Helping Washington State homeowners learn more about their mortgage options.
This weekend, Fannie Mae will be updating DU (Desktop Underwriter) to reflect the new higher minimum down payment requirements. I’ve written about that here.
This new underwriting guideline will also impact Fannie Mae HomePath mortgages, bringing the minimum down payment from 3% for owner occupied purchases to 5% down.
Edward DeMarco, Acting Director of the FHFA, pretty much confirmed that we can anticipate lower conforming loan limits next year. This is from his prepared remarks for “Getting Our House in Order”:
There’s been a lot of recent chatter about the possibility of conforming loan limits being reduced in 2014 that home buyers in the greater Seattle area and home owners should be aware of.
Reuters reports that Denise Dunckel, a spokes person for the FHFA recently stated “a gradual reduction in loan limits is an appropriate and effective approach to reducing taxpayer’s mortgage risk exposure”.
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.
Fannie Mae and Freddie Mac both offer special incentives to entice buyers to properties they have foreclosed on. Fannie Mae’s program is called Homepath and Freddie Mac’s is Homesteps. Although the names some similar, their incentives are VERY different. What Fannie Mae Homepath and Freddie Mac Homesteps do have in common is that the properties are generally in better shape than other distressed homes.
Wall Street Journal’s Market Watch has named the Seattle – Bellevue – Everett area as one top five markets in the nation for selling your home. From the article:
Homes are flying off the market in Seattle. Listed properties spent a median of 56 days on the market as of January, down 38% from a year ago, according to Realtor.com. That’s almost half the median time homes are listed nationally….
….buyers have been left with a smaller number of homes to bid on, which in turn encourages multiple offers on properties that can push the purchase price higher than the asking price, experts say. There were fewer than 4,000 homes for sale in the Seattle metro area as of January, down 44% from a year prior, according to Realtor.com.
This morning’s S&P/Case-Shiller Home Price Index also provides some positive data revealing that the Greater Seattle’s prices are up 8.2% year-over-year.
For hopeful home buyers, this means they need to make sure they have their ducks in a row before making an offer on a home. Home buyers in competitive markets like Seattle, Bellevue or Everett should contact a mortgage professional early on to start the preapproval process. The preapproval process typically only takes a day or two once the home buyer provides all the necessary supporting documentation. However it pays to get started early just in case there are situations that could be improved (such as credit scores, savings, etc.).
The FHFA released their report on mortgage interest rates showing that rates trending higher since late November 2012 for the 30 year fixed conforming mortgage. If you’ve been following my rate quotes on Twitter, you may have realized this trend. Although rates are still very low, they are trending higher and have been for a few months.
If you are considering selling your home in the greater Seattle area, please don’t rule out buyers who are approved with FHA or VA financing. FHA and VA loans are much easier to underwrite and process in today’s market. In fact, they’re pretty much like a conventional mortgage. Plus buyers who qualify for FHA or VA loans are able to have higher loan amounts than conforming in our area.
Loan Limits for Seattle – Bellevue – Everett
Conforming: $506,000
FHA: $567,500
VA Jumbo: $1 million. $500,000 is the loan limit if the Veteran is looking for a zero down home. After $500,000, the down payment is 25% of the difference between the $500,000 limit and the sales price.
NOTE: Congress has been discussing rolling back loan limits. This is another reason to consider selling now if you have a home that would be impacted with reduced loan limits.
By the way, I have been in the real estate industry for just shy of 27 years. My first fourteen years were in the title and escrow industry and for the last 13 years, I have been a mortgage originator at Mortgage Master Service Corporation. I’ve worked with many real estate agents over my career and I’m happy to recommend one to you if you are considering selling or buying a home.
I’m working with a couple in Seattle who would like to buy a home. They have excellent credit (scores of 740 or higher) and are planning on using $70,000 for their down payment and closing cost. They want to know how much home they can buy based on their down payment.
The following rate quotes are effective as of January 24, 2013 at 12:20 pm. Rates change constantly, for your personal rate quote for a home located in Washington state, click here.
Conforming High Balance allows them to buy a home priced at $576,000.
The conforming loan limit in Seattle/King-County is currently $506,000. Using a conventional mortgage, they could buy a home priced at $576,000.
Current mortgage rates for a 30 year fixed conforming high balance ($417,001 – $506,000) based on this scenario is 3.750% (apr 4.094).
3.750% is priced as close to “par” as possible meaning there is as little rebate credit or discount points priced with the interest rate. We could adjust the rate slightly higher to create more rebate credit to help pay for closing cost or we could reduce the rate by paying more in discount points.
