My Second Home

February 1, 2007 by Leave a Comment

I often tell the story, when I’m meeting with first time homebuyers who are a bit discouraged with today’s home prices, about my first home.   We were renting a nice apartment in Kent when a builder had left a flyer on our car promoting that if we could afford $X in rent, then we could afford $X of a brand new house!  WOW!  I couldn’t believe it…but my wheels were turning.   

I began picking up the Homes & Land magazines and before you know it, we had landed with a real estate agent and were looking at homes…with that bright and shiny brand new home in our minds.   In reality, we qualified for a 900 square foot older rambler with 3 bedrooms and 1 bathroom…and we pounced on it for about $65,000.   In 1989, our interest rate was in the 11% range.  My commute out of NE Tacoma to downtown Seattle was horrendous!  Even back then.   

We lived there about one year and we were experiencing a market similiar to what we have lately in our area.   I began to panick that we would be "trapped" in that house forever.   Although I was grateful to own a home, it was not where I wanted to raise our future family.   My (then) husband and I discussed matters and agreed to wait 5 years to move.   The next day, when he was at work, I bought a house…subject to his approval, of course!   He wasn’t very happy when I called him at work to tell him what I had done.   He forgave me when he learned that our house we had purchased a year ago was worth $90,000!   

We bought our second home.  This one was new construction in southwest Madronameadows Federal Way.  The plat was marketed as "The Affordable Street of Dreams".   This photo is not of our second home, but is in the neighborhood (Madrona Meadows…there were  no Madrona trees in the plat…btw) and is similiar in size and age.

I thought I would provide you with the sales history on our former home in Madrona Meadows (these figures are not for the home in the photo):

  • We purchased July 1990 for $124,495
  • We sold in April 1993 for $134,900 (approx. 7.5% appreciation over 3 years)
  • Sold again in July 2003 for $215,000 (approx. 9% appreciation in 10 years)
  • Last sold in March 2006 for $303,000 (approx 14% appreciation in 3 years)

Owning a home can be the best savings plan a person can have.  In 16 years, the property more than doubled in value (241%), provided income tax benefits, not to mention shelter!  Back in 1990 when we purchased in Madrona Meadows, there was "bubble talk" as well and in our area, we have yet to see real estate take a nose dive.  It may simmer or slow down a bit, I certainly would not recommend that potential buyers sit on sidelines waiting for that event.  Our local economy is too strong for that to happen anytime soon.   In addition, "first time" homes are great purchases because there will always be a market for them.   

Filed Under: Financial Planning, Residential Purchase

How to Pick a Lender

January 10, 2007 by 1 Comment

Picking your mortgage professional is not as easy as selecting a good cantaloupe or watermelon atJ0400581  the market.   As tempting as it may be, I certainly wouldn’t recommend thumping a Loan Officer on the head to see if there’s anything in between the ears or smelling them to see if their fresh!  So how does a potential buyer decide who they should use for possibly the financing one of their largest investments in their lifetime?

  [Read more…]

Filed Under: Financial Planning, Mortgage

The “R” Word

January 4, 2007 by 2 Comments

Resolutions.  I was not going to post New Years resolutions since they are everywhere.J0309664_1..however, I can’t pass up this opportunity.  Beyond the perennial lose 10 pounds, start excising, or stop smoking; here are a few goals to consider for your financial health.   I plan on revisiting these goals more indepth on future blogs…so I’ll try to be brief for now.

  1. Have an emergency fund established with at least 3 months of living expenses in an accessible account.   You can also use a HELOC for an emergency fund account IF you have the discipline to leave it alone.   A HELOC can be an excellent tool and should be applied for before you have an emergency situation (loss of employment, medical, or a tree landing on your house from sweet Mother Nature) and may not be able to obtain one.   In the event of an emergency, do you have your finances organized?   A recent article I read from the Financial Planning Association recommends having copies of all your pertinent financial documents in a binder that you can find quickly in the event you need to evacuate your home.

  1. Know your score, or at least what is being reported on your credit history currently.  Credit scores are not only used for determining what mortgage programs and rates you qualify for.   They also impact insurance, credit card rates and auto loans to name a few.  In addition, reviewing your credit will help determine if you credit is being used without your knowledge (identity theft).   You can visit www.annualcreditreport.com for a free credit report.   This is provided by the “big 3 bureaus” and it may not provide your score without paying an additional fee.  As you are allowed one report from each bureau annually, I would recommend that you pull your report from one bureau every four months to keep a constant monitor on your credit activity.  There may be simple ways to improve your credit score that you can determine once you have the information available.

