This photo was taken in West Seattle on October 4, 2007.
A Sign of the Times
October 6, 2007 by Leave a Comment
Buyer must ask Seller if they can change loans with the new Financing Addendum
October 5, 2007 by Leave a Comment
Later this month, the Northwest MLS will be releasing a newly revised purchase and sale agreement. Of particular interest to me, as a lender, is the following on the Financing Addendum (Form 22A, page 1, paragraph 1):
"Buyer may not change the type of loan or the lender without the Seller’s prior written consent after the agreed upon time to apply for financing expires."
This is important for sellers because they would naturally assume from a preapproval letter that financing is proceeding. However, if the buyer decides to switch lenders for whatever reason, the seller is unaware that the buyer is not moving forward based on the preapproval letter that was originally presented with the mutually accepted purchase and sale agreement.
In order to avoid giving the seller a reason to balk at a transaction in progress, it looks to me like the buyer had better be preapproved and have their financing figured out prior to writing up a purchase and sale agreement. They should avoid program changes…and also…switching lenders mid-stream.
Apology not acceptable
October 4, 2007 by 13 Comments
Last night I had someone (who I thought was a client) email me stating:
"I appreciate your time and help with this thus far, but we’ve decided to go with a different source for our mortgage needs.
We feel going with someone more local to our area and whom already has a working relationship with our realtor is best for us. I hope you understand and again, thank you"
Fact is…I don’t understand at all.
I’ve met with this couple personally twice thus far and we have countless emails and phone calls back and forth at all hours of the day. I have them preapproved for their mortgage which is a 10% down jumbo that I structured the financing to obtain the best rates for them by structuring a conforming first and second combo. I have guided this couple and provided them with a strategy for buying their next home together. I have met every one of their mortgage needs.
They hooked up with a real estate agent who used my preapproval letter to secure their home and then did switch-a-roo to her preferred Loan Originator. It’s a sneaky snakey pass off when everything has been done. It’s steering the customer.
How would their real estate agent feel if I would have steered the buyers to another agent that I work with after she has invested the same amount of time with her? Whenever she called me, I responded immediately. I never gave her a reason to have doubt in my abilities as a Mortgage Professional. This is all about steering to her preferred lender. I wonder if it’s one their company has an interest in? I also wonder how the Listing Agent would feel if they knew that the lender who wrote the preapproval letter that was presented with the offer is not the lender being used for financing at this stage in the game? Should a Loan Originator retract their preapproval letter in this situation? Obviously, I’m not use to someone doing this to me and I’ll get over it. It’s simply not how I treat people.
I’m not sure if my bigger beef is with the real estate agent or the buyers.
Why should I understand? I don’t.
Concerned questions from a home owner regarding the “credit crisis”
August 12, 2007 by Leave a Comment
The other day, one of my past clients asked me:
“I was wondering if there are issues that could arise if this credit crisis continues in a downward spiral? The market hasn’t been doing well in the past week with concerns about the “credit crisis”.
Is there any reason for concern that we could have our home loan called in early if our mortgage company gets into trouble? Are there other issues that we should be thinking about if this causes a ripple affect to other areas of the economy?”
Are You Preapproved for an Interest Only Mortgage?
July 20, 2007 by Leave a Comment
You better double check with your Mortgage Professional. As of Sunday, July 22, 2007 underwriting guidelines are tightening up for interest only conventional (loan amounts $417,000 and lower) mortgages.
- Fixed Rate Mortgages (ex. 30 year fixed with 10 year interest only payments) will be based on the full PITI payment using the Note Rate. (If there is a temporary buy down, the qualifying is still based on the Note Rate).
- Interest Only ARMs: Qualifying is based on the full principal and interest payment (PITI) at the fully indexed rate (index + margin).
- Negative Am. (deferred interest) ARMs: Qualifying will be based on the full PITI at the fully indexed rate amortized over the full repayment term using the loan amount based on the amortization cap. (I am not a fan of Option ARMs and I have never provided one to any of my clients. For some people, they have probably been very successful tools…most of my clients, once they understood how the mortgage works, would opt for an interest only ARM instead of this mortgage).
So what does this mean?
Previous Guidelines: If a buyer was preapproved using a 5/1 Interest Only LIBOR ARM based on an interest rate of 6.125% (note: this is NOT a rate quote and is only for purpose of illustrating the guideline changes) earlier this week qualified for a payment in the amount of $2041 (plus taxes and insurance), they could borrow $400,000.
