So You’ve Just Become a Home Owner…Feeling Popular?

April 21, 2008 by 2 Comments

You will soon feel quite popular if you’ve just bought a home or at least your mail box will be with tons of junk mail.  Over the weekend I received an email from one of my clients who closed on their new home last month:

"As I’m sure is typical, we’re being deluged with mortgage junk mail.  I see you have several highlights of particularly bad ones you’ve seen, but is there any way to stop the flood?  I know there’s a marker you can put on your credit report that stops credit card offers – is there anything similar for mortgages?"

In a nutshell, your Deed and Deed of Trust are recorded at the county which become "public record".  There are companies that research, buy and resale this information to those wanting to reach out to new homeowners.  You’re more popular than you’ve ever wanted to be…it’s the welcome wagon of junk mail.   What’s worse is that some companies will present the information as if they are a part of or teamed up with your lender.   

Please check back with your original lender before taking up some of these offers to verify if they are indeed from your mortgage company–the trickery they will resort is amazing and sickening.

Here’s a great article that I read another local blog, A Generous People regarding getting rid of junk mail.  I hope it helps!  In the meantime, I recommend opening your mail over your recycle bin. 

Filed Under: Predatory Lending, Rant, Residential Purchase

Remember Last Weekend?

April 20, 2008 by Leave a Comment

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Just a week ago, we were soaking in blue skies and warm sunny 70 plus degrees.  This photo is probably the last of my cherry blossoms.   It was so nice out that we move the last surviving plant (an Angel Trumpet) out of the garage and I pruned my roses. 

My husband and I decided to finally get rid of some shrubs that I was never a big fan of.  I have no idea what they are–except they have to be pruned back every year and they don’t bloom or change color.   I’m sure one of my readers will tell me these are terrific plants and I just didn’t show it the right love.  Alas, they’re gone now (we did keep one)!

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Our home older and the garden is a little over crowded. We replaced the four "green shrubs" with a variegated hydrangea and two black lace elderberries. A week earlier Gardening with Cisco raved about black lace elderberries and so I was thrilled to find a few at our local nursery.   I’ll follow up with an "after" post assuming our new plants made it through our bizarre freezing weather this weekend. 

Filed Under: Just for Fun

Adorable Ballard Bungalow

April 17, 2008 by Leave a Comment

Dirks

This charming bungalow in Ballard could be yours.  It’s offered at $530,000 and will be open this Sunday, April 20, 2008 from 1:00 – 4:00 p.m.

I’m not a real estate agent…but I’m happy to help you with financing on this home! 

For more information on this home, please contact your real estate agent.  This home is listed with Windermere – MLS #28058060.  Dirkhome_3 

This listing is posted with the permission of the home owners.

Dirkkitchen

Filed Under: Real Estate, Seattle

You’ve Got ’til Midnight to File Your Taxes

April 15, 2008 by Leave a Comment

The only Post Office in the Seattle area opened until midnight is located at 15250 32nd Avenue South (map).   And if you need to file an extension, you can find that here.

Hat Tip to West Seattle Blog.

Filed Under: Financial Planning

I Love Checking Out ARMs: Reviewing An Existing Mortgage

April 15, 2008 by 1 Comment

Recently a friend approached me confessing to having one of those "awful adjustable mortgages"…she thinks she needs to refinance and take advantage of today’s lower rates.   Before assuming that someone "needs" to refinance, I like to review their current mortgage and what their financial goals are.  Sometimes, people do not need to refinance…they just need to understand their mortgage terms.

Current Mortgage:  P&I Payment $3,330 (original balance $520,000).

  • 7/1 Adjustable Rate Mortgage: Note Rate 6.625%
  • Caps: 2/2/5
  • Margin: 2.25
  • Index: 1 Year LIBOR (currently 2.637% as of this the date of this post).

There is approx. 65 months remaining with the fixed period rate of 6.625% before the mortgage adjusts.   When the mortgage adjusts, the new rate will be 2.25% plus the current 1 year LIBOR rate EXCEPT the rate will be no lower than 4.625% and no higher than 8.625% due to the 2% adjustment cap. 

Best case scenario at first adjustment date with current mortgage:

Rate: 4.625% with principal and interest payments for 12 months of $2,780.   Note: If the mortgage was adjusting today, the rate would be closer to the best case scenario at 4.875% (2.25% plus 2.637% = 4.887% rounded to the nearest 0.125%).  Alas…they have 65 more months before knowing what the going rate for the 1 Year LIBOR will be.

Worse case scenario at first adjustment date with current mortgage:

Rate:  8.625% with principal and interest payments for 12 months of $3,937.

Possible scenarios that I suggested:

Refinancing into a conforming-jumbo mortgage 30 year fixed at 6.375%.  This would provide a principal and interest payment of $3,232.   With closing costs at $2900, they will break even on this scenario in 30 months.  From 30 months (the break even point) to when the fixed period of the ARM is over, the savings based on the monthly payment would be $3430.

Restructuring the existing mortgage into two mortgages with a conforming first at $417,000 at 5.875% and second mortgage paying off the balance (they can opt for a fixed second or a HELOC).   With a principal and interest payments of $3,194 and closing costs of $3,200; it will take 24 months to break even on this scenario.   From 24 months to when the fixed period of the ARM is over, the savings based on the difference between the monthly payments would be $5,576. 

