If you are struggling with your home mortgage, reach out to a trusted advisor.  Contact your real estate professional for guidance and a referral to a local attorney that can help.

If you do get contacted look for these three signs as a warning that you may be getting scammed:

1)      An upfront fee is required.  If you pay a fee (often in the thousands of dollars), that is likely the last you will see of those dollars and the last you will hear from the caller.

2)      You are given a GUARANTEE to stop your foreclosure.  Nothing is that cut & dry in the current world of banking.  The rules seem to change weekly and there is no guarantee to stop a foreclosure.

3)      Tells you to stop paying your mortgage & pay them instead.  Creating a “trust account” does not help you stop a mortgage and quite frankly is simply another way of getting more dollars out of you under the pretense that it is a necessary step in solving your foreclosure.

Housing activity: “not as bad as some think; not as good as some would like”

KIRKLAND, WA, July 6, 2010 – Not even the lowest interest rates in decades could entice wary house-hunters last month. Home sales around Western and Central Washington remained sluggish with pending sales lagging year-ago levels, but not all the numbers were down.

June’s pending sales (mutually accepted offers) outgained the total for May by 5.8 percent. Closed sales were up from both a year ago and the previous month. Brokers also applauded congressional approval of legislation to extend the tax credit deadline on contracts signed by the April 30 deadline. That measure, which President Obama signed on July 2, pushes the deadline to Sept. 30.

“In general consumers seem to be stuck in uncertainty surrounding the world’s economic concerns, our lack of jobs and the rollercoaster of the stock market. They seem to be hunkering down despite the lowest interest rates in years,” said NWMLS director Frank Wilson, managing broker at John L. Scott, Inc. Poulsbo. 

On a more upbeat note, Wilson said the deadline extension for the tax credit is good news. “Congress has acknowledged the length of time it is taking banks to close a transaction by passing this extension,” he remarked. Without the extension, the National Association of Realtors estimates as many as 180,000 buyers wouldn’t have qualified for a tax credit of up to $8,000 because they couldn’t meet the June 30 deadline to close on their purchase.

The latest report from Northwest Multiple Listing Service shows mixed news across its 21-county market area, with arrows going in both directions. 

“The current market is not as bad as some people think, and not as good as some people would like it to be,” observed NWMLS director Pat Grimm, managing broker at Windermere RE/Capitol Hill, Inc. He also said the combination of low interest rates and affordable prices are the best he’s seen in his 25 years of experience in real estate.

The MLS summary statistics for June show:

Pending sales of single family homes and condominiums (combined) fell 28 percent from a year ago

• Pending sales of single family homes and condominiums (combined) fell 28 percent from a year ago, but rose 5.8 percent from May.
• Year-to-date (through June), pending sales are up 12.4 percent compared to midyear 2009.
• Closed sales for June outgained the same month a year ago by 617 transactions (up 12 percent), and rose 8.9 percent from May’s total.
• The median price for last month’s completed transactions is down about 7 percent from twelve months ago. 
• Four counties (Cowlitz, Grays Harbor, Lewis and Pacific) reported price increases from a year ago, while eight other counties had declines of less than 5 percent.

NWMLS director Wilson surmised the drop in pending sales could be just a dip as kids get out of school “and we rush to embrace summer” or a “hangover from the tax credit,” but cautioned, “It’s too early to tell.”
“The economy is still recovering and that makes some consumers hesitant to buy,” Grimm stated, adding, “On the other hand, with prices down and mortgage rates at their lowest in 50 years, homes are more affordable now than they were before the tax credit went into effect.”

Grimm said the market has created its own incentive for buyers who missed out on the most recent tax credit.  “Lower prices and lower interest rates more than offset the benefit of the tax credit. Homes are actually more affordable than they were three months ago, and that factors in the tax credit,” he emphasized. To illustrate his point, he said the purchaser of a $500,000 property this month with a $400,000 mortgage would save more than $250 per month as a result of the interest rate drop. “Do the math and you can see you are way ahead if you stay in the property for more than three years.”

