When you are refinancing your primary mortgage and you have an existing second mortgage or HELOC (home equity line of credit), the new lender will require to stay in “first lien position”. This boils down to who has first dibs on a property in the event of a foreclosure. Lien position is determined by the date the mortgage was recorded. When you refinance your first mortgage and you have an existing second mortgage, the new mortgage will have a recording date that is after the existing second mortgage. Technically, that would put the second mortgage or HELOC in “first lien” position, which would not be allowed with the new lender. Click here for a no-hassle mortgage rate quote for your Washington state home. [Read more…]
Income Limits and Property Qualifications for USDA Rural Loans in Washington
December 10, 2011 by Leave a Comment
NOTE: INCOME LIMITS HAVE BEEN UPDATED SINCE THIS POST WAS PUBLISHED.
USDA is a government backed program that allows zero down payment on homes that are in a designated rural community for families earning less than a certain income. A majority of Washington State single family residences (homes and condos) qualify…of course if you live in metropolitan areas like Seattle or Bellevue, odds are your home will not. To qualify, families must be without “adequate housing” (may not own a home or adequate home), must have reasonable credit history and be able to afford the mortgage (29/41 is the debt to income ratio guidelines).
Income limits vary by county and the entire household income is considered (not just the primary borrowers or those borrowers on the mortgage) for determining if the income meets the guidelines. This is separate from income considered for “debt-to-income” ratios. USDA loans allow incomes up to 115% of the median income for the area. Income limits vary on household size from 1-4 person or 5-8 person.
As of the publishing of this article, in Washington, the income limits by county are:
- King and Snohomish Counties: 1-4 Person $92,600 | 5-8 Person $122,250
- Island County: 1-4 Person $89,550 | 5-8 Person $118,200
- Kitsap County: 1-4 Person $85,700 | 5-8 Person $113,100
- Thurston County: 1-4 Person $85,100 | 5-8 Person $112,350
- Clark County: 1-4 Person $82,800 | 5-8 Person $109,300
- Pierce County: 1-4 Person $81,450 | 5-8 Person $107,500
- San Juan County: 1-4 Person $78,050 | 5-8 Person $103,050
- Whatcom County: 1-4 Person $76,850 | 5-8 Person $101,450
- Benton and Franklin Counties: 1-4 Person $75,750 | 5-8 Person $100,000
- All other Washington counties: 1-4 Person $74,050 | 5-8 Person $98,650
You can check current USDA income limits by visiting the USDA site (clicking here)…be sure to click the “guaranteed” option. Income limits can and do change. You can also use USDA’s income eligibility calculator which will factor in deductions to income, select the “guaranteed” results (not “direct”).
Income used to determine if a family is under the household income limits includes all those (18 years and older) who will be living in the home regardless of whether or not they’re on the mortgage. Incomes of children over 18 who working AND who are full time students are not factored.
Once you’ve determined that you meet the household income limits, the next step is to see to see what communities in your area are eligible for USDA financing. You don’t have to go too far from Seattle or Bellevue to find homes that do qualify for this type of mortgage. Using the USDA site, under “Property Eligibility” click “Single Family Dwelling”. From there you can either enter a specific address or click on the map to narrow down your search.
Sellers and real estate agents who are working in neighborhoods that qualify should be sure to include this program as an option they’ll consider for financing on their offers.
I’m pleased to offer USDA financing as an option for borrowers who meet the criteria since there is no private mortgage insurance and the program is a 30 year fixed rate. If you have any questions regarding USDA or other mortgage programs for financing homes located anywhere in Washington State, please contact me, I’m happy to help!
Information about HARP 2.0: Fannie & Freddie’s Home Affordable Refi
December 9, 2011 by Leave a Comment
VA Loan Limits for 2012 for Homes in Washington
December 6, 2011 by Leave a Comment
NOTE: VA loan limits have been raised for the remainder of 2012 in certain counties per VA Circular 26-12-7. Click here for more information.
Below are the loan limits for VA loans in Washington State for 2012 which have reduced loan amounts for the “high balance” areas from 2011. Congress may still impact these loan limits and if so, I will update this post.