The loan to value based on a sales price of $576,000 and loan amount of $506,000 is 87.874% which means the Seattle home buyers will have private mortgage insurance (pmi). For this client, we’re opting to include the pmi in their mortgage payment instead of paying it as an upfront additional closing cost or doing “split premium” mortgage insurance.
The principal and interest payment is $2,343.36 plus private mortgage insurance of $282.52 gives us a “PIMI” payment of $2,625.88. Property taxes and home owners insurance are additional.
The Seattle home buyers will negotiate the seller paying for remaining closing cost and prepaids/reserves estimated at $7900, leaving their amount due at closing very close to $70,000. If the sellers opt to not pay for closing cost and prepaids, the buyers can use rebate pricing (slightly increasing the mortgage rate) to offset the cost.
FHA allows them to buy a home priced up to $637,500.
FHA mortgages in the Seattle/King County area have a loan limit of $567,500. With a down payment of $70,000 they could buy a home priced up to $637,500. The big difference between FHA and conventional financing is the mortgage insurance. FHA has both upfront and monthly mortgage insurance.
The current mortgage rate I’m quoting for their FHA scenario is 3.375% (apr 4.059%).
This rate is priced with a little more rebate to help reduce closing cost. If the Seattle home buyers want a lower rate with less rebate credit, they certainly can opt for that. Mortgage rates are not locked until we have a bona fide contract and the rates will be “floating” while they shop for a home.
The principal and interest on this rate and loan amount is $2,552.80 with mortgage insurance at $562.43 providing a PIMI payment of $3,115.23. Property taxes and home owners insurance are additional.
After the rebate credit, if the buyers negotiate the seller paying the remaining balance of their closing cost, prepaids and reserves in the amount of $4,000, the buyers will need around $70,000 for funds due at closing.
VA loans allow them to purchase up to $780,000 with a “VA Jumbo” loan.
The VA zero down loan limit in Seattle is $500,000. When a loan amount exceeds the limit, eligible Veterans can have a down payment based 25% off the difference between the sales price and loan amount.
For example, a sales price of $780,000 less $500,000 loan limit = $280,000. $280,000 x 25% = $70,000 down payment.
The current rate I’m quoting for this VA Jumbo 30 year fixed loan is 3.250% (apr 3.379).
The principal and interest payment on this loan is $3,136.31. There is no mortgage insurance on a VA loan. Property taxes and home owners insurance are additional.
If the seller pays for $4500 of the Veteran’s closing cost and prepaids, then the amount due at closing will be around $70,000.
USDA loans are not eligible in the Seattle area because it’s not a rural area.
If you are interested in buying a refinancing a home located anywhere in Washington state, I’m happy to help you. I’ve been originating residential mortgages at Mortgage Master Service Corporation since April 2000.
The Federal Housing Financing Agency (FHFA) who oversees Fannie Mae and Freddie Mac, confirmed that conforming limits for 2013 will be unchanged from 2012. This means that a single family 1-unit residence in the greater Seattle area has a conforming loan limit of $506,000. Loan amounts above conforming limits are considered “jumbo” or non-conforming.
Four counties in Washington continue to have “high balance” loan limits above the “general” loan limits:
King County, Snohomish County and Pierce County:
1 Unit: $506,000
2 Unit: $647,750
3 Unit: $783,000
4 Unit: $973,100
San Juan County:
1 Unit: $483,000
2 Unit: $618,300
3 Unit: $747,400
4 Unit: $928,850
The remaining Washington counties have “general” loan limits:
Adams, Asotin, Benton, Chelan, Clallam, Clark, Columbia, Cowlitz, Douglas, Ferry, Franklin, Garfield, Grant, Grays Harbor, Island, Jefferson, Kitsap, Kittatas, Klickitat, Lewis, Mason, Okanogan, Pacific, Pend Oreille, Skagit, Skamania, Spokane, Stevens, Thurston, Wahkiakum, Walla Walla, Whatcom, Whitman and Yakima Counties:
1 Unit: $417,000
2 Unit: $533,850
3 Unit: $645,300
4 Unit: $801,950
Rhonda Porter is a Licensed Mortgage Originator MLO121324 living in the greater Seattle area. Rhonda began her career in 1986 in the title and escrow industry and began her mortgage career in 2000. She enjoys helping people understand the mortgage process and started writing The Mortgage Porter in late 2006. Read More…
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