Helping Washington State homeowners learn more about their mortgage options.
The West Seattle Street Fair (aka West Seattle Summer Fest) is taking place right now (actually started yesterday) in "The Junction" on California Avenue. If you've never been to the fair, it's a lot of fun, food, arts, crafts and music. The fair ends tomorrow at 5pm and goes on until midnight tonight…so don't delay!
Be thankful the photos in this post are not "scratch 'n sniff", voodoo lilies emit a very foul odor after blooming.
According to Paghat's Garden:
Northwest gardeners have reported them spreading quite wildly, & requiring no special attention of any kind. They spread by self-seeding & by bulb offsets. If the seedheads are not collected, they will eventually fall over in the garden, where beetles or ants cart them away, spreading the voodoo lily more distantly. The penultimate photo below shows one of the green seed cobs in August. The final photo shows the ripened cob in October, when the stalk has softened has toppled to the ground so insects will clean & disperse the seeds.
We've had these amazing plants slowly spread through our garden.
This Q&A from the Seattle Times recommends not planting these too close to your home, especially near dining areas or your doors or windows because of the smell and the insects that are attracted to the aroma (which only lasts a few days).
This isn't something you'll find in vase in my home! But I will tolerate the smell to adore their beauty. I was just out in my garden and had to share this with you!
Mortgage Master Service Corporation is closed today in observance of Independence Day. With the beautiful sunny weather we're celebrating freely, I hope you and yours have a fun, safe and sane holiday.
Earlier this week, The Seattle Times published with tips for "paring down your mortgage" siting that many home owners are opting to pay off their mortgages quicker:
The portion of borrowers refinancing in January who took 15-year mortgages rose to 29 percent from 11 percent two years earlier, according to the most recent data available from CoreLogic, a real-estate information firm in Santa Ana, Calif. Mortgages with 30-year terms accounted for 52 percent of refinancings in January, down from 80 percent in January 2009.
The share of cash-in refinancings reached a record 44 percent in the fourth quarter, according to data from Freddie Mac dating to 1985. While the share fell to 21 percent in the first quarter as mortgage rates climbed, it was almost double the quarterly average over the past 26 years.
I've noticed a much healthier, financially responsible "attitude" with my clients over this past year. Instead of home buyers wanting to know "how much" they can buy, they want to know what a certain payment will qualify them for. There's a definite trend where folks are buying less than what they could be preapproved for.
Many are considering shorter terms, as the Seattle Times article mentions, including the 15 year and 10 year amortized mortgage (which is being heavily advertised on the radio). I caution to make sure you have plenty of reserves if you opt for a shorter term mortgage…you can always pay shorten the term of a 30 year mortgage and have the flexibility of only making the 30 year amortized payment; but should you find yourself needing more cash flow in the future, you cannot make a 30 year payment on a 20, 15 or 10 year amortized mortgage. And should you find yourself in a financial squeeze in the future, you may not qualify to refinance into a longer term.
30 Year Fixed: 4.625% (apr 4.790) with a principal and interest payment of $2057.
20 Year Fixed: 4.500% (apr 4.679) with a principal and interest payment of $2531.
15 Year Fixed: 3.750% (apr 3.995) with a principal and interest payment of $2909.
10 Year Fixed: 3.500% (apr 3.808) with a principal and interest payment of $3955.
The savings over the life of the loan is great…but if you're having to refinance to obtain cash back or to reduce your payment or if you're relying on your credit cards, you may want to seriously consider a longer term mortgage. You can reduce the interest you pay by making additional payments towards your principal.
Cash-in refinances are continuing to be popular as many home owners are wanting to take advantage of the lower rates that are available with conforming and conforming high balance loan limits. This has become more of a phenomenon with the loan limits set to be reduced from $567,500 to $506,000 as of October 1, 2011 in the Seattle area for both FHA and Conforming loans and possible reduced lower effective January 1, 2012.
Here's an example of the difference between current conforming high balance and jumbo mortgage rates with a 30 year fixed in greater Seattle:
Conforming High Balance loan amount of $567,500: 4.750% (apr 4.871) principal and interest payment of $2,960.
Non-Conforming Jumbo loan amount of $567,501: 5.375% (apr 5.486) principal and interest payment of $3,178.
With a cash-in refinance, it's important to weigh the lost opportunity of the cash you're investing into your home (you may not have access to it for quite a while) along with the monthly savings of the refinance.
Adjustable rate mortgages are also gaining in popularity. If you're not planning on retaining your home for more than five years, it's worth at least comparing the savings. However if the idea of having a mortgage that will adjust in five, seven or ten years makes you uncomfortable, then you should stick with a fixed rate product.
