Mind the Gap: High Balance Loan Amounts are Running Out of Time

August 25, 2011 by Leave a Comment

Mindthegap Conforming and FHA high balance loan limits set to be reduced effective October 1, 2011.  Banks and lenders have different cut-off dates in order to assure they're able to deliver loans without being stuck with a "jumbo" loan priced at a conforming rate. 

If mortgage transactions are currently taking 30 days to close and mortgage companies are setting their own deadlines to make sure they can deliver before time runs out, borrowers need to act fast IF their loan amount is in the gap between the current and reduced limits.  In King, Snohomish and Pierce Counties, loan amounts between $506,001 and $567,500 for single family dwellings will be impacted by reduced loan limits.  This post I wrote a few weeks ago contains a complete list of reduced loan limits for conforming and FHA mortgages by county in Washington.

If you are refinancing or buying a home and your loan amount is "in the gap" between current and pending loan limits AND you're closing in late September, contact your mortgage originator as soon as possible to make sure that everything is in place so that your transaction closes in time (which may require closing prior to September 30 depending on your lender's guidelines).  Be aware that you will most likely NOT be able to extend your rate lock commitments at the end of September if the loan amounts are in "the gap" range.

Mind the gap!

If you would like me to provide you a mortgage rate quote for your home located anywhere in Washington, click here.

 

Filed Under: Interest Rates

Seattle Homebuyers Surprised by Multiple Offers on “Ideal” Homes

August 25, 2011 by Leave a Comment

Earlier this month, Aubrey Cohen of the Seattle PI wrote "Home buyers finding competition for nice homes in Seattle".  As a Mortgage Originator, I find that many of the home buyers that I'm working with are discovering it's taking a longer amount of time to find the "right home" due to lack of inventory and then, once they do find one they're interested in, they discover they're not alone.  David Billings of Redfin, says:

"When the ideal, cute, turn-key starter home comes on market at a price that a buyer feels is a decent value, they're shocked to find that there are lots (three, four, maybe six) of other buyers that feel just like they do," …"After having patiently waited out the market and read every article about how terrible Seattle real estate is, they can't believe they'll need to pay full list price, let alone the possibility of paying more in order to beat out others. It takes some time for them to come to grips with this reality and get competitive with their offers, or adjust their search to a home that needs some work, or is in a slightly less prime location."

The article reports the "hottest" homes are priced under $500,000 "turn-key…staged, painted…" located in the neighborhoods of Northeast Seattle, Capitol Hill-Montlake and Ballard-Greenlake. "Multiple offers have jumped from between 30 and 35 percent to 40 and 50 percent, hitting 51.4 percent in Ballard".

What's a Ballard Home Buyer to Do?  Actually, I think this applies to any home buyer who's considering making an offer on a home, especially if it's one that is "ideal" and newly listed. 

  • Meet with a local licensed Mortgage Originator to review your financial options and get preapproved. You really can't start this process too early – even if you're not planning on buying for a year, meeting with a mortgage originator and reviewing your credit and assets (funds for down payment) ahead of time may help put you in the best position possible for when your "ideal home" comes on the market.
  • Have a plan and set your limits. Determine what mortgage payment you're comfortable paying and what down payment you're willing to part with (this may be a lower amount than what you're approved for).  
  • Develop thick skin. Buying a home can be emotional – especially in a bidding situation. Be prepared that you may not win a bid and stick to your price range. 
  • Work with a professional real estate agent. Get referrals and check out your real estate agent just as you would when selecting a mortgage professional. Some agents, especially in this market where their commissions may be down, may be more interested in making a sale than looking out for you. I'm happy share my recommendations with you.
  • Be patient. Some of my clients have taken up to a year or more enduring several bidding wars before landing their home.

In a multiple offer situation, you're going to need to present yourself as a strong buyer, which includes having a well written preapproval letter. The Seller has probably heard plenty of horror stories of failed transactions due to tougher underwriting guidelines and they're going to want to select a strong buyer. Other factors may also include how quickly the transaction can close, especially if the home is vacant or if the seller has an offer pending on their next home.

In a possible bidding situation, I will often prepare several preapproval letters at various price points for my clients so they can determine just how high they want to go with the potential sales price.  

With home prices in Washington reaching "record affordability" combined with historically low mortgage rates, many home buyers are looking for their "ideal home" at a more reasonable price or a distressed property at a discounted price.

Bottom line, be as prepared as possible and start the preapproval process early. If you're considering buying a home located anywhere in Washington State, I'd love to work with you.