- King, Snohomish and Pierce Counties: $458,850
- San Juan County: $432,400
- All other counties in Washington state: $417,000
VA loan limits work differently than conventional or FHA insured mortgages. If a Veteran elects to purchase a home with a sales price higher than the loan limit, they’re down payment is 25% of the difference between the loan amount above and the sales price. This may be changing in 2012, from VA’s website:
2012 loan limits: The procedure for calculating loan limits for 2012 has changed from 2011. VA’s previous procedure expires December 31, 2011. If Congress passes legislation permitting VA to calculate maximum guaranty as it has in the past, the numbers below could increase slightly; they will NOT decrease. If that occurs, we will post announcements and reissue this loan limit chart.
Lenders have various limits as to how large of a VA loan they’ll fund. This is one reason why it’s great to work with a company like Mortgage Master Service Corporation where we have several sources for government loans. If I can provide you a quote for a VA loan on a home located in Washington state, please contact me.
I will keep you posted as soon as we have more information regarding the possible changes in 2012 VA loan limits and/or how they are calculated. To stay up to date about topics like this, subscribe to my blog in the upper right corner.
FHA Loan Limits for homes located in Washington State for November 18, 2011 and 2012
December 5, 2011 by Leave a Comment
A few days ago, HUD confirmed the 2012 FHA Mortgage limits which have been restored to the higher “temporary” higher loan limits effective November 18, 2011. This morning, HUD’s site is reflecting the revised loan amounts.
Here are the 2012 FHA loan limits which are retroactive for case numbers obtained November 18, 2011 or later for homes located in Washington:
King County, Snohomish County and Pierce County
- 1 Unit: $567,500
- 2 Unit: $726,500
- 3 Unit: $878,150
- 4 Unit: $1,091,351
Benton and Franklin Counties:
- 1 Unit: $275,000
- 2 Unit: $352,050
- 3 Unit: $525,550
- 4 Unit: $528,850
Chelan and Douglas Counties:
- 1 Unit: $342,700
- 2 Unit: $438,700
- 3 Unit: $530,300
- 4 Unit: $659,050
Clallam County:
- 1 Unit: $384,100
- 2 Unit: $491,700
- 3 Unit: $594,350
- 4 Unit: $738,650
Clark and Skamania Counties:
- 1 Unit: $418,750
- 2 Unit: $536,050
- 3 Unit: $648,000
- 4 Unit: $805,300
Island County:
- 1 Unit: $381,250
- 2 Unit: $488,050
- 3 Unit: $589,950
- 4 Unit: $733,150
Jefferson County:
- 1 Unit: $437,500
- 2 Unit: $560,050
- 3 Unit: $677,000
- 4 Unit: $841,350
Kitsap County:
- 1 Unit: $475,000
- 2 Unit: $608,100
- 3 Unit: $735,050
- 4 Unit: $913,450
Kittitas County:
- 1 Unit: $328,750
- 2 Unit: $420,850
- 3 Unit: $508,700
- 4 Unit: $632,200
Mason County:
- 1 Unit: $310,000
- 2 Unit: $396,850
- 3 Unit: $497,700
- 4 Unit: $596,150
San Juan County:
- 1 Unit: $593,750
- 2 Unit: $760,100
- 3 Unit: $918,800
- 4 Unit: $1,141,850
Skagit County:
- 1 Unit: $373,750
- 2 Unit: $478,450
- 3 Unit: $578,350
- 4 Unit: $718,750
Thurston County:
- 1 Unit: $361,250
- 2 Unit: $462,450
- 3 Unit: $559,000
- 4 Unit: $694,700
Whatcom County:
- 1 Unit: $375,000
- 2 Unit: $480,050
- 3 Unit: $580,300
- 4 Unit: $721,150
Adams, Asotin, Cowlitz, Ferry, Garfield, Grant, Grays Harbor, Lewis, Lincoln, Okanogan, Pacific, Pend Oreille, Spokane, Stevens, Whakiakum, Walla Walla, Whitman and Yakima Counties:
- 1 Unit: $271,051
- 2 Unit: $347,009
- 3 Unit: $419,425
- 4 Unit: $521,250
Related post:
HUD confirms Higher FHA Loan Limits with an official Mortgagee Letter
December 2, 2011 by 4 Comments
I just received notice from HUD announcing higher FHA loan limits are to be retroactive for case numbers issued November 18, 2011 and later via Mortgagee Letter 2011-39. This means that in the greater Seattle area, FHA loan limits will be restored to $567,500 instead of $506,000. With that said, when I pop over to HUD's loan limit site, it's still reflecting $506,000 for King County (as of the time of publishing this post).
I did tweet to HUD earlier today asking them when the loan limits will be updated.
