The Mortgage Porter

Tips for being prepared for this weekend’s snow storm

December 20, 2008 by Rhonda Porter Leave a Comment

I just received this email from King County with a request to post this safety information on my blogs for our local community:

Are you prepared? Steps to stay safe in this weekend's storm

With high winds forecast for this weekend and possible power outages, it's time to take steps to stay save and avoid carbon monoxide poisoning.

How to avoid carbon monoxide poisoning

Carbon monoxide can kill you or cause serious injury. Carbon monoxide gas comes from burning fuels such as gasoline, propane, oil, kerosene, natural gas, coal or wood. Here are some steps to prevent carbon monoxide poisoning.

Never use a gas or charcoal grill, hibachi, or portable propane heater to cook indoors or heat your home.
During a power outage or at any other time, do not operate fuel-powered machinery such as a generator indoors, including in the garage.
Avoid combustion "space heaters" unless there is an exhaust vent.

Carbon monoxide poisoning can strike suddenly and without warning. In some cases, physical symptoms of carbon monoxide poisoning may include splitting headache, nausea and vomiting, and lethargy and fatigue. If you believe you could be experiencing carbon monoxide poisoning, get fresh air immediately. Call for medical help from a neighbors home. The fire department will tell you when it's safe to reenter the home.

For a full list of carbon monoxide prevention tips and other safety and disaster information in English and other languages, visit www.kingcounty.gov/health/disaster

Other important safety tips

Make sure you are wearing enough warm clothing before going outdoors. Wind speed can create dangerously cold conditions even when the temperature is not that low.
If you think power will be out for several days, check with your city for location of warming shelters.
Watch for signs of frostbite and hypothermia-slurred speech, confusion, uncontrollable shivering, stumbling, drowsiness and body temperature of 95 degrees Fahrenheit or less. Get medical help immediately if you think someone has frostbite or hypothermia.
Check on elderly friends, family, and neighbors to make sure they are safe.
If power goes out where you live, keep food safe by keeping the doors closed on your refrigerators and freezers as much as possible. A full freezer can stay at freezing temperatures about two days'' a half-full freezer about 1 day. Potentially hazardous foods, like meet and fish, should be discarded if thawed and warmer than 41 degrees.

Update: News Release from the City of Seattle

Filed Under: Current Affairs

The Snow We’ve Been Waiting For?

December 18, 2008 by Rhonda Porter Leave a Comment

Yesterday morning the local news forecasters had Seattle prepared for a big snow blast that didn't happen. Schools canceled and we waited and waited for the flakes to fall…and today we were suppose to have around 1-2 inches. Well I'm bundled up here to tell you that in my warm home in West Seattle, we have about 6-7 inches and it's still snowing! Luckily I'm armed with my laptop and can work from home while we weather this winter storm.

Two years ago, almost to the day, we were with out power for 6 days during the Hanukkah Eve Storm. I guess next on our slate is winds from the north…cross your fingers and hope that we keep our power!

Filed Under: Seattle

Santa Ben and the FOMC Deliver Lower Rates

December 16, 2008 by Rhonda Porter Leave a Comment

Just in time for the holidays, the FOMC surprised everyone by cutting the Fed Funds rate to a range of zero to 0.25%. This 0.75-1.00 reduction is more than the widely anticipated 0.50% rate cut. The Fed also reduced the Discount Rate by 0.75% to 0.50%.

Bernanke and the FOMC didn’t stop with the giving there…they reiterated their commitment to buying mortgage backed securities which keeps mortgage interest rates low.

[Read more…]

How to get your personal bailout

December 15, 2008 by Rhonda Porter Leave a Comment

Kenneth R. Harney had a great article syndicated in the Seattle Times this weekend “Be Ready for Your Own Little Bailout“.

Perhaps my favorite part:

“So what do you do if you’re already well along in your shopping, you’ve found a house at a great price, and you’re ready to apply for a mortgage at 5.5 percent but don’t want to miss out on potentially lower rates?

Ask your broker or loan officer whether you can lock in today’s rate but still have the ability to move down should cheaper money become available to you.

Not all lenders can accommodate such requests. Some brokers offer 60-day locks with that option; others may charge you.”

By the way, this applies to refinances too. Do check with your loan originator before you commit to a lock what their lock policies are.

Another reason to lock in lower rates now with a lender who has the ablity to provide you a lower rate, should they drop further, is the plan that Obama’s team is considering. From Bloomberg:

“While Paulson’s team is only exploring an initiative for new purchases, the incoming administration wants to go beyond that and address the record surge of foreclosures. Some industry lobbyists have urged the inclusion of refinancing for existing homeowners, up to one-fifth of whose loans are bigger than the value of their properties, estimates show….

“It’s a much more efficient use of the government’s balance sheet to do this as a purchase program” only, said Nicholas Strand, a mortgage analyst at Barclays Capital Inc. in New York. He estimated the cost of a plan to buy 4.5 percent loans for new purchases at about $300 to $400 billion. Adding the refinance option could cost up to $3 trillion, he said”.