House-hunters have plenty of choices. Brokers added 10,354 new listings to inventory last month, bringing the selection to 42,940 residences being offered for sale system-wide. That’s up about 4 percent from a year ago.  Included in the current listings are 36,027 single family homes priced from $8,500 to $25 million, and 6,913 condominiums priced from $20,000 to $15.6 million.

Asked if now is the right time to buy, Grimm replied, “You can’t time the real estate market any more than you can time the stock market,” but added, “If you want to buy a home, and can afford it, I haven’t seen a better convergence of affordable prices and low interest rates in the 25 years I’ve been working in real estate.”
Last week’s benchmark 30-year fixed-rate mortgage fell to 4.75 percent, according to the Bankrate.com national survey of large lenders. That’s the lowest rate for the 30-year fixed in the nearly 25-year history of Bankrate’s weekly survey. Freddie Mac reported an average of 4.58 percent, the lowest level in more than five decades.
Mark Fleming, chief economist for CoreLogic, said economists at that California-based firm see a U-shaped recovery, similar to the 2000 recession, but with a longer, more pronounced bottom. Because of various factors at play, including the expiration of the tax incentives and various mortgage modification programs affecting distressed properties, he expects the real estate market to “sag through the summer and slower cooler months,” but believes it will eventually grow in line with economic and income growth “as we put the great recession further behind us.”

Northwest Multiple Listing Service, owned by its member brokers, is the largest full-service MLS in the Northwest. Its membership includes more than 24,000 brokers and agents. The organization, based in Kirkland, currently serves 21 counties in Western and Central Washington.

Statistical Summary by Counties: Market Activity Summary – June 2010

4-County Puget Sound Region Pending Sales (SFH + Condo combined)
(Totals include King, Snohomish, Pierce & Kitsap counties)

__________
Copyright © 2010
ALL RIGHTS RESERVED
This material may not be published, broadcast, rewritten or redistributed without prior permission.

The extension was needed for those that missed the original June 30 deadline due to the more complicated financing process or those trying to navigate the complicated process of purchasing a short sale property.

It is expected that President Obama will sign the bill, which was overwhelmingly approved by the House on Tuesday.

A)  Construction noise (equipment, vehicles, delivery trucks, etc.) are handled by the Department of Planning & Development.  To file a construction noise complaint call 206-684-7843

B)  To report major mechanical noise (fans, vehicle repair and body shops, ventilators, air conditioning, manufacturing, etc.) call the Department of Planning & Development 206-615-0808

C)  All other noise complaints like are handled differently.  If you are struggling with the following type of noise listed below,  contact the Seattle Police Department @ 206-625-5011.   Do not call 9-1-1.

• Barking dogs;
• Horns;
• Sirens;
• Motor vehicles;
• Music or amplified sound;
• Amplified human voices
• A vehicle sound system;
• Noise from parks or public places;
• Watercraft

Don’t get caught of guard by added costs and don’t leave yourself exposed to potential fines, check with your contractor regarding work to be done on homes built prior to 1978.

As reported by the National Association of Home Builders:

The U.S. Environmental Protection Agency’s Lead: Renovation, Repair and Painting rule governing the work of professional remodelers in homes where there is lead-based paint was published in the Federal Register on Earth Day, April 22. The rule took effect April 22, 2010.

The rule addresses remodeling and renovation projects disturbing more than six square feet of potentially contaminated painted surfaces for all residential and multifamily structures built prior to 1978 that are inhabited or frequented by pregnant women and children under the age of six.

It requires a cleaning inspection after the work is completed and grants the remodeler flexibility in determining the size of the work area, which can reduce the size of the area subject to containment.

The EPA rule also lists prohibited work practices ― including open-torch burning and using high-heat guns and high-speed equipment such as grinders and sanders unless equipped with a HEPA filter.