Filed Under: Residential Purchase, Seattle

Comcast service issues from Seattle to Renton

August 24, 2011 by Leave a Comment

UPDATE 11:15 am: our office is being told that they expect service to be up in an hour.

UPDATE 11:00 am: learning that our office in Kent is having internet issues too. This sucks.  No message from Comcast if the ETA  is 1:45 today but that's how it's looking at this point!  West Seattle Funblog reports that 388,000 Comcast users are NOT having a Comcastic experience.

UPDATE 10:00 am: a few of us on Twitter are asking @ComcastBill if the outage is expected to be repaired in 1 hour and 45 minutes or at 1:45 today (no answer yet). My email is working – but slow.

UPDATE 9:30 am:  It looks like Comcast's issues were spotty from the friends I surveyed on Facebook and Twitter.  Regardless it looks like my service is slightly improved "back to normal"….KNOCK ON WOOD!!   With so much of my mortgage business being internet based, having slow internet and email is a real set-back.

My internet and email are being painfully slow this morning.  I tweeted to @Comcastcares and here's their response:

Comcast
I'm trying to find out just how widespread this outage is.  

Meanwhile I'm trying switching to my Droid to see if that will provide better service than Comcast.  

 

Filed Under: Current Affairs

Chasing Last Week’s Mortgage Rates | How Rates Change

August 23, 2011 by Leave a Comment

Yesterday, a Seattle area homeowner I’ve been providing rate quotes to told me they’d like to lock if they could have the rate quote I provided him last week when mortgage rates were at an all time low.  Six months ago, there would be a greater possibility that I would be able to offer her the same rate at the same price as last week prior to the Fed’s ruling on how mortgage originators are compensated (referred to as LO Comp).

LO Comp has done two things:

[Read more…]

Filed Under: Interest Rates, Refinance Tagged With: ,

Using Rebate Pricing to Reduce Closing Cost on your Refi or Home Purchase

August 21, 2011 by 6 Comments

Mortgage rates are priced with rebate, a credit towards closing cost, or discount points, an additional cost paid to reduce the interest rate (Note rate).  The amount of the rebate or discount is based on a percentage of the loan amount. The difference in pricing (rebate or credit) varies throughout the day, just as mortgage interest rates change. In fact, it’s not so much that the mortgage rates change throughout the day, it’s actually the cost or credit associated with that rate.

[Read more…]

Filed Under: Interest Rates Tagged With: , , ,

Sunday Drive to San Juan Islands

August 21, 2011 by Leave a Comment

We recently took a family vacation and celebrated my husband’s birthday with our teens in the San Juan Islands. San Juan Island is beautiful and really not that far away from Seattle if you catch the non-stop ferry out of Anacortes.

San Juan Islands WA Roache Harbor
Gardens at Roche Harbor. [Read more…]

Filed Under: Just for Fun, Sunday Drive - Neighborhood Tours Tagged With: , ,

Make Sure Your Loan is Locked

August 19, 2011 by Leave a Comment

I’m taking a few days off and thought I’d share an post I wrote a few years ago (April 2008) at Rain City Guide.  It’s interesting how much higher the rates were back then. You can read the original post here. 

I’ve been communicating with a home owner who thought their loan was locked in at a certain rate only to learn that this is not the case.   Here’s their story:

Their existing ARM reset in March.   In late February, they informed the LO they wanted to lock at  5.5%, no points, 30 year fixed, and close before April 1 and the LO said it was reasonable and doable.  The appraisal was complete in late March with a LTV 79%.  The LO did not lock in at that time.   The LO presented a GFE 55 days after the application was signed and not the program that was agreed on…the LO admits he dropped the ball but cannot fix it with his bank.

Ouch.  Big ouch. 
Part of the problem that I can see by reviewing rates I’ve posted is that in late February (at least on Fridays) rates where in the high 5’s with 1 point.  So a borrower could easily tell a Loan Originator, “this” is the rate I want you to lock me in at…and if that rate does not happen at that time, the LO will most likely not lock the borrower since this is what the borrower has instructed the LO to do.
 
For the LO to tell these borrowers “reasonable and doable” was a stretch. Reasonable, maybe but in this current market when we’re averaging two rate sheets/changes a day: almost anything and nothing may be reasonable and who’s to say what’s doable unless you’re the dough fronting the mortgage.  The appraisal should not have been ordered without the borrowers consent.  The LO could have easily told the borrowers, your rate has not become available, should we order the appraisal (worse case, borrower is out a couple hundred dollars) or would you like to wait to see if your rate becomes available?   The Good Faith Estimate being presented almost two months of application is inexcusable.  
Hindsight is so clear and you can see the warning signs about this transaction skidding down the wrong track. So what can you do to try to make sure your loan is actually locked?
 
