4 Ways Buyers Can Mess Up a Loan Approval

This happens all the time.  Home buyers have gotten approved for a mortgage and now they’re just waiting to make it to the closing table.

It is just a waiting game.  Don’t throw your loan approval into jeopardy by making one of these common mistakes:

1. Making a big purchase: Avoid making major purchases, like buying a new car or furniture, until after they close on the home. Big purchases could change the buyer’s debt-to-income ratio that the lender used to approve the buyer’s home loan and could throw the approval into jeopardy.
2. Opening new credit: Now isn’t the time to open up any new credit cards. Don’t do it!
3. Missing any payments: You need to be extra vigilant about paying all their bills on time, even if they’re disputing one.
4. Cashing out: Avoid any transfers of large sums of money between your bank accounts or making any undocumented deposits — both of which could send up “red flags” to your lender.

Seattle ninth-best U.S. market for home sellers: Report

Seattle is the ninth-best market in the country for homeowners selling their home, according to a new report.

This is great news if you are thinking if selling your home anytime soon, and another reason to jump in if you’re buying!

According to Zillow Inc. reports that only home sellers in eight other U.S. cities have more leverage than Seattle home sellers. Zillow describes a seller’s market as one where homes are on the market for a shorter time, price cuts occur less frequently and homes are sold at prices very close to (or greater than) their last listing price.

In markets like Seattle, “sellers … are squarely in the driver’s seat with their homes selling within days of listing, often after bidding wars that increase the sale price above the asking price,” said Stan Humphries, Zillow chief economist, in a statement.

If you’d like to know what’s going on in your neighborhood, on your block for similar homes just like yours, call me for a no-obligation consultation.

The Appraisal Process Has Changed

Just like everything else in real estate the process for getting your home appraised has changed! Here are 3 key areas that have been modified:

1. Relationship Between Lenders and Appraisers
The biggest change is that lenders and appraisers no longer work together — a method that many say was a breeding ground for appraisal fraud. While fraudulent activity is down as a result of the changes some new problems have arisen.

2. Quality of appraisals
As for the quality of appraisers… Here’s the reality: appraisers are not making as much money as they used to. Some appraisal management companies are paying about $200 for an appraisal that would normally pay $350-$400 and they are to get the job done quicker. As a result both the quality and level of competence of the appraiser has taken a hit. In 2007, there were nearly 99,000 licensed appraisers; at the end of 2011, there were just 87,000.

3. Deal or no deal?
Stats don’t lie: An astounding number of contracts are being cancelled – some 33% in January, 2012, alone. That’s up from just 9% in January, 2011. This is  due to lowball appraisals, something has gone wrong with the inspection process that cannot be remedied, or the buyer has either lost his/her job unexpectedly, or simply gotten cold feet. Regardless, brace yourself for the possibility that your home may not be assessed at a fair value, putting you at a disadvantage.

Things are changing but never fear, we are here to help. If you have any questions at all please call 425-330-0663

How long until you can buy again after short sale, bankruptcy, or foreclosure?

I get this question all the time and I finally got smart and decided to post it here for everyone. These are general guidelines and change often.

2011 FHA Waiting Guidelines

Bankruptcy – You may apply for a FHA insured loan after your bankruptcy has been discharged for TWO (2) years with a Chapter 7 Bankruptcy.

You may apply for a FHA insured loan after your bankruptcy has been discharged for ONE (1) year with a Chapter 13 Bankruptcy

Foreclosure – You may apply for a FHA insured loan THREE (3) years after the sale/deed transfer date.

Short Sale / Notice of Default – You may apply for a FHA insured loan THREE (3) years after the sale date of your foreclosure. FHA treats a short sale the same as a Foreclosure for now.

Credit must be re-established with a 640 minimum credit score

2011 VA Waiting Guidelines

Bankruptcy – You may apply for a VA guaranteed loan TWO (2) years after a Bankruptcy

Foreclosure – You may apply for a VA guaranteed loan TWO (2) years after a foreclosure

Short Sale – You may apply for a VA guaranteed loan TWO (2) after a short sale, unless it was a VA loan then restrictions apply

Credit must be re-established with a minimum 620 credit score

2011 Conventional Waiting Guidelines (Fannie Mae)

Bankruptcy – You may apply for a Conventional, Fannie Mae loan after your bankruptcy has been discharged for FOUR (4) years.

Foreclosure – You may apply for a Conventional, Fannie Mae loan SEVEN (7) years after the sale date of your foreclosure. Additional qualifying requirements may apply,

Short Sale / Deed in Lieu of Foreclosure – UPDATED 12/16/11 Currently treated the same as a foreclosure with a waiting time of SEVEN (7) years before you can buy again using a Fannie Mae conventional home loan.