Additionally, the rule establishes required lead-safe work practices, including posting warning signs for occupants and visitors; using disposable plastic drop cloths; cleaning the work area with HEPA vacuuming and wet washing; and individual certification through a training course.

The full rule and brochures for consumers and renovators can be downloaded from the EPA’s Web site.

Information for Homeowners Working at Home

If you are a homeowner performing renovation, repair, or painting work in your own home, EPA’s RRP rule does not cover your project. However, you have the ultimate responsibility for the safety of your family or children in your care. If you are living in a pre-1978 home and planning to do painting or repairs, please read a copy of EPA’s Renovate Right: Important Lead Hazard Information for Families, Child Care Providers, and Schools (PDF) lead hazard information pamphlet (11 pp, 1.1MB). | en español (PDF) (20 pp, 3.2MB). You may also want to call the National Lead Information Center at 1-800-424-LEAD (5323) and ask for more information on how to work safely in a home with lead-based paint.

*  Previous 2 years W-2 statements
*  Most recent paystubs (showing one full month of income)
*  2 months bank statements on all checking and savings accounts
*  Landlord information
*  Most recent statements on investment accounts (retirement, mutual funds, stocks, bonds, etc.)
*  If you receive Social Security or retirement income you must provide the benefits letter
*  If you are selling a home and using the proceeds for your purchase, you will need to provide a copy of the Settlement Statement for that transaction
*  If you own rental property, copies of all lease agreements and signed tax returns for the last two years

If you are self employed or paid on commission you will need to provide additional documentation:

*  Previous two years tax returns, signed and dated
*  Year to date profit & loss statement, signed and dated
*  Additional tax returns and schedules if you are a corporation or general partner in partnership or LLC

Additional items that may be requested, depending on your circumstances:

*  In the case of a divorce, you will need to provide a copy of the final (recorded) divorce decree
*  For income from child support, you will need to provide the parenting plan and evidence of funds being received for the last 12 months
*  Maintenance agreements for shared roads or driveways
*  Documentation on the budget and expenses for an HOA
*  In the case of a bankruptcy, you will need to provide your discharge papers and a letter of explanation

For good reason, getting a home loan is more complicated than it has been for many years.  You will need to be prepared to provide lots of documentation to the lender right up until the final closing.  As long as you are prepared and have a reliable mortgage lender working on your behalf it should not feel too painful.

Wondering who to talk to regarding a mortgage?  Contact me, I have a wonderful resource in the world of home loan lending and would be happy to refer you to them.

The three big changes are:

1.  Mortgage insurance premium (MIP) will be increased to build up capital reserves and bring back private lending
   1. The first step will be to raise the up-front MIP by 50 bps to 2.25% and request legislative authority to increase the maximum annual MIP that the FHA can charge.
   2. This has already gone into effect.
2.  Update the combination of FICO scores and down payments for new borrowers.
   1. New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%.
   2. This allows the FHA to better balance its risk and continue to provide access for those borrowers who have historically performed well.
   3. This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.
3. Reduce allowable seller concessions from 6% to 3%
   1. The current level exposes the FHA to excess risk by creating incentives to inflate appraised value. This change will bring FHA into conformity with industry standards on seller concessions.
   2. This change will be posted in the Federal Register in February, and after a notice and comment period, would go into effect in the early summer.

Even with these changes FHA will remain a fantastic loan option for first time home buyers.  The program allows “gift funds” from family, friends &/or employers.  It also allows participation in state  home buyer assistance programs.

Keep in mind that FHA is only one option for home buyers.  If you are thinking of buying a home talk with a knowledgeable real estate professional and a local lender to explore your options and be sure it makes sense for you.

Hat tip to the neighborhood blog My Green Lake

Below are most of the fees commonly associated with obtaining a residential home mortgage.

