When someone becomes “preapproved” for a mortgage, it boils down to they qualify for a certain mortgage payment based on their income and debts (DTI aka debt to income ratio). A home buyer qualifies for the loan amount of the new mortgage and their funds available for down payment and closing cost determine the sales price.
How can a preapproval change?
September 14, 2012 by 2 Comments
King County Home Prices are up 7% from last year
August 8, 2012 by Leave a Comment
The Seattle Times reports that home prices for King County have jumped up 7.2% from July last year. This pencils out to $25,250 with the median sales price of $375,250. The article also notes that closings are up 26% YOY which is great news for the housing industry. It doesn’t matter how low mortgage rates or home prices are unless transactions can actually close.With less inventory, many buyers are finding themselves in bidding wars or having a property in contract before they can get their offer together. From the article:
“Another recurring theme is the dramatic drop in the number of homes for sale. Home listings have been sliding for a full year; in July the number of home listed for sale was down 38 percent year-over-year…
…distressed home listings — bank-owned properties and short sales — are down 60 percent from last year. This also contributes to the small number of listings and brings up home prices.”
Part of the reason for the low inventory, per Seattle real estate economist Matthew Gardner, is that many people are not able to sell because they are underwater with their mortgages and don’t want to go through a short sale.
If you’re considering selling and your property is non-distressed (you have enough equity to sell), this could be a great time with more buyers than sellers.
If you’re underwater with your home and would like to sell once you have equity, you might consider a HARP 2.0 refinance (if your last conforming mortgage closed prior to June 2009) or an FHA streamlined refi (if your existing mortgage is FHA). While you wait for home values to continue to trend higher, why not save on your monthly mortgage payments?
If you’re a home buyer, I cannot stress enough how important it is to be fully preapproved BEFORE you start shopping for a home. If you’re considering buying or refinancing a home in Seattle, King County or anywhere in Washington state, I’m happy to help you!
Survey Says!
July 10, 2012 by Leave a Comment
According to Fannie Mae’s Monthly National Housing Survey, many Americans believe that home prices are on the rise. If you are shopping for a home in the Seattle area, you probably know this to be true and may have experienced a bidding war or two.
If you are considering taking advantage of today’s very low mortgage rates and home prices, it’s crucial that you get preapproved by a qualified local mortgage originator.
A preapproval means that you have provided your supporting income and asset documents to prove you have the ability to purchase the home. If you have not provided income and asset documents to your lender, you are most likely not “preapproved” and may only be “prequalified”.
I’m happy to assist with the financing of your home located anywhere in Washington state. It all starts with a review of your financial scenario – click here to start the application process.
More Listing Agents Performing “Sniff Test” on Mortgage Originators
May 21, 2012 by Leave a Comment
I’m noticing that more listing agents are performing, what I like to call, “sniff test” to check out the lender who has prepared the preapproval letter. By the way, I think this is an excellent idea. This is especially true if the listing agent is reviewing multiple offers, which is happening more in the greater Seattle area with non-distressed homes that are desirable and priced right.
The sniff test is typically a phone call by the listing agent so they can get an idea about the mortgage originator. The listing agent should not ask personal information about the potential home buyer (such as credit scores or available funds).
When a listing agent contacts me, I know they’re sizing up:
- how quickly I returned their phone call or email
- how experienced I am at closing my clients specific mortgage program (for example, Fannie Mae Homepath, Freddie Mac Homesteps or FHA transactions)
- how long I’ve been in the mortgage industry (over 12 years at Mortgage Master Service Corporation)
- how quickly we can close by
- to learn more about our company (family owned and operated since 1976)
I’ve heard from many local real estate agents that they need to make sure the loan can actually close. Often times, a preapproval letter may not be worth more than the paper it’s written on if the mortgage originator has not done their homework with the actual preapproval. NOTE: you are NOT preapproved unless you have provided your mortgage originator your income and asset documentation.
