30 am, June 26, 2013 and are based on a loan amount of $400,000 with a loan to value of 80% and credit scores of 740 or higher for a purchase in Seattle closing by July 31, 2013.

30 year fixed rate: 4.500% (apr 4. 658%) priced with 0.981 discount points.

  • Principal and interest payment:  $2,026.74
  • Principal balance at 7 years: $348,105.21
  • Principal and interest paid at 7 years: $170,246
  • Principal balance at 10 years: $320,357.88
  • Principal and interest paid at 10 years: $243,208

7/1 adjustable rate: 3.875%  (apr 3.683%) priced with 0.883 discount points. The highest the rate can ever be for the life of the loan is 8.875% (5 percent cap plus 3.875% note rate).  The lowest the rate can ever be is 2.25% (the margin).  The margin is added to the current index (LIBOR) at the time of adjustment to determine the new rate, subject to the limits of the caps.  As of today, the 12 month LIBOR is 0.688.

  • Principal and interest (P&I) payment: $1,880.95
  • Principal balance at 7 years: $343,240.85
  • Principal and interest paid at 7 years: $158,000
  • P&I at first adjustment period (month 85): WORSE CASE – rate adjust up to 8.875% with P&I of $2,920.71. BEST CASE: rate drops to the floor of 2.250% with P&I of $1,767.41.
  • Principal balance at 10 years: WORSE CASE is $327,543.74. BEST CASE is $311,605.70
  • Principal and interest paid at 10 years: $263,145 assuming worse case adjustments or $221,627 assuming best case adjustments.

Here is the Fed’s booklet about adjustable rate mortgages, which I encourage you to read if you are considering an ARM.

If you are considering buying or refinancing your home located in Pasco, Puyallup, Port Angeles or anywhere in Washington state, I’m happy to help you!




Are you reading this post from Google Reader?

It seems like a bad April Fools joke… except it’s going to take place on the first of July instead of the first of April: Google Reader is going away.

If you are reading the articles I publish at Mortgage Porter via Google Reader, I encourage you to take a few moments to subscribe in the upper left corner of my blog.

You can receive my articles via email or by Feedburner RSS.

Your information is kept private and will never be sold. Subscribing is only for receiving articles that I publish on this blog, The Mortgage Porter.

As always, you can unsubscribe at anytime…but why would you do a silly thing like that? 🙂

Seriously, I do appreciate my readers. Thank you!


What may impact mortgage rates this week: June 24, 2013

Mortgage rates are still marching higher this morning. As I’ve mentioned many times over the past couple years, mortgage rates rise much quicker than they come down, as we are experiencing that right now.  As I begin to write this post on 7:00 am on June 24, 2013, the DOW is down 243.  MBS are down over 100 bps as investors continue to sell mortgage backed securities as the end of the Fed’s manipulation of mortgage draws near.

Here are some of the scheduled economic indicators to be released this week:

Tuesday, June 25: Durable Goods Orders; S&P Case-Shiller Home Price Index; Consumer Confidence; New Home Sales

Wednesday, June 26: Gross Domestic Product (GDP); GDP Chain Deflator

Thursday, June 27: Personal Consumption Expenditures (PCE); Core PCE; Personal Income; Personal Spending; Initial Jobless Claims; Pending Home Sales

Friday, June 28: Chicago PMI; Consumer Sentiment Index (UoM)

I’m checking pricing for mortgage rates and we have long since left the 3’s for 30 year fixed… looks like if rates stay on this pace, it won’t be long before we are back to rates in the 5% range. Which historically speaking is still low…however, it doesn’t feel so low to those who have become accustomed to the artificially low rates we’ve enjoyed the past couple years.

As of 7:30 am, for a 30 year fixed rate based on a loan amount of $400,000 and an 80% loan to value with a 740 minimum credit score, I’m quoting (ready for this??):

  • 4.750% priced with 0.064% discount, essentially at “par” or as close to zero points and zero rebate as I can get with the lenders we work with (apr 4.830).
  • 4.625% is currently priced with 1.090% discount points (apr 4.921%).

Remember, mortgage rates change constantly, often several times a day – especially with how volatile the markets have been. If you would like a mortgage rate quote based on current pricing and your personal scenario for a home located anywhere in Washington state, where I’m licensed, click here.

Want to know more and keep informed? Subscribe to my blog in the upper right corner, follow me on Twitter and/or “like” me on Facebook.

UPDATE 8:30 am:  Check out the MBS chart from this week’s issue of Mortgage Market Guide Weekly to see how dramatically rates have recently gone up.

Common misconceptions about the Washington State mortgage program: Home Advantage

When most folks think of the mortgage programs offered by the Washington State Finance Housing Commission, they often think of the state bond program (House Key Opportunity).  Washington home buyers and real estate agents may not realize that the WSFHC offers a “revamped” program, Home Advantage Mortgage, which will eventually phase out House Key Opportunity. Both Home Advantage and House Key Opportunity offer down payment assistance to Washington home buyers.

Here are some questions that I often hear about the Home Advantage Mortgage Program:

Do I have to be a first time home buyer?

The Home Advantage Mortgage program is NOT limited to first time home buyers.  It is limited to homes located in Washington state and the buyer must be occupying the property. It is not available for second homes or investment properties.

Is there a recapture tax, like the state bond program?

There is NO recapture tax with the Home Advantage Program. When the home owners sells or no longer occupies their home, the balance of the Home Advantage second mortgage that was used as down payment assistance will be called due.

Isn’t this program just for lower priced homes?

Home Advantage does not have an acquisition limit or restriction to the sales price of the home. Home Advantage does have an income limit of $97,000.  Based on debt to income ratios, I’ve qualified borrowers up sales prices up to $400,000.  How much someone qualifies for will depend on current interest rates and their personal debts.  If a couple with dual incomes exceeds $97,000, it’s possible to remove one of the incomes as long as they still qualify with their debts.

What are the terms to the down payment assistance?

The Home Advantage Program offers a second mortgage based on up to four percent of the first mortgage loan amount at 0% interest with the payment deferred for 30 years. The DPA can only be used towards down payment or closing cost. Home buyers using this program do not have to use the full four percent.

What first mortgage programs are available with Home Advantage?

Washington State Housing Finance Commission offers conventional (up to 97% loan to value), FHA, VA and USDA mortgages. I’m happy to provide you with a rate quote for this (or any) mortgage program.

Do I have to attend a Home Buyer Class to qualify?

In order to qualify for any of the WSHFC mortgage programs, you must attend one of their sponsored home buyer education seminars. All parties who will be on the mortgage must attend this 5 hour course.

As a WSHFC trained mortgage originator, I’m pleased to be able to offer the Home Advantage and House Key mortgage programs. I will be an instructor at two home buyer education classes next month in Seattle. If you or someone you know are interested in buying a home in Washington and would like help with your down payment, please contact me.




What may impact mortgage interest rates this week: June 17, 2013

On Wednesday, we’ll have the results of the Fed Meeting which is sure to influence mortgage rates as traders wait for clues as to what the Fed plans to do with quantitative easing. It is not anticipated that the Fed will make any changes to the Fed Funds rate at this meeting. Ben Bernanke will be holding a press conference on Wednesday following the Fed Meeting.

Here are some of the economic indicators scheduled to be released this week:

  • Monday, June 17:  Empire State Index
  • Tuesday, June 18: Building Permits; Consumer Price Index (CPI); Housing Starts
  • Wednesday, June 19: the FOMC Meeting
  • Thursday, June 20: Initial Jobless Claims; Existing Home Sales; Philadelphia Fed Index

Remember, mortgage rates are based on mortgage backed securities (bonds) and when the stock market is rallying, mortgage rates tend to deteriorate as investors will trade the safety of bonds for the potentially stronger return found with stocks. The reverse is also true.

Want more details? Check out this week’s issue of Mortgage Market Guide Weekly.

If you would like me to provide you with a mortgage rates quote for your refinance or purchase for a home located anywhere in Washington state, where I’m licensed, click here.

Home Buyer Education Class on July 20, 2013

Do you or someone you know want to learn more about the home buying process?

Jim Reppond from Coldwell Banker Danforth and I will be instructing a free home buyers class on Saturday, July 20, 2013 at the Green Lake Library.

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