10/1 ARM: 4.125% (apr 3.911). Interest rate fixed for 120 months with caps of 5/2/5 and a principal and interest payment of $1,930. The highest the rate can adjust on the 121st payment is 9.125% and the lowest is 2.25%.
7/1 ARM: 3.625% (apr 3.537). Interest rate fixed for 84 months with caps of 5/2/5 with a principal and interest payment of $1,852. The highest the rate can adjust on the 85th payment is 8.625% and the lowest is 2.25%.
5/1 ARM: 3.250% (apr 3.359). Interest rate fixed for 60 months with caps of 5/2/5 and a principal and interest payment of $1,714. The highest the rate can adjust to on the 61st payment is 8.250% and the lowest is 2.25%.
If you have questions or are interested in obtaining a mortgage for a home located anywhere in Washington state, please contact me! Nothing makes me happier than helping my readers.
Rates quoted above are effective as of July 1, 2011 at 11:45 a.m. and may change at anytime. Rates are based on 740 or higher credit scores with an 80% loan to value for a purchase or rate-term refinance in Washington.
Beginning October 1, 2011, USDA Rural Loans may an have annual mortgage insurance (like FHA, paid monthly) and will reduce the upfront guarantee fee on purchases from 3.5% to 2%. RD AN No. 4551 states:
Beginning October 1, 2011, it is anticipated that all purchase loans transactions will be charged (1) an up-front guarantee fee equal to 2% of the loan amount and (2) an annual fee of 0.3% of the unpaid principal balance.
Unlike FHA insured loans where the annual mortgage insurance premium ceases after 60 payments and the principal balance reaches 78% loan-to-value based on the original sales price or appraised value, USDA's annual fee NEVER terminates. It will remain a part of the monthly payment until the USDA mortgage is paid off. The annual fee will be reduced each year as it is calculated annually from the principal balance.
Here's a comparison:
Currently, if someone was using a USDA zero down loan to purchase a home in Duvall for $300,000, their loan amount would be $310,500 (sales price plus 3.5% for the upfront guarantee fee). Based on current rates of 4.375% (apr 4.786), their payment (excluding taxes and home owners insurance) would be $1550.28.
Effective October 1, 2011 and assuming mortgage rates just happen to be the same, the loan amount would be $306,000 (sales price plus 2% for the upfront guarantee fee) creating a principal and interest payment of $1,527.81 PLUS an estimated monthly premium of $75.82 = $1,603.63. An increase of $53.35 per month!
Why would someone even consider having a USDA mortgage after October 1, 2011? Well for one, it's one of the few "zero down" mortgage programs available for homes that are located in a designated rural area (like Duvall, Gig Harbor or Maltby). If the appraisal comes in higher than the sales price, borrowers may be able to finance closing cost… there are some perks to this unique program and it may be worth your consideration if you're income meets the guidelines and you're buying a home in a rural community.
Questions about USDA or other types of mortgage programs for homes located in Washington State? Contact me, I'm happy to help!
Some of my Seattle area clients have been searching for the “just right” home for months. With a good portion of the available inventory being bank owned, many of the homes have been left in less than desirable condition or perhaps are overdue for a little TLC. If you’ve found a home that needs some work that’s located in a neighborhood you’d like to call home, an FHA 203k rehab loan may be worth your consideration.
FHA 203k loans allow a borrower to finance almost anything to improve the home (exceptions are luxury items, such as swimming pools, hot tubs, fire pits, etc.). Improvements that are allowed are:
The cost of the improvements are added to the sales price of the home. For example, if you find a fixer with a sales price of $250,000 and it needs $40,000 in repairs or improvements, you can finance up to 96.5% of $290,000 (FHA loans currently have a minimum down payment of 3.5%).
Many home buyers might buy a “fixer” knowing they can do a lot of the work “down the road” or as they can afford it. With an FHA 203k rehab loan, the work is done after closing and financed with the “purchase money” first mortgage. This means you’ll have the benefit of current low FHA rates instead of financing improvements with a Home Depot or Lowes credit card, not to mention the income tax benefits.
I recommend starting with a prequalification to see how much mortgage payment you are comfortable with and that you qualify for. If you’re buying a home anywhere in Washington, I can help you. Once you know what you qualify for, you can start shopping for homes that you’d like to improve (it doesn’t need to be a foreclosure or a total fixer). By the way, if you need a recommendation to a real estate agent, please let me know.
Once you’ve found a home that you’re interested in, it’s not too early to meet with a HUD approved consultant for a feasibility study. In fact, you can do this before you’re in contract. This step is very important. The consultant will help you identify what items HUD will require to be repaired to meet lending standards and make recommendations for improvements and consider your “wish list” for items to be done to the home. You also want to make sure not to “over improve” your home for the area as the finished product will need to appraise for the adjusted sales price (sales price plus improvements and cost of the 203k loan). A qualified consultant can help guide you through this part of the process and I’m happy to recommend someone if you’re buying a home anywhere in Washington.