I wrote about “investigating your preapproval letter” many years ago at Rain City Guide. The issue with preapproval letters then was probably that anybody and their brother was a mortgage originator back in 2007. Now there are far less mortgage originators however, if the mortgage originator works at a bank or credit union, they may still lack experience (they’re not required to be licensed). A licensed mortgage originator may be new to the industry as well. Some large internet mortgage companies have been hiring LO’s who can pass the national exam but still lack experience. There’s a big difference between being a good a passing exams and successfully closing loans.
While the number of mortgage originators is dramatically down, it’s still important to make sure your mortgage originator has the capability to see your transaction to closing. It may be a consideration to make sure your mortgage originator can pass a sniff test.
Mortgage Scenarios for a West Seattle Townhome – OPEN TODAY!
April 28, 2012 by Leave a Comment
It's National Openhouse Weekend and I'm promoting a new listing for of one of my West Seattle clients. This townhome is conveniently located in Highland Park at 7705 11th Avenue SW, Seattle and will be open today, Saturday, April 28, 2012 from 11:00 am – 3:00 pm by Wendy Hughes-Jelen of Mountain to Sound Realty. For photos and more information about this property, click here: MLS#349459.
Here are a few financing options based on the list price of $219,950. Rates quoted are as of April 27, 2012 and are based on credit scores of 720 – 739 with closing towards the end of May, just in time to move in for Memorial Day. Home owners insurance is estimated at $50 per month. This is not a condo, so there are no Homeowner Association Dues.
FHA 30 Year with a minimum down payment of 3.5%.
3.750% has a total estimated payment of $1437.04 with funds due at closing in the amount of $8963 including net closing cost, prepaids and reserves (apr 4.728).
Here is a detailed video review of the above quote:
Conventional financing with 10% down payment using private mortgage insurance with debt to income ratios under 45%.
3.875% (apr 4.397) using monthly private mortgage insurance with a total estimated monthly payment (including estimated insurance and taxes) of $1,259.02 and estimated funds due at closing in the amount of $28,478.26.
or…
4.125% (apr 4.465) using split premium mortgage insurance. Similar to FHA, a portion is paid upfront which reduces the monthly premium. I'm pricing this rate slightly higher to create rebate credit to help reduce net closing cost for the buyer of this West Seattle townhome. Total estimated monthly payment is $1,223.22 with funds due at closing estimated in the amount of $27,671.44.
Here is a video where I review both of the 10% down scenarios with private mortgage insurance quoted above:
This is just a small sample of possible mortgage programs for this home. In addition to conventional and FHA financing, the sellers will accept VA and cash.
If you would like me to prepare a personal rate quote based on your scenario on this or any home located anywhere in Washington, please click here.
UPDATE: There will be a Brokers Open (public welcome) this Wednesday, May 9, 2012 from 11:00 am to 1:00 pm at this home.
Seattle Bidding Wars: What You Need to Know to Help “Win” Your Home
April 24, 2012 by 4 Comments
I’m noticing more “bidding wars” on new listings in the greater Seattle-Bellevue area. Because of the lack of non-distressed inventory and current low interest rates, multiple offers may occur driving the sales price higher than the original offered price. Sellers and listing agents may try to create an environment for a bidding war by slightly delaying the review of offers and by pricing the home either at or slighltly under what may considered “market value”.
Here are a few tips to remember should you find yourself in a possible “bidding war”.
Be prepared to provide a strong offer. Get preapproved early. This will help you know how much you qualify for and the seller will most likely require a strong preapproval letter that illustrates you are strongly qualified and that your loan will successfully close.
Determine your financial boundaries. What is the most you want to pay for the home and for your monthly mortgage payment? Bidding wars can be charged with emotion – keep your financial goals in mind.
I often will provide several preapproval letters at staggered amounts for clients when they’re getting ready to make an offer. The letters might start at their preferred offer price and go up to the limit of their financial comfort zone is (of course they have to for that amount).
Work with a reputable lender. It is not unusual for listing agents to contact the mortgage originator to confirm the preapproval letter and to do a “sniff test” of your mortgage originator. If the listing agent is comparing two offers that are essentially the same, the mortgage originator may be a deciding factor.
Consider a shorter time period for closing. Depending on the seller’s situation, for example if the home is vacant, a shorter closing might help you win the bid. Contact your mortgage originator to see what time frame they can realistically close a transaction before writing an offer for a quick close.