New Guidelines: The current index for LIBOR is 5.4 plus the margin of 2.375% for this particle loan program = a fully indexed rate of 7.775% for the same ARM mentioned above. Qualifying the borrower for a $2041 payment based on a 30 year amortization at 7.775% means the borrower now qualifies for a loan amount of $284,200.
This will obviously have a dramatic impact on purchases and refinancing out of interest only products. This is still very new and we’ll see if non-conforming products follow suit.
Here’s what you need to do:
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Agents: Contact your Mortgage Professional today to see if you have clients who are preapproved for conventional financing with any interest only payments. Confirm your buyer is still qualified. (Your LO may need to check Fannie Mae guidelines).
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Buyers/Borrowers: If you’re using interest only products with loan amounts of $417,000 or less, contact your Mortgage Professional to verify you are still approved.
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Buyers: Now more than ever, it’s crucial that you meet with a Mortgage Professional prior to buying a home to become preapproved. With mortgage programs and underwriting “tightening”, there will be less options compared to just a few months ago.
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Buyers/Borrowers: Having solid credit is also more important. You should review your credit a couple times a year. If your scores are below 680, work on improving your credit.
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Borrowers who currently have ARMs: Do not wait until just before your ARM is about to adjust if you are considering retaining your home. Contact your Mortgage Professional six months in advance to review your credit in case you need to make adjustments and/or repairs.
This is not the time to be hiding or not dealing with your mortgage…guidelines are changing quickly and you need to be proactive and responsible with your largest investment. If you need help, find a qualified Mortgage Professional such as a Certified Mortgage Planning Specialist, who has been acquired additional training and education or get a referral from someone you trust and respect.
Affordable Kent Townhome
July 18, 2007 by Leave a Comment
This town home is conveniently located on the East Hill of Kent just off of 104th. With a two-car garage, 3 bedrooms and 2.5 bathrooms…what else could you want? How about a private fenced backyard…you can have it all.
This home is offered at $307,000.
MLS#27107903
24626 103rd Avenue SE, Kent, Washington 98030
Property taxes: $2,734
I’m not a real estate agent; I am a Mortgage Planner who is happy to help you finance this fine home.
For more information, you can 
contact your Realtor or the listing agent, Jim Whitnell of Re/MAX.
What will mortgage interest rates be in October?
July 18, 2007 by Leave a Comment
Who knows…it could be a trick or a treat! This is a question asked earlier this week from one of my past clients. She has a friend who is buying a home that is new construction. The builder has "encouraged" her friend to use their preferred lender by offering $5,000 towards closing costs. The builder’s lender is refusing to quote rates, which unless they’re locking for 120 days or more…the rates they quote are useless. Technically, if the LO has taken a loan application, they are required to provide a Good Faith Estimate within 3 days.
Lenders do offer 120 day locks. There may be a non-refundable upfront fee and the rate is the higher (the longer the term of the lock, the higher the rate or cost for that rate will be). If rates are lower in October than they are today for a 120 day lock, you’ve lost your upfront fee. Even if you decide not to close on that property, that fee is gone. Not to mention, 9 times out of 10, builders take longer than they anticipate to complete construction of the home. At this point, they’re just pouring the foundation. The LO knows the buyer cannot or will not lock that rate yet.
I should add that this home buyer is well qualifed so being preapproved is not an issue. I don’t advise getting preapproved from a Mortgage Professional and then ditching them over 0.125% in interest rate. It’s very possible that the builder may require you to get preapproved from their lender even if you’re seeking financing elsewhere, in this case, I wouldn’t feel too badly about shopping them. It’s not your fault you’re being forced to provide your financial information to a lender who’s shacked up with a builder.
My advice to my past client’s friend is to:
- Request a Good Faith Estimate based on a 30 day quote just to see for the heck of it what the LO would disclose for fees associated with the rate.
- Compare other lenders using the same scenario to get an idea of what the builder’s lender fees are compared to other lenders offering the same rate.
- When the construction is closer to 60 days out, obtain updated GFEs. At that point, you’re in a good position to lock in your rate.
- It doesn’t hurt to ask! The $5,000 credit may be legit or built into the rate. It was probably all ready factored into the sales price of the home, however it’s too late to negotiate that once the purchase and sale agreement has been signed and some builders will not budge. Should you want to work with your lender vs. the builder’s lender, there is no reason why your agent cannot submit an offer asking for the same credit.
Rescuing Homebuyers from Lending Tree
July 16, 2007 by 4 Comments
I have a couple of clients who did not feel like “winners” having banks compete for them via Lending Tree. Recently, I helped a family by closing their purchase in 5 days…the lender they obtained from Lending Tree did not perform after having their loan for over 30 days. Here are a few nice words from my new clients:
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