TWO (2) Years up to Maximum 80% Loan to Value | 20% Down Payment

FOUR (4) Years up to Maximum 90% Loan to Value | 10% Down Payment – Subject to Private Mortgage Insurance underwriting guidelines.

SEVEN (7) Years above 90% Loan to Value | with less than 10% Down Payment – Subject to Private Mortgage Insurance underwriting guidelines.

Credit must be re-established with a minimum 660 credit score.

Fannie Mae has reduced waiting periods in cases of extenuating circumstances – The death of a primary wage earner seems to be the only one I have been able to identify up to this point.

Preparing to Buy Again after Bankruptcy, Short Sale or Foreclosure

You should begin looking at your credit at least six (6) months before you are ready to buy again.

Quite often there are things left over on your credit report that can delay your ability to qualify.

With a little head start and good advice, you can get your credit in line, qualify for financing and buy again in the lowest priced real estate market that we’ve seen in years!

We specialize in helping people make sense of Distressed Selling so feel free to drop me an email, call/text anytime.

Buy A Home With Less Than 20% Down

It seems to be the common perception that if you want to buy a home in today’s market, you need to put at least 20% down. We are happy to say that is not always the case!

Fortunately, for many home buyers, there are many exceptions to this rule. Lending Tree recently released a study claiming that the average U.S. mortgage down payment is about 12.25%.

The following scenarios may allow you to purchase a home for less than 20% down.

FHA Loans

FHA loans are the most popular low-down-payment mortgage loans. FHA loans allow down payments of as little as 3.5%. FHA mortgages traditionally have a clientele of mostly lower-income homebuyers and first-time homebuyers. However, they have become extremely popular since the subprime mortgage crisis as an option for a low-down payment home loan.

VA mortgages

The primary remaining source of no-money-down mortgages is the Veterans Administration through a VA home loan. To qualify, you typically have to have either served or be currently serving in the military.

Certain nonmilitary persons can qualify for VA mortgages also, including certain surviving spouses of veterans, officers of the Public Health Service or National Oceanic and Atmospheric Administration.

Conventional mortgages

With as little as 5% to 10% down, you may still be able to get a conventional or standard mortgage. Fannie Mae or Freddie Mac backs these loans, and they generally require better credit than the programs mentioned above.

A lender will be more likely to approve you for a mortgage with only 5% down if you’re buying a home in a local market where real estate values have been relatively stable.

Fannie Mae’s Homepath

Fannie Mae’s Homepath program is a low-down payment program that doesn’t required mortgage insurance. Homepath is Fannie Mae’s program for selling foreclosed properties that have come into its inventory. Homepath mortgages require only 3% down, there’s no requirement for mortgage insurance, and you can borrow up to an additional $35,000 for necessary renovations and repairs.

Credit standards remain high for Homepath mortgage loans.

Keep in mind that if you choose a low-down payment program and put down less than 20% down, your interest rate may be higher and in many cases, you’ll have to pay some sort of mortgage insurance.

To discuss mortgage loans options and whether a low-down-payment loan is right for you, give me a call at 425-330-0663.

Great News for Veterans!

We like working with Veterans, I’m a Veteran and anytime we can pass on a great deal to those that have served our country I’m excited!

Did you know home loans guaranteed by the Department of Veterans Affairs continue to have the lowest serious delinquency and foreclosure rates in the mortgage industry. Veterans have also taken advantage of their home loan benefit in record numbers, as VA loan originations reached their highest total in eight years.

“The continued strong performance and high volume of VA loans are a testament to the importance of VA’s home loan program and a tribute to the skilled VA professionals who help homeowners in financial trouble keep their homes,” said Secretary of Veterans Affairs, Eric K. Shinseki.

Last year, VA helped 72,391 Veterans and Servicemembers who were in default on their mortgage loan retain their homes or avoid foreclosure, an increase from 66,030 from the prior year. At the same time, foreclosures on VA guaranteed loans dropped by 28 percent.

According to the Mortgage Bankers Association National Delinquency Survey, VA’s foreclosure rate for the last 14 quarters and serious delinquency rate for the last 11 quarters have been the lowest of all measured loan types, even prime loans.

In fiscal year 2011, VA guaranteed 357,594 loans, an increase of nearly 14 percent over last year. There are currently over 1.5 million active VA home loans. The program makes home ownership more affordable for Veterans, active duty Servicemembers, and eligible surviving spouses by permitting no-downpayment loans and by protecting lenders from loss if the borrower fails to repay the loan.

Much of the program’s strength stems from the efforts of VA employees and loan servicers nationwide, whose mission is to ensure all Veterans receive every possible opportunity to remain in their homes, avoid foreclosure, and protect their credit from the consequences of a foreclosure.

“We are committed to making even more Veterans and Servicemembers aware of this important benefit and delivering the assistance they deserve when financial difficulties arise,” said VA’s Under Secretary for Benefits Allison A. Hickey.