Loan Origination Fee:   The loan origination fee or “loan fee” is the initial charge assessed by the lender and is intended to cover the administrative costs resulting from paper work connected with each phase of their real estate lending activities. Conventional lenders can charge any size loan fee they wish, typically 1%. FHA & VA lenders are restricted to 1% of the loan amount.

Discount Points

Appraisal Fee:  Where new financing is involved (excluding a private contract) an appraisal is required. The purpose of the real estate appraisal is to assist the bank in determining “real property value” to ensure that they have adequate collateral for the loan amount being requested. The appraiser is expected to present an image of the neighborhood, site and improvements. Which through adequate documentation substantiates his or her conclusion of value. The total appraisal report and not just one individual item is considered in determining if the appraisal supports the estimated market value and overall acceptability of the property.

Credit Report:  The status of your credit history is of great importance, as it shows your attitude toward repayment of obligations. Your proven ability to handle obligations will provide evidence that you are capable of budgeting and handling a mortgage payment.

What are some of the things a credit repot shows? Stability of residence, credit, income and payment history. Including any late payments, how many days late and is the account current.

Tax Service or Tax Registration Fee:  At the close of a transaction where new financing is involved, the buyer pays a one time fee to a private realty tax information firm who, in turn, provides the borrower’s lender with current tax information, relative to the subject property, for the life of the loan. The contract remains in effect, even if assumed by another buyer at a subsequent date.

Escrow/Closing Fee:  The escrow holder is a “disinterested” third party who assumes responsibility for seeing all conditions with a given transaction are 100% satisfied before the transaction is finalized. There are the conditions previously agreed upon by the Buyer and Seller and conditions imposed by the lender. Additional duties of the escrow holder are: clear title, pay bills, pro-rate items such as taxes, insurance, utilities, etc. Also, prepare documents to be signed by the Buyer and Seller such as the note, deed of trust, deed, etc.

ALTA Title Insurance:  The ALTA, also known as the “lender’s title policy”, protects or insures against matters affecting title that are not of record and would be revealed by an “on-site” inspection, such as an easement (not of record) or encroachment. It is only required when new financing is involved (not including private contract financing), and is paid for by the Buyer as an inducement for the lender to make the loan. The lenders will not endanger such large sums of money without adequate protection of their lien in the first lien position.

Recording Fee:  Nominal charges by the County Recorder’s Office for recording pertinent documents. Such as the Deed of Trust.

Flood Certificate:  This certificate is issued by a flood research firm who tracks flood patterns in each county. This notifies the lender whether or not flood insurance will be required on the home. Note: Location of the home does not matter. Lenders require this certificate on all homes.

Interim Interest:  The interest on a new loan begins to accrue from the date the loan is closed, even though the first payment is not due for 30 to 60 days. Daily interest is charged at the time the loan is closed for the period covering the date of closing to 30 days before the first payment is due. When the first mortgage payment is made, the interest portion of the payment covers the 30 day period preceding the first payment. This pattern continues for the life of the loan with each interest payment covering the previous 30 day period.

Tax & Insurance Reserve Requirements:  FHA, VA and most conventional lenders require that the borrower’s monthly mortgage payment include:

• principle & interest 
• 1/12th of the annual real estate taxes 
• 1/12th of annual Homeowners Insurance Policy 
• 1/12th of the annual private mortgage insurance premium, if required.

At the time of closing, the borrower will establish sufficient reserve account funds for the above accounts when they become due and payable. The reason for upfront payments is, as you know, insurance must be paid before you use it. Because of this, 10 months after closing your lender will receive a bill. Without collecting 2 months upfront the lender will be short, as you will have only made 10 payments.

Private Mortgage Insurance (conventional loans):  A special form of insurances designed to permit lenders to increase their loan-to-value ratio, often up to 95% (or sometimes more) of the market value of the property. If the loan is approved, the mortgage insurance company will issue a commitment to insure under a policy carrying 20% of the loan balance. