Helping Washington State homeowners learn more about their mortgage options.
UPDATE 5/2/17: Fannie Mae has changed guidelines for refinances of recently listed homes.
So you tried selling your home in this market and were not able to find a buyer. Now, you want to take advantage of our current low mortgage rates and refinance to reduce your payments or perhaps take some equity out to improve your home now that you’re not moving anywhere. Not so fast! Most lenders will not refinance a recently listed property. [Read more…]
This month’s YOU Magazine is now available for your review. YOU Magazine is one of the many tools that I subscribe to for my clients. This month’s articles include:
Does The Fed Change Your Monthly Mortgage Payment?
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The Federal Reserve has cut interest rates six straight times since September 2007. Most analysts are predicting that the Fed will cut rates even further when it meets at the end of this month. And yet, despite a full 3% in interest rate cuts during this time, mortgage rates are significantly higher now than they were just three months ago. How is that possible? Don’t rate cuts equal lower mortgage rates? Read on as the team at YOU Magazine goes behind the headlines to show you how these Fed cuts do and don’t affect your mortgage.
Everything You Need to Know About 529 Plans
Accidental Landlords: A Great Unplanned Investment
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Lower house prices and higher rents have created a new breed of real estate investor: the accidental landlord. Some bought new homes and couldn’t sell their old ones while others chose to invest in the changing market. Either way, being a landlord is more than just sitting back and collecting the rent. This month YOU Magazine takes a closer look at how being a successful landlord is no accident.
Just to name a few…
How perfect that not only is it Good People Day, that it also JP Patches 80th birthday. If you’re a long time reader of Mortgage Porter, you know I’m a Patches Pal who has watched him since I was a tyke.
Today’s article in the Seattle PI also announced that the Statue will be complete and unveiled in Fremont on August 17, 2008! Donations are still needed and JP’s handsome mug will remain on my blog (right side of the page) until the fundraising is complete.
It looks like the statue has changed from what was previously unveiled…I wonder if it 
was the finger issue? During the unveiling at Fremont last year, the statue featured waving hands of the duo and someone (can’t remember if it was JP, Gertrude or from the crowd) said…"wonder how long until someone breaks off the fingers leaving just one?"
A tip of the hat to The Tim of Seattle Bubble.
I’m a big fan of Gary Vaynerchuck for many reasons:
Gary has declared today as "Good People Day"…a day to recognize all the good in people instead of focusing on all the negative that often surrounds us.
I’m so fortunate to have so many wonderful people in my life and I thank you all from family, friends, clients, my blog readers, fellow bloggers, the many people who help us in our business transactions and daily life…I can go on and on and on. The world is a great place and I thank Gary for reminding us of this and a big tip of the hat to Morgan Brown of Blown Mortgage–both Good People! My heartfelt thanks to all of you.
Share the love and spread the word: today is Good People Day.
Here’s a tip from my husband: don’t scratch your back using the wrong side (or should I say write side) of a ball point pen.
Fellow Rain City Guide Contributor, Tim Kane wrote an interesting post while I was on vacation asking if preapproval letters are worth their ink in our current market. Truth be told, this was a valid question prior to our current market conditions and has been for years. The true worth of the preapproval letter prior to the mortgage "melt down" was based on the merit of the loan originator who was preparing the letter. I’ve addressed this issue before here and here. Anyone can type a letter or issue a fancy certificate; has the borrower really submitted supporting documents verify their income, employment and assets required per underwriting (i.e. the borrower has been credit underwritten)?
The fact is, in today’s current mortgage climate, where loan programs are terminated, guidelines tightened, private mortgage insurance restricted and geographical areas are being deemed soft: a preapproval letter is not any sort of guarantee that a home buyer will be able to close on a proposed home purchase.
So why bother with preapproval letters? Here is the current value of a true preapproval letter:
What can you do if preapproval letters are worth less than they were before?
This market demands that you select a Mortgage Professional based on ability, expertise, commitment and available products. Trying to get the lowest rate in a market where rates change up to 3 to 5 times per day is insanity. A true Mortgage Professional will provide you with the most competitve rate available considering your current mortgage plan.
Hat to Dan Green of The Mortgage Reports for pointing out Blog dot Blog: a domain name created just for bloggers. This is a chance to drive more traffic to your blog with this new url. For example, I am registering www.mortgageporter.blog.
Check it out–domain names will go quickly! You can register your blog at blogdotblog.com today.
In part one of this story about Michael and Pam investigating a refinance with Woo Who, we uncovered how the bank Loan Officer was not willing to provide a copy of the Federal Truth in Lending to Michael and Pam. It was not until after Michael insisted that it was his right to receive this document, that it appeared disclosing a prepayment penalty that he was not informed of.
The story gets better. As I mentioned, Michael and Pam’s existing adjustable rate mortgage is scheduled to adjust this June. I reviewed the Note with Michael showing him that the index his mortgage rate is tied to is the Monthly Treasury Average (MTA). The Monthly Treasury Average is just that: a 12 month average of the monthly average yields of the US Treasury securities. The 12 month average is determined by adding together the Monthly Yields for the most recently available twelve months and dividing by 12. As it is based on a 12 month average, the rate does not move drastically. This could act as a benefit when rates are moving upwards and is less beneficially when rates are dropping. Here is the 411 on Michael and Pam’s current loan:
Based on this information, their new rate is estimated at 5.548%. The new rate is rounded up to the nearest 0.125% = 5.625%. The new mortgage would reamortize at their balance at that time (estimated at $196,000) based on the remaining term providing Michael and Pam a principal and interest payment of $1218.29. This is without refinancing–no closing costs–no loan approval. Simple.
Woo Whoo’s proposal is a 5/1 ARM with a prepayment penalty at 5.375% with a principal and interest payment of $1108.74 and closing costs of $2283.74 (not calculating how many years and what the penalty is for the prepay).
When Michael and Pam understood their options, they elected to stick it through with their existing ARM. Their rate should drop lower when it adjusts again next June. Michael was puzzled (to put it mildly) as to why the representative from Woo Whoo Bank didn’t explain this to them. Especially since the loan that would be refinanced was with Woo Whoo.
It’s painfully simple. The Loan Originator would not be paid for giving free advice. It’s real easy for LO’s and mortgage companies to target those with adjustable rate mortgages and plant fear of the adjustment. Or perhaps the Whoo Who Loan Originator didn’t even consider how Michael and Pam would fair not refinancing.
This is why it’s so important to review your mortgage Note and understand how and when it adjusts (if you have an ARM). If it all seems like too much to figure out, contact your Mortgage Professional to help you. If your loan originator is neglecting you (perhaps they’ve left the industry or do not care for clients after the transaction is closed), I’m happy to adopt your Washington State mortgage…no refinance required.
It’s all about understanding all of your options and sometimes, that option is: do nothing.
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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