Perhaps everything will be updated in the morning and I shouldn't be blogging at 10:39 in the evening… when I receive an email like this from HUD at 9:55pm, I consider it "breaking news".
I'll have more information soon.
More Changes Coming for FHA Loans
December 1, 2011 by Leave a Comment
Today, HUD Secretary Shaun Donovan testied before the House Committee on Financial Services addressing the financial health of the FHA mortgage insurance fund. You can read his prepared testimony here.
Donovan has pledged to reduce the allowed seller contribution (currently at 6%) and to bring it down to "more of the norm". Currently, with a conventional mortgage, if you have less than 10% down payment, the maximum seller contribution that is allowed is 3%.
Mr. Donavan also addressed increasing the annual mortgage insurance rate (paid monthly). The National Mortgage News reports that he's considering raising the annual mortgage insurance rates on FHA High Balance loans. In the greater Seattle area, this would be loan amounts from $417,001 to $567,500 in 2012.
In my opinion, it would be great if HUD would revise their streamlined refi guidelines to allow borrowers to keep their existing mortgage insurance premium rates and to allow refinacing from an ARM to a fixed rate product to satisfy their "net tangible benefit" without having to meet the 5% improvement in principal, interest and mortgage insurance payment – especially when the borrower qualifies for the higher payment.
I'm also in favor of risked based pricing, which HUD tried to implement a few years ago based on credit and amount of down payment.
HUD has been threatening to reduce seller contribution for quite a while now and quite frankly, I've rarely had a seller contriubte the full 6%. The biggest impact will be when HUD raises the mortgage insurance premiums…again.
…well that's enough from the peanut gallary!
Home Affordable Refi aka HARP 2.0 Phase 1
November 30, 2011 by Leave a Comment
Fannie Mae and Freddie Mac' s Home Affordable Refi enhancements will be released in phases with the first version of HARP 2.0 becoming available tomorrow, December 1, 2011. The next phases will allow for expanded loan to value requirements and pricing enhancements. Fannie Mae will have an update to their selling guide in mid-December (so more information to follow). Freddie Mac and Fannie Mae plan on having their underwriting system (DU and LP) updated on or before mid-March 2012. I will continue to keep you posted as we learn more information.
Here's my recommendation for Washington area home owners who may be eligible for a Home Affordable Refinance:
- You can apply for HARP 2.0 tomorrow, December 1, 2011.
- We should be able to determine whether your loan qualifies based on the current "phase" available. We are able to re-run your scenario during the next phase of HARP, if needed.
- Loan to values under 80% may not qualify for the new Home Affordable program but you may still be able to take advantage of today's lower rates.
- Some of my refinance clients have already had their appraisals waived with their Fannie-to-Fannie DU Plus refinances.
- Unless you have an owner occupied or second home and are opting for an amortized mortgage of 20 years or less, the pricing difference with HARP 2.0 may not be that significant.
- I'm happy to provide you with a Home Affordable Refi rate quote.
Here are some pointers on what you can do to prepare for your Home Affordable Refinance.
I'm still waiting to hear from all of the private mortgage insurance companies to see if and how they will participate in this program. We are also waiting to see how the lenders and banks we work with are going to treat this and if they've added layers of overlays to this program.
UPDATE 12/15/11: If you qualify for a HARP refinance and have borrower paid private mortgage insurance, as long as the insurance can be transferred, we can help you. Lenders (secondary markets) and private mortgage insurance companies are working on allowing this for lpmi (lender paid mortgage insurance). More info on LPMI to follow.
I am required to have the language below if I am soliciting your Home Affordable Refi for your home in Washington…and yes, I would love to help you with your HARP (or any) refinance:
Freddie Mac and Fannie Mae have adopted changes to the Home Affordable Refinance program (HARP) and you may be eligible to take advantages of these changes. If your mortgage is owned or guaranteed by either Freddie Mac or Fannie Mae, you may be eligible to refinance your mortgage under the enhanced and expanded provisions of HARP. You can determine whether your mortgage is owned by either Freddie Mac or Fannie Mae by checking the following websites: www.freddiemac.com/mymortgage or http://www.fanniemae.com/loanlookup/
If you have any questions about this or any mortgage program and your property is located in Washington state, I'm happy to help you. I am only licensed to originate mortgages in Washington state.
Bottom line: we are still receiving (and waiting to receive) more information about the HARP 2.0 enhancements and bank/lender overlays. However you can start your application on December 1, 2011 and "float" your rate, if needed.
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