Preapproval letters typically begin stating that a home buyer has been qualified or preapproved to buy a home priced at specific amount. What it really boils down to is how much mortgage payment the home buyer qualifies for based on the borrowers monthly income and the debt to income ratio that is being allowed by the program guidelines. Your proposed mortgage payment determines the loan amount that you’re qualified for. Add the funds to cover your down payment less the closing cost and you’ll have the sales price.
What Determines How Much Home You Qualify to Buy: Part 1 – Your Payment
November 27, 2010 by Leave a Comment
Happy Thanksgiving
November 25, 2010 by Leave a Comment
Happy Thanksgiving to you and your family from ours.
Mortgage Master Service Corporation is closed today and tomorrow. We will reopen for business as usual on Monday, November 29, 2010.
Seattle Scenes
November 20, 2010 by Leave a Comment
Just a few photos I caught with my Droid-X while we were cruising through Seattle today. With the "s" word in the forecast, we stopped by REI for some mittens and other warm winter wear.
The first two photos are of Seattle's historic Steam Plant.
You can just see part of Qwest Field, where the Seahawks and Sounders play, to the right of King Street Station from Pioneer Square.
2011 Conforming Loan Limits for Washington State
November 19, 2010 by Leave a Comment
Fannie Mae issued their confimation that the current loan limits of 2010 will continue through 2011 with certain "high cost areas", like Seattle, Bellevue, Everett or Tacoma, retaining the temporary high balance loan limits for loans originated through September 30, 2011.
High Balance loans are set to roll back to lower limits previously set with loans originated October 1, 2010. For the great Seattle area, that means that loan amounts over $506,000 will be considered non-conforming (jumbo rates and underwriting guidelines) for a single family dwelling. I'll be sure to write more about this as that time approaches. Click here for loan limits effective October 1, 2011 through December 31, 2011 in Washington.
High Balance Loan Limits for Washington State until September 30, 2011:
King, Pierce and Snohomish Counties
1 Unit – $567,500
2 Unit – $726,500
3 Unit – $878,150
4 Unit – $1,091,350
Clark and Skamania Counties
1 Unit – $418,750
2 Unit – $536,050
3 Unit – $648,000
4 Unit – $805,300
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
San Juan County
1 Unit – $593,750
2 Unit – $760,100
3 Unit – $918,800
4 Unit – $1,141,850
NOTE: The following Washington counties do not have "high-cost area loan limits": Adams, Asotin, Benton, Chelan, Clallam, Columbia, Cowlitz, Douglas, Ferry, Franklin, Garfield, Grant, Grays Harbor, Island, Kittitas, Klickitat, Lewis, Lincoln, Mason, Okanogan, Pacific, Pend Oreille, Spokane, Stevens, Thurston, Wahkiakum, Walla Walla, Whatcom, Whitman and Yakima.
Conforming Loan Limits for 2011
1 Unit – $417,000
2 Unit – $533,850
3 Unit – $645,300
4 Unit – $801,950
Reader Question: Converting Current Home to Rental
November 17, 2010 by Leave a Comment
I enjoy receiving email like this from my readers:
I currently own a condo as my primary residence and am getting married soon. The mortgage and title is in my name only. We will soon like to look at moving to a bigger place and would apply for a mortgage on our new primary residence together while still keeping the condo to rent out. How will this situation affect getting approved for the new loan? Are there any changes that will need to be made to my current condo mortgage since it will no longer be my primary residence? Thanks in advance for your help!
Unless you're planning on refinancing your existing condo, there shouldn't be any changes that you need to make that mortgage because you are renting it out. If you are currently refinancing or planning to refinance the condo, you should let your mortgage originator know of your intentions to use the property as an investment property. On a side note, you may also want to check with your Home Owners Association or condominium bylaws to make sure that investment properties are allowed.
Qualifying for the new home will be impacted by the type of financing you select and the amount of home equity you have currently in the condo. If you have less than 30% home equity, you'll need 6 months reserves for all of your mortgages (your current residence/future rental and the new home) if you're considering conventional financing or you must qualify with both mortgage payments. FHA does not have this guideline at this time.
In addition, if you do not have a documented current two year history as a landlord, you may find that the entire mortgage payment (including the home owners association fees) may be factored into your debt with no credit for any rental income you receive on the new home.
Lenders are looking for extra reserves and making sure that people who are leaving their current homes have enough "skin in the game" (equity) so that they're less likely to walk away from their former residence once they've closed on their new home.
By the way, if the home you're buying with your future bride is located in Washington state, I'm happy to help you with your mortgage!
Buying a Condo or Townhome?
November 12, 2010 by 1 Comment
Condos come in many forms including high-rises, converted apartment buildings and even some town-homes may be condominiums depending on how they are legally described. If you’re planning on buying a condo and not paying cash for your purchase, here are a few things to look out for where lenders may have an issue with.
Veterans Day
November 11, 2010 by Leave a Comment
Today we thank and remember those who have served our country.
Mortgage Master Service Corporation is closed in observance of Veterans Day today. We will re-open for business as usual on Friday, November 12, 2010.
Hat tip to my mother-in-law, Ruth Porter, for the Kiss video!
My Interview on NPR: Credit and Refinancing
November 10, 2010 by 3 Comments
If you listen to the soothing voices of NPR in the mornings, you may have heard NPR's Wendy Kaufman's interview discussing the challenges of refinancing with lower credit scores. I actually meet with Wendy about a week ago in Bellevue so she could interview me for this piece which I'm told will be airing again around 8:50 this morning PST on KPLU (88.5 a.m.).
You can also read the text version which includes a link to the broadcast: Home Loan Blues: Refinancing Isn't So Easy
Here are some points I'd like to add to the interview:
It is more challenging to refinance (or purchase) in today's market. Especially if you compare it to the wild subprime era of a few years ago…however the pendulum is still swinging tighter. Mortgage guidelines absolutely needed to swing back from subprime, however some people may surprised to experience a mortgage transaction today. The broadcast included a borrower who had to take clear copies of his documents–that would have happened before too assuming his supporting documentation (bank statements) were even required. Today's underwriter is asking a lot more "why" instead of simply checking off a box that was generated by a streamlined automated underwriting system. Qualifying for a mortgage is not impossible but you do need to be cooperative and provide what your mortgage professional asks of you…including that last page of your bank statement, even if it's blank.
With regards to credit scoring, we continue to see the minimum allowed credit score being raised. It used to be that a 700 credit score or higher was considered great. Now there are three different credit score "brackets" with conforming mortgages if your score is in the 700 range. With higher loan to value loans, like FHA, many lenders are requiring a mid-score of 640 or higher (some lenders may go lower but I expect their credit score standards to increase too at a higher rate).
There are programs available for refinancing your home if you have lost equity and/or have a lower credit score. If home owners currently have an FHA mortgage or conforming mortgage that qualifies for a Home Affordable Refi, they may still be able to take advantage of today's low rates. If your home is located in Washington state, I'm happy to review your scenario at no obligation to see if refinancing makes sense for you.
Listen to the NPR interview where I discuss credit scores.
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