Happy 80th Birthday, JP Patches!

How perfect that not only is it Good People Day, that it also JP Patches 80th birthday.  If you’re a long time reader of Mortgage Porter, you know I’m a Patches Pal who has watched him since I was a tyke. 

Today’s article in the Seattle PI also announced that the Statue will be complete and unveiled in Fremont on August 17, 2008!  Donations are still needed and JP’s handsome mug will remain on my blog (right side of the page) until the fundraising is complete.

It looks like the statue has changed from what was previously unveiled…I wonder if it Jp1ststatue was the finger issue?  During the unveiling at Fremont last year, the statue featured waving hands of the duo and someone (can’t remember if it was JP, Gertrude or from the crowd) said…"wonder how long until someone breaks off the fingers leaving just one?" 

A tip of the hat to The Tim of Seattle Bubble.

Filed Under: Charity, Current Affairs, Just for Fun

April 3, 2008 is “Good People Day” Pass It On!

I’m a big fan of Gary Vaynerchuck for many reasons:

  1. He’s hysterically funny.
  2. He reviews wine in common easy to understand terms.
  3. He’s mastered web marketing 2.0
  4. He just seems like a real nice guy.  Here’s proof:

Gary has declared today as "Good People Day"…a day to recognize all the good in people instead of focusing on all the negative that often surrounds us. 

I’m so fortunate to have so many wonderful people in my life and I thank you all from family, friends, clients, my blog readers, fellow bloggers, the many people who help us in our business transactions and daily life…I can go on and on and on.   The world is a great place and I thank Gary for reminding us of this and a big tip of the hat to Morgan Brown of Blown Mortgage–both Good People!   My heartfelt thanks to all of you.

Share the love and spread the word: today is Good People Day.

The Current Value of a Preapproval Letter

Fellow Rain City Guide Contributor, Tim Kane wrote an interesting post while I was on vacation asking if preapproval letters are worth their ink in our current market.  Truth be told, this was a valid question prior to our current market conditions and has been for years.   The true worth of the preapproval letter prior to the mortgage "melt down" was based on the merit of the loan originator who was preparing the letter.   I’ve addressed this issue before here and here.   Anyone can type a letter or issue a fancy certificate; has the borrower really submitted supporting documents verify their income, employment and assets required per underwriting (i.e. the borrower has been credit underwritten)?   

The fact is, in today’s current mortgage climate, where loan programs are terminated, guidelines tightened, private mortgage insurance restricted and geographical areas are being deemed soft: a preapproval letter is not any sort of guarantee that a home buyer will be able to close on a proposed home purchase.   

So why bother with preapproval letters?  Here is the current value of a true preapproval letter:

  • It demonstrates that the buyer has completed loan application and is preapproved at that moment for a specific product.   
  • There is a level of commitment that a buyer has if they have provided all of their documentation to a lender over one who has not taken the steps to become preapproved.
  • You know who the loan originator and lender is that the buyer is working with.   I’ve recommended before, and especially do now, that Selling and Listing Agents give the Loan Originator a friendly phone call to introduce yourself…allowing you to see if the LO passes "the smell test".

What can you do if preapproval letters are worth less than they were before?

  • I recommend that all buyers with a credit score below 700 and/or using less than 20% down have a "Plan B" for their mortgage scenario.   Consider "what if" the mortgage scenario they are current approved for is terminated with no notice from the lender or if the area they are buying a home in is considered soft?  Is your Loan Originator able to offer FHA or VA financing?  Note:  FHA and VA jumbos are quite attractive.
  • Home buyers should start even earlier in the home buying process (six months to a year is fine).  A Mortgage Professional can help improve credit scores and provide advise on how work on where they may need more strength to be on the best position possible to buy a home.
  • Allow more time for preapprovals from lenders.  Underwriting (and appraisals) are taking more time in this climate.   Everything is being reviewed under a microscope.
  • Review your current preapproval with your Loan Originator.  There have been recent pullbacks with private mortgage insurance (including LPMI, Fannie Flex and Freddie Mac higher LTV products).
  • Home Buyers should discuss with their Real Estate Agent (not the Listing Agent) the "what ifs" of losing their financing and how it may impact their earnest money deposit.
  • Listing Agents should have their preferred Mortgage Professional review the preapproval letter should their be any doubt regarding the letter in question.  The preferred Mortgage Professional can at the very least provide some valid questions for the Listing Agent to ask the loan originator and Selling Agent.

This market demands that you select a Mortgage Professional based on ability, expertise, commitment and available products.   Trying to get the lowest rate in a market where rates change up to 3 to 5 times per day is insanity.  A true Mortgage Professional will provide you with the most competitve rate available considering your current mortgage plan. 

Happy Easter

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The egg hunts will be wet this beautiful Easter morning on which my cherry trees are finally beginning to blossom.   Happy Easter from our family to yours.

It’s Official: Zero Down is Gone

Iceage_2Unless you’re eligible for VA financing within the conforming loan limits, 100% LTV financing (aka "zero down") is no longer available in the conforming mortgage markets.   

The following products are extinct:

  • Fannie Mae Flex 100
  • Freddie Mac 100
  • My Community Mortgage 100
  • Home Possible 100

If you are short on down payment with credit scores below 680, you should consider FHA financing, which is not as credit score sensitive as conventional programs.  Fannie Mae Flex 97 is still available as well as Home Possible 97.  Both conforming programs allow for 3% down.

Home buyers should also plan on having "reserves" after closing.  The amount of reserves may vary depending on the program from 2 – 6 months of proposed mortgage payments for owner occupied when it’s said and done.   Real estate agents, your first time home buyers may need help with closing costs from Sellers…if they’re willing…in order to meet the reserve account conditions. 

We’re rolling back the underwriting guidelines…not all the way back to the ice age…but close!

If you’re considering buying a home or refinancing, meet with your Mortgage Professional sooner than later so you have time review your credit and consider your options.

Is the Seattle Area in a Recession?

Not according to this graph from USA Today.

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The article reports that Washington State is a leader in exports, which is helping our State stave off recession.   Even though our State seems to be fairing well as compared to other economies, it’s important to keep in mind:

"Businesses and consumers not in areas most affected by the housing boom and bust are not escaping the effects of the housing slump entirely. That’s because in the fallout from the subprime mortgage mess, banks have tightened lending standards for a variety of loans, no matter where the borrower is."

Hat tip to Transparent Real Estate

Don’t Forget Daylight Saving Time

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Just a reminder to spring forward before you go to bed tonight or if you’re very proper, set your alarm for 2 a.m. on Sunday, March 9, 2008 to turn your clock forward.

Ah, Spring…I can’t wait!

President’s Day

Mortgage Master is closed today in observance of Presidents Day.   We will reopen for business as usual on Tuesday, February 19, 2008.