FHA 203k loans tend to take a little longer to process and close than a standard FHA transaction. The total loan amount (sales price plus improvements) is limited to FHA loan loans which is currently $567,500 (until October 1, 2011) in King, Pierce and Snohomish Counties.
Questions? Please contact me – your next home with your new kitchen is waiting for you. Mortgage Master Service Corporation is a Direct Endorsed HUD approved lender.
Click here for your personal mortgage rate quote for homes located in Washington.
Unless Congress passes an extension of our current FHA loan limits soon, they're set to roll back to "HERA 2011" amounts effective on October 1, 2011 through the end of this year. We won't know what 2012 will bring until around November (Fannie Mae has warned conforming loan limits could drift even lower as loan limits have been based on median home prices).
King, Snohomish and Pierce Counties will see the FHA loan limit reduced by $65,000 to $506,000 from $567,500. Kitsap County will be hit with the largest drop with their loan limit being reduced $167,950 to $307,050 from $475,000.
Here's a list of counties in Washington that will be impacted with reduced FHA loan limits as of October 1, 2011 (see HERA Limit and click for larger image).
Conforming loan limits and VA loan limits are also set to be reduced as of October 1, 2011. If you are considering refinancing your mortgage and the loan amount is above loan limits that will be in effect after September 30, 2011 (possibly sooner as lenders will create their own overlays to protect themselves from being stuck with a "jumbo" loan) you may want to take action NOW.
I'm licensed to assist you with mortgages on homes located anywhere in Washington state. Please contact me if I can help you!
Today the Fed will announce if they're going to change the Fed Funds rate. It's highly anticipated that they will leave the rate where it's currently at. What ever action the Fed takes does not directly change mortgage rates, however it does have a strong INFLUENCE on mortgage rates. Following the Fed's announcement, Ben Bernanke will be holding a press conference which may also impact mortgage rates. Remember, mortgage rates are based on mortgage backed securities (bonds) and inflation will drive mortgage rates higher.
This is a live post to illustrate how the Feds actions may impact mortgage rates, assuming the markets don't shrug off the information.
As of 9:00 am this morning, prior to the Fed's monetary decision and MBS (FNMA 30yr 4.00%) are up 34bps. What you and I probably relate to more than mortgage backed securities (MBS) are how this translates to mortgage rates.
I can lock in a 30 year fixed at 4.375% (based on the criteria I use for rate quotes) with a discount of 0.198% (apr 4.503).
5/1 ARM is currently at 2.875% (apr 3.256) with a discount of 0.043%. 5/1 ARM is fixed for 60 months and has caps of 5/2/5. The highest this rate can be at the 61st payment (or the life of the loan) is 7.875%.
11:10 am: we're minutes before Ben Bernanke's news conference. Mortgage rates that I've quoted are unchanged.
9:25 am: DOW is down about 7 points.
"No change" to interest rates is announced. The Feds Funds rate is unchanged at 0 – 0.25%. Good news to those who have home equity lines of credit which are based on the prime rate, they've dodged another bullet!
Initial reaction: markets seem unmoved. No real surprises in the FOMC press release.
9:31 am: Receiving an intraday rate sheet with pricing for the better from one of the lenders we work with. This lender did not have as competive pricing as what I quoted above (they're still far from it) as the began the day with worse pricing. The rate quotes above is still current pricing that I have available.
9:50 am: In just over an hour, we'll hear from Fed Head, Ben Bernanke. Stay tuned. I'll continue to share rate updates and updating this "live" post.
10:30 am: MBS down to session lows at 15bps for the 30yr.
11:10 am: minutes before Ben Bernanke's news conference and mortgage rates are unchanged from what I've quoted above. DOW is up 7.46.
12:15 pm: Ben Bernanke has wrapped up the news conference. MBS are up slightly to 22bps with the DOW down 32. Mortgage rates and pricing that I quoted above are unchanged.
I listened to as much of Bernanke's conferene as I could while I was work on my day job, originating mortgage on homes located in Washington. Some bits that I extracted (and shared on Twitter) are that Bernanke referred to the pace of unemployment being "frustratingly slow". During the Q&A he said that "we don't use words like "extended period" to be intentionally opaque, it means that we really don't know how long". Regarding housing, he commented that "those who can get credit, can buy a lot more house than they could a few years ago" referring to low rates and affordable home prices. He would like to see further efforts from mortgage servicers to modify loans when appropriate and to speed up the foreclosure process when appropriate.
DOW closes down 80.34.
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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