For Veterans and Servicemembers who have trouble meeting their mortgage obligations or anticipate problems in the near future, VA first recommends contacting their loan servicer.

Depending on the situation, VA’s loan specialists can intervene on a Veteran’s behalf to help pursue home-retention options such as repayment plans, forbearances, and loan modifications. Veterans and Servicemembers can also call VA toll-free at (877) 827-3702 to speak with a VA specialist concerning foreclosure avoidance.

Veterans may obtain a certificate of eligibility and sign up for eBenefits through the web portal at www.ebenefits.va.gov. The Department of Defense and VA jointly developed the eBenefits portal as a single secure point of access for online benefit information and tools to perform multiple self-service functions such as checking the status of their claim.

Servicemembers may enroll in eBenefits using their Common Access Card at any time during their military service, or before they leave during their Transition Assistance Program briefings.

Veterans may also enroll in eBenefits and obtain a premium account by verifying their identity in-person at the nearest regional office or online depending on their status, or calling VA’s toll free number at 1-800-827-1000.

Since 1944, when home loan guaranties were first offered under the original GI Bill, VA has guaranteed more than 19.4 million home loans worth over $1.1 trillion. To obtain more information about the VA Home Loan Guaranty Program, please visit the program’s home page at www.benefits.va.gov/homeloans.

I’m a Veteran and I’d love to help other Veterans so call me, 425-330-0663!

Relax, things are getting better!

Americans’ concerns over housing and the economy are subsiding. This good news is from Fannie Mae’s National Housing Survey from February. There are a few reasons this is happening:

A improving job market is a big part of what’s behind Americans feeling more confident about the housing market. “The pickup in the pace of hiring over the past few months has helped soothe consumer concerns, lifting their moods regarding their personal finances, the direction of the economy, and their views on the housing market,” says Doug Duncan, chief economist of Fannie Mae. “As a result, we’ve seen more potential for economic upside, creating a more balanced near-term outlook.”

The survey found that 28 percent of Americans expect home prices to increase over the next 12 months while 53 percent say prices will likely stay the same. Fifteen percent say they expect home prices to decline.

Meanwhile, the majority of those surveyed see rental prices continuing to increase over the next year.

Sixty-five percent of those surveyed say that if they were going to move they’d buy their next home; 29 percent say they would rent.

With low mortgage rates and falling home prices, 70 percent of those surveyed say now is a good time to purchase a home. Also, more Americans surveyed say now is a good time to sell, rising to 13 percent in February, which is the highest level in more than a year but still low by historic standards.

Overall, Americans expressed more confidence about their personal financial situation, with only 12 percent saying they expected their personal financial situation to worsen in the next 12 months — which is the lowest number in more than a year.

This is all good news. If you are looking to buy or sell give me a call 425-330-0663.

How can one man lift a big rock?

How can one man lift a big rock?  Why does Donald Trump win so often in high-stakes negotiations?  How can you buy five income producing properties with very little of your own money?

You’ve heard me talk about it often.  It’s leverage.  Let’s take a quick look at why the concept of leverage is so crucial to growing wealthy. Leverage is the ability to use a small amount of your own money to control an asset of far greater value. For example, when you put down 20% on the purchase of a single family residential home, you are essentially using the bank’s money to extend your own buying power.

Assume that you have $100,000 cash to invest. You could find a $100,000 house and purchase it outright. A better idea would be to find five single family residential properties each costing $100,000. Rather than plow all your resources into one property, put down 20% on all five, let the bank loan you the rest, and suddenly you have a portfolio of five income producing properties.

If you’ve done your homework and chosen appropriate deals that provide positive cash flow immediately, you’re sitting in the proverbial catbird seat. Later, you’ll refinance all five loans in seven to twelve years and use the resulting proceeds to buy as many properties as you have the down payments to afford. You should NEVER pay off your loans, but rather frequently refinance into more and larger real estate deals.

Here’s the reality of this type of investing. You use other people’s money (OPM) to buy assets that you will eventually own. Along the way, you also use OPM to cover the monthly expense of your investment, which is the mortgage payment. How do you do this?

By renting the place out! Assuming the deal is right, which it should be when you do your homework, a tenant’s monthly rent payment should cover the mortgage, all associated expenses, and still leave you with a little cash in your pocket. This is called positive cash flow.

Here’s the bottom line. There is no other asset which allows you to rent it out! Don’t try this in the precious metals market or on Wall Street. They’ll laugh you out of the place.

Let’s grab a cup of coffee and discuss the how investing can help you with your wealth goals!  Call me anytime at 425-330-0663.

Book em danno

Our team is always looking for tools and resources that will help our clients make informed decisions in home buying. Now you can see what crime is like in that area you’re thinking about living in with Trulia’s Crime Map.