LiborcompThis chart, which I created utilizing The Mortgage Coach, is factoring in the 2.25% margin to the LIBOR rate back to January 1999.  You can see there is a significant range with the rate.   Home owners with ARMs based on the LIBOR rate from 2002 to 2004 were probably grinning from ear to ear (depending on what their margin was) when you see what their rate was compared to the 30 year fixed.  Timing is everything with an adjustable rate mortgage.

What ever the home owner decides to do is completely up to them.  Of course one of their options is to not refinance and wait to see what the new rate (LIBOR) will be in 65 months.   If they wound up with a "best case scenario" new payment, it would be pretty sweet however the cost of paying the higher payment for 65 month and we don’t know what the index will be at the date of adjustment.    Understanding your mortgage and knowing your available options just starts with contacting your local Mortgage Professional. 

By the way, if you are a Washington State  home owner who has not heard from your loan originator lately or if you would like me to adopt your mortgage, please contact me.   Many LO’s have left the industry or do not provide service once the loan has closed.  I’m happy to review your ARM (or fixed rate mortgage) without any obligation to refinance. 

Filed Under: Adjustable Rate Mortgage (ARM), Jumbo/Non-Conforming, Refinance

When an Appraisal Comes in Low for a Refi

April 13, 2008 by 1 Comment

Appraisals are being scrutinized more than ever with our current mortgage climate.  And I am seeing a few coming in lower than what the home owner anticipated.    If you have plenty of equity, a lower appraisal may not impact you.   However, mortgages are often priced based on loan to values and depending on the type of mortgage and property.  Different scenarios have different pricing based on "risk".  A higher loan to value over a certain price point can increase the cost of the loan.

For example, I recently had a refinance for an investment property where the home was appraised for slightly less than the home owner expected.  He estimated $200,000 for the value of the property and the appraiser (with supporting comparable sales a.k.a. comps) valued the property at $180,000.  The difference between 75.01-80% loan to value and 80.01% LTV is 0.5% to fee (that’s 0.5% of the loan amount or repricing the mortgage interest rate to absorb the 0.5% in fee).    

What are the options with this scenario?

  • The property owner could pay the additional 0.5% in fee ($900 based on the above scenario) to keep the same rate or have the rate bumped up to absorb the fee.   Plus they would pay private mortgage insurance since the LTV is over 80%.
  • The loan amount can be reduced back to 80% of the appraised value, keeping the current rate.  The property owner may have to bring cash in to closing if there is not enough equity to absorb the difference.
  • The loan may be re-priced to absorb closing costs and thus reduce cash needed for closing.

Many appraisals now require interior photos (including kitchen, main living area and bathroom).  Since the underwriter is reviewing the photos, you may want to make sure that your home and yard are tidy.  They are reviewing photos for clues of "pre-foreclosure" or fraud.  I recently even had an underwriter question why a room was vacant on an owner occupied refinance, the home owner had just finished a remodel and had not moved his furniture back when the appraiser was there for the photos.  His house appeared too clean!  Appraisers and underwriters are questioning everything and are being very cautious during these historic times.  What it boils down to is that nobody wants the lender pointing a finger back at them should the loan not perform (become a foreclosure). 

Filed Under: Appraisals, Refinance

Seniors Facing Financial Whammy Should Consider a Reverse Mortgage

April 9, 2008 by Leave a Comment

From the front page of Monday’s Seattle PI: Seniors face financial ‘quadruple whammy’.

The article features  a photo Seniors in line at the West Seattle Food Bank and begins with this sentence:

“Like many retirees, Wilma Johnson notices the price of everything in Seattle going up while the interest on her savings is flat to dropping.

“I told my cat she’s going to have to go out and catch her own food,” the 86-year-old Broadview homeowner said.

With a reverse mortgage, seniors qualify based on their home equity and their age (62 yearsSeniorkitten_3 old is the youngest allowed on title) and can receive either monthly payments, a lump sum of cash or a home equity line of credit that they can draw on when needed.  If a Senior owns their home and has enough equity, there is no reason for them to struggle financially during their golden years.  Reverse mortgages do not require income or credit for qualifying.  It’s definitely worth consideration when it can improve quality of life.

Dear Wilma, your cat doesn’t need to catch her own food–please consider a reverse mortgage.

If you or someone you know are considering a reverse mortgage, please contact me.

Filed Under: Reverse Mortgage Tagged With:

Fannie Mae Clarifies Conforming Jumbo Guideline for Refi’s

April 7, 2008 by Leave a Comment

Great news!  I just received a memo from Fannie Mae clarifying that they will now allow purchase money second mortgages to be included in a conforming-jumbo refinance and to be treated as "limited cash out".   Previously, purchase money second mortgages (piggy back mortgages used for financing when you purchased your home) were going to be considered "cash out" and not allowed with the temporary conforming jumbos. 

In a nutshell, this means that if you have combined loan amounts up to $567,500 for King, Pierce or Snohomish counties, and the mortgages being paid off are from when you purchased your home, this is now a doable refinance utilizing a conforming jumbo mortgage (subject to credit scores, loan to value, documentation…etc.).   

A little easing will help many home owners who were hoping to consolidate their mortgages.

Filed Under: Jumbo/Non-Conforming, Refinance
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