If you benefit from restructuring your mortgage with today’s low rates, you may want to consider securing (locking) a rate now with a lender who has the ability of providing a lower rate should it become available prior to closing…if it happens.

Filed Under: Economy, Interest Rates

Christmas Ships at Alki

December 14, 2008 by Rhonda Porter Leave a Comment

Last night we ventured into the snow and cold to see the Argosy Christmas Ships land at Alki in West Seattle. If you have a chance to see the boats as they tour around the Puget Sound area, please do. It will really set you in the holiday spirit.

Filed Under: Seattle

Question about the 2009 Lower FHA High Balance Loan Amounts

December 13, 2008 by Rhonda Porter Leave a Comment

Here's a question from a Mortgage Porter subscriber (not from King, Pierce or Snohomish counties, which is why the loan amounts are lower):

"My husband and I are presently in the process of buying a home. The closing is scheduled for Jan. 31st 2009. We have been approved for 302,500. We understand that the new FHA guidelines are changing to 271,050 as of Jan. 1st.

We want to wait until the last minute to lock in our interest rate. Our mortgage banker wants us to lock in because "We may need to lock the rate to ensure that we have met all of the FHA requirements before year end, as the mortgage limits are changing on Jan 1. The is only $271,050, so we must make sure that we are guaranteed the stimulus loan limit of $302,500." Our loan commitment letter that we signed says we can lock in within 5 days of closing.

What do you think about this?"

HUD's guidelines state that the new FHA loan limits "are effective for those loans which have credit approval on or after January 1, 2009". This sounds like you can continue to originate an FHA mortgage at the higher 2008 limits as long as the loan is fully credit approved by December 31, 2008. However, it's just not that simple. Various lenders will have their own guidelines to determine how long they'll accept the loans with the higher 2008 loan limits in order to stay compliant with HUDs guidelines and to have the ability to package or sell the mortgage. The lower 2009 "high balance or FHA jumbo" loan limits has caused borrowers caught between the two loan amounts to be in an awkward position.

The cut-off time for accepting the 2008 loan limit may vary from lender to lender. If your lender is telling you that you need to lock now and that it will guarantee the funding of your 2008 loan amount in 2009, I recommend you listen to her. One lender we work with is requiring that all 2008 FHA loans over the 2009 limit be funded/closed and delivered to them by December 19, 2008. Yet another lender will allow 2008 FHA Jumbo loan limits for credit approved loans locked by December 31, 2008 as long as they are purchased by February 13, 2009. No lender or mortgage company wants to have a loan in their system that is above the loan limit.

The loan commitment letter is probably a template that was not created considering that we might be dealing with lower loan limits in a new year. Dealing with a higher loan limit is a much easier transition.

Filed Under: FHA

Should You Wait for 4.5% Mortgage Rates to Refi?

December 8, 2008 by Rhonda Porter 6 Comments

Personally, I would not wait for the proposed, much talked about 4.5% mortgage interest rate. Check out the last word from this Sunday's Seattle PI's real estate section: "4.5% mortgage rate seen as possible".

For the most part, mortgage interest rates are determined by supply and demand: they are bonds (mortgage backed securities) that are traded. The Treasury has been discussing buying mortgage backed securities (MBS) from Fannie Mae and Freddie Mac which should lower rates. Mortgage interest rates are not set or directly controlled such as the Fed Funds rate where the Fed decides exactly how much the rate will adjust, if at all. Another factor to consider, if this becomes more than the current speculation, is that the talk has just been about purchasing Fannie and Freddie MBS. Those who would potentially benefit from the future lower rate would need to qualify for a conventional mortgage.

What would I do if I were considering a refinance?

Contact a qualified mortgage professional who has the ability to float down or renegotiate your rate should they dramatically drop after your rate is locked.
Consider pricing the mortgage as a no-cost refinance so that should rates drop low enough, you can refinance again should it be justified.
Have a plan. Review your goals with your mortgage professional to make sure refinance makes sense. If you're not planning on retaining your mortgage long enough to break even, it may not make sense to proceed with a refi. Focusing just on the rate and not factoring in closing costs and break-even periods can be costly.
Get ready. Apply early so you're in the best position to lock. If today's current rates do not pencil out, determine what rate will. Some mortgage professionals will agree to a "forward lock" in the event your target rate (or better) becomes available.

If a refi boom happens, be prepared for the transaction to take longer. Fact is, there are now fewer people in this industry from Loan Originators, Processors, Underwriters and Escrow Officers to handle the increased volumes.

Questions? I'm licensed to provide mortgage in Washington State. Contact me.

Get Ready, Get Set: Refi!

Declining Home Values: Good for Buyers, Bad for Refi's

Why Your Loan Originator Needs a Complete Loan Application Before Locking

Filed Under: Refinance