Obtain a written Lock Confirmation.   Your lock confirmation is not a guarantee.  I’m sorry…I wish it were.  If the information you provided on your application, your credit scores change (expired credit report), the appraisal comes in lower; may impact your interest rate and thus the lock.   Once you request a lock from your LO, or they say your locked, get it in writing!   If you don’t receive a Lock Confirmation by the following day, contact your Loan Originator to find out when you will have one. 
 
I have recommended that this couple contact the LO’s supervisor…but here’s the challenge:
 
If the LO told them they were indeed locked, the bank might try to honor (eat) the lock, as they should.  Based on today’s pricing, buying that rate would cost an additional 2 points.  However, without documentation of any sort (no email or lock confirmation), it will be challenging to prove that the LO promised or committed to this rate.  It’s your word against theirs.   If the borrower stated, I want “x” rate at “y” cost and these factors never happened…the Loan Originator is off the hook.  The LO cannot provide what is not available (specific rate/cost).   It’s an expensive lesson.
 
But what if the borrowers rate/cost was available and the LO committed to locking in that rate?  Mind you, rates can and do change even while they’re being locked–which is very frustrating.  In that case, the LO should contact the borrower immediately to let them know there’s been a change for better or worse (usually better is no problem).   Again, assuming the rates available and the LO either screws up and doesn’t lock the rate or tells the borrower it’s locked when in reality the LO is “gambling” the market.   What can the consumer do if they discover their rate was never locked?  I contacted fellow RCG contributor and attorney, Craig Blackmon regarding if there’s any recourse for someone with an unhonored written lock confirmation (assuming the program is still available and the other factors I mentioned above that may impact a lock):
 
Here’s Craig’s answer:
 
That would depend on the “written lock confirmation.”  If that document constitutes a binding contract, then yes the borrower would have a breach of contract claim against the party to the contract for the difference between the promised rate and the actual rate.  Even if the document does not constitute a contract, the borrower might still have a negligence claim (i.e. a malpractice claim) against the LO if the LO failed to exercise a reasonable degree of skill and care in attempting to lock in at the promised rate.  In either event, the borrower’s recourse would be against the LO (I think — again, I would need to see the “confirmation” to confirm in regards to the breach of contract claim).  
Bottom line, be sure to get documentation of your lock in writing.   Lenders should provide lock confirmations with an updated Good Faith Estimate if the rate or cost have changed from the last one provided.  If something smells fishy and they’re no cooperating or stalling, it’s probably shark.  Oh…and last but not least, I don’t recommend chasing a rate.  If you like the rate, lock it or be prepared to lose it.
 
UPDATE AUGUST 2011:  Once a good faith estimate is issued (since 2010), a bona fide “changed circumstance” is required before a loan officer can reissue or update it…locking your loan (going from a float to a lock) is considered a “changed circumstance” and if a Good Faith Estimate has not been issued, one is required within 3 days.  
Filed Under: Interest Rates Tagged With:

Am I the Worst “Sales Person” in the World?

August 16, 2011 by Leave a Comment

I'm not a sales person. I never really have been. I will not cold call or push my business cards onto strangers, friends or family. I will not manipulate numbers or show fancy charts to pressure someone into a mortgage "right now". Hearing the word "leads" makes me cringe.

I used to debate Jillayne Schlicke over on old Rain City Guide posts whenever she would insinuate that I, and all mortgage originators, were sales people. I hate to admit, she's technically correct. We are "mortgage originators" and are paid to "originate mortgages". Pretty simple.

I prefer to view myself as someone who helps people make informed decisions about the financing of their home. My job, once someone decides to have me help them with their mortgage, is to guide them through the entire process. My goal is to have my clients have all of their mortgage questions answered BEFORE they're at the signing appointment. I think I feel strongly about this because of my years managing an escrow branch…a borrower should understand the terms of the mortgage before closing.I stay involved with my clients throughout the transaction. They're not pushed off to a coordinator or assistant so that I can focus on getting "more deals". Hopefully, if my clients are pleased with the level of service I provide them, they'll remember me when someone they know is considering buying a home or refinancing.

This is probably why I'm so passionate about blogging. I can help provide information to my readers and I'm fortunate that many of those who are buying or refinancing in Washington select me to be their mortgage originator. My business consists of those who find me from my social media efforts, returning clients and referrals from my clients, real estate professionals and financial advisers.

Yes, I originate mortgages but I won't "sell" you on one. I will provide you with a competitive rate and be dedicated to the successful closing of your transaction.

Filed Under: Misc.
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