  1. Create or review your Will.  I had a pretty cheesy will until I married last year.   My husband and I spent quite a bit of time with an attorney to make sure we have everything set up as we wish it to be instead of letting the government have it.   You would be surprised how easy, with home values, a retirement account, etc. that your net worth can grow.  Whether you have children or not, a will is a must.   After you have a will, it’s a good idea to have your information organized for your loved ones.   A great website to check out is www.readyornot.biz.

  1. Get a mortgage check-up.   If your mortgage has an adjustable rate (ARM), if you are paying private mortgage insurance (PMI) or if you have two mortgages on your home, this could be a great time to review your current scenario to see if you can reduce your monthly payments.   There is no sense in paying more than you need to, unless you plan on selling the home soon.   An Annual Mortgage Review is more in-depth than checking out your mortgage to current rates and products.

  1. Eliminate credit card debts.  It is too easy to fall into credit card debt.  Banks do not want you to ever pay them off with all the interest they earn.   Start with paying additional towards your smaller debts and then work toward the next one.  This is a slow process, but worth it.  It is boggling how much the interest can mount up on these types of loans with no tax benefit to you.  Improving  monthly cash flow reduces stress and allows you to eventually save for more important life items such as retirement and college.

I know this is a few days past New Years…however, it’s always relevant.   I wish you and yours a very happy, healthy and prosperous New Year.   Cheers!

Filed Under: Credit Scores and Reporting, Debt Restructuring, Financial Planning, Identity Theft, Interest Rates, Mortgage

You’ve Got To Start Somewhere

November 28, 2006 by 1 Comment

I have been meaning to do this (create my own blog) for quite a while now.  Sadly, it has taken all of the recent bad press about others in the mortgage industry for me to get off my duff and a "snow day" in Seattle (when most everything else grinds to a halt).    

I am a Certified Mortgage Planning Specialist.  I have been in the mortgage, title and escrow fields for over twenty years and have been amazed at what I have seen.  I love my career.  There is nothing more rewarding for me than to see how much owning a home can impact a family’s quality of life.   

It is equally amazing to me that up until recently, Loan Originators (aka Loan Officer, Mortgage Consultant, Mortgage Planner, Loan Specialist… to name a few) have been one of the few individuals without any requirements in our great state of Washington, to handle a family’s largest investment, their mortgage.   Thankfully, this is all about to change.   In fact just yesterday, I completed my on-line application with the Department of Finance to become a Licensed Loan Officer.   Amazing, isn’t it?   Up until now, only Realtors, Escrow Officers and Appraisers have been licensed (for the most part)…but the person advising you of the best mortgage and devising financial strategies for your future could have absolutely no training whatsoever or even be a known felon!

Governor Gregoire signed House Bill 2340 which will regulate all Loan Originators (UNLESS they are employed by a bank, such as Washington Mutual, Countrywide or Wells Fargo) providing residential mortgage loans in Washington State.    Here are the basic requirements effective January 1, 2007:

  1. All Loan Originators will need to pass a basic compliance skills examination (this will not be available until mid 2007.  Until then, we are just required to obtain our license and then we get to keep the license assuming we pass the test in 2007).
  2. Continuing Education courses will be required on an annual basis.
  3. Background checks will be required prior to licensing.  Persons with felonies may be allowed to practice if their felony was prior to seven years ago.   

This is, like my first blog, at least somewhere to start.  It is definitely overdue.   Many consumers and real estate professionals that I have talked to are often shocked to learn that there has been no regulation of mortgage originators (for the most part) in our state.    It will be interesting to see how this will all evolve.   As I mentioned earlier, I completed my application (all nine pages) yesterday.   The questions that were presented blew me away–most were based on "have you ever committed a felony, fraud, caused a company to lose their bond…as well as wanting a 10 year employment history".  I had the joy of being fingerprinted just last month (I’ve got sweaty hands).  The real change in our system, after the background checks are complete, will be seeing how many loan originators will or will not pass the exam.   

It’s not entirely the loan originator’s fault for not being educated.   Most mortgage companies do not offer training.  There are many courses and presentations available on line and "live".  Currently, in most cases, it’s up to the loan originator to be motivated and passionate enough about their field to take these steps.   Effective January 1, 2007, unless they work a big bank, it will be mandatory if the loan officer wants to continue their practice in Washington State.

Filed Under: Financial Planning, Legislation, Mortgage
« Previous Page