Don’t forget the appraisal. Regardless of what you and five other bidders are willing to pay for a home, it still needs to appraise based on what other homes like have recently sold and closed for. The seller does not have to accept a lower appraised value. Your lender will rely on the lower of the appraised value or sales price for your mortgage scenario.
Making a non-contingent offer. Sometimes a real estate agent may suggest that you need to make an offer “non-contingent”. Consider how much earnest money you’re willing to lose if something happens where you elect not to proceed with your transaction (for example, if your appraisal comes in lower than the sales price and you’ve waived your financing contingency). NOTE: making an offer non-contingent on financing may be less risky depending on your personal scenario.
Be prepared to do your home inspection prior to making an offer. It’s not unusal for greater Seattle area homes that are preparing a bidding war to request inspections be done prior to your offer. This will also help you make your offer “less contingent” it’s not subject to an inspection.
Being as prepared as possible may help give you an advantage over other offers. The sellers and listing agent wants to be assured that what ever transaction they select in a multiple offer situation has the best odds of successfully closing.
I am happy to assist you with your preapproval and financing of your next home located anywhere in Washington state. I have been originating mortgages, including conventional, FHA and VA at family owned and operated Mortgage Master Service Corporation since April 2000. We are a well respected correspondent lender established in 1976 by the Porter family.
Reader Question: Does Getting a Mortgage Preapproval Impact my Credit Score?
April 18, 2012 by Leave a Comment
One of my Seattle subscribers wrote me to ask this great question:
“I’m considering purchasing a home soon, but I’m concerned about getting preapproved too early. If I get preapproved and don’t find a home until the preapproval expires and I need a new one, will the credit hit from the first approval damage the score of my second approval?”
Credit scoring is intended to reflect a persons credit habits. When a credit report is pulled by a mortgage originator, a persons score may go down a few points. The initial pull of your credit report will help determine if there’s anything that needs to be address to help improve your scenario before you find your next home. It’s not uncommon to find that your score may be lower than what you estimated, perhaps there’s a parking ticket, or or a payment was reported late that you’re not aware of. This is the time to find out.
Loan preapprovals generally last around 90 days (this may vary depending on how old your supporting documentation is that was provided to validate your preapproval). Your credit report may not need to be repulled until you have a bona fide offer if at all depending on when your transaction is scheduled for closing. Sometimes a “second preapproval” can be updated with new paystubs or bank statements.
Credit scoring is accumulative. So if you’ve been shopping for a car or a big screen television, these inquiries compounded with one from your mortgage lender will have more of an impact than just the credit being pulled for a preapproval alone. By the way, if you’re shopping for new credit before (or during) being preapproved for a new home, be ready to explain every one of your credit inquiries.
Odds are, if you’re worried about your score dipping from being preapproved you really should proceed with having it pulled by a local, licensed mortgage originator now…just in case a little elbow grease can help pump up your scores. Something as simple as paying down a debt to be under 50 or 30 percent of the total credit line may make a difference for an improved mortgage rate or qualifying for certain mortgage program.
I tend to lean towards getting preapproved as soon as possible. At the very least, it’s an opportunity to develop a game plan to make sure you’re in the best position possible for qualifying for your next mortgage. In addition, I’m seeing more non-distressed home homes in the greater Seattle area that are having multiple offers or “bidding wars”. If you’re considering buying a home, you’re going to need to be prepared with a preapproval letter from a reputable lender. You never know when a home that you want to make an offer on may become available.
If you’re considering buying a home in Seattle, Redmond, Walla Walla or anywhere in Washington, I’m happy to help you with your mortgage preapproval.
Buying a Vacation Home in Washington
March 29, 2012 by 2 Comments
W
ashington State has so many great areas for folks to vacation in. From the deserts in eastern Washington, rugged mountains, the Pacific coastline or the San Juan Islands; I think our state pretty much has it all to offer. It’s no wonder I’m seeing more clients taking advantage of lower home prices and interest rates to buy a second home.
Mortgage rates are essentially the same for a second home as they would be for a primary residence. Here are some requirements lenders have for financing an vacation (or second) home:
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