Drawing from three data sources, Crime Map starts with a national view for cities with available data, and then zooms into specific areas. Darker red areas and larger circles on the maps indicate more incidents, whereas green areas and smaller circles represent the opposite.

Click on regions or the scaled circles to see details on individual crimes during the past year.

This is good stuff and very useful for both home buyers and sellers.  For example, if you are thinking of selling your home, check out the crime stats in your area.  You’ll see what buyers are seeing when it comes to crime.

And then there’s the little things like permalinks for locations, filtering by crime type, quick zooms to locations with the most crime, and discussion pages. It’s that little bit of awesome sauce that makes for an extra informative application.

Voters Strongly Value Homeownership

By an overwhelming margin, American voters, including those in Seattle, strongly value homeownership and believe tax incentives are appropriate and reasonable.

Three-fourths of voters who took part in a new nationwide survey affirmed their belief in homeownership, saying owning a home is the best long-term investment they can make.

Survey respondents also said they object to efforts to weaken or eliminate the mortgage interest deduction or diminish a federal role to help qualified home buyers obtain affordable 30-year mortgages.

“The American electorate is sending a clear message that owning a home remains a cornerstone of the American Dream and preserving a federal commitment to homeownership is essential to maintain a thriving middle class and get housing and the economy back on track,” said Neil Newhouse, a partner and co-founder of Public Opinion Strategies. His company conducted the survey in early January to gauge likely voters’ attitudes toward homeownership and housing policy issues.

The comprehensive survey of 1500 voters, conducted on behalf of the National Association of Home Builders by the Republican and Democratic polling firms of Public Opinion Strategies in Alexandria, Va., and Lake Research Partners in Washington, D.C., includes data from key political “swing areas.”

The poll shows that three out of four voters (both owners and renters) believe it is appropriate and reasonable for the federal government to provide tax incentives to promote homeownership. That sentiment cuts across regional and party lines, with 84 percent of Democrats, 71 percent of Republicans and 71 percent of Independents saying they agreed with the statement.

Two-thirds of respondents said the federal government should help home buyers to afford a long-term or 30-year, fixed-rate mortgage.

Nearly three fourths (73 percent) of voters oppose eliminating the mortgage interest deduction. These figures held firm across the political spectrum, with 77 percent of Republicans, 71 percent of Democrats and 71 percent of Independents against eliminating the mortgage interest deduction.

More than two-thirds of those polled (68 percent) would be less likely to vote for a congressional candidate who proposed to abolish the deduction, a figure that was virtually identical across all party affiliations (69 percent of Independents and 68 percent of Democrats and Republicans).

A majority of voters are also against proposals to reduce the mortgage interest deduction, eliminate the deduction for interest paid for a second home, limit the deduction for those earning more than $250,000 per year, scale back the deduction for home owners with mortgages above $500,000 and do away with the deduction for interest paid on home equity loans.

“With the 2012 election season in full swing, candidates running for the White House and Congress would be wise to heed the will of the American voters, who have expressed broad support for government policies that encourage homeownership and oppose efforts to make it more difficult to get a home loan and to tamper with the mortgage interest deduction,” said Celinda Lake, president of Lake Research Partners.

Among the poll’s other key findings:

• An overwhelming number — 96 percent — of home owners are happy with their decision to own and 84 percent who are “underwater,” or owe more on their mortgages than their home is worth, expressed the same sentiment.
• 79 percent of home owners would advise a family member or close friend just starting out to buy a home, and 69 percent of those who are underwater on their mortgage would offer the same advice.
• 74 percent said that despite the ups and downs in the housing market, owning a home is the best long-term investment they can make.
• Homeownership and a retirement savings program are considered by voters to be their best long-term investments.
• 78 percent of respondents said that owning their own home is very important to them.
• Nearly seven out of 10 voters who are not currently home owners (68 percent) said it was a goal of theirs to buy a home.
• Job uncertainty and saving for a downpayment and closing costs are the biggest barriers to buying a home.

The survey findings are consistent with the results of other public opinion surveys. In a New York Times/CBS News poll conducted in June, 89 percent said that homeownership is an important part of the American Dream and more than 90 percent indicated that it is important for the federal government to continue the mortgage interest deduction.

According to a Pew Research Study conducted last March, 81 percent of respondents agree that buying a home is the best long-term investment a person can make and 81 percent of renters surveyed said they would like to buy a house.

“Even in a down housing market, homeownership remains a core American value, with the vast majority of citizens who do not currently own a home saying they want to buy a home,” said Bob Nielsen, president of the National Association of Home Builders and a home builder from Reno, Nevada. “Those running for office in November need to understand that voters will not look kindly on any candidates who seek to dismantle the nation’s long-term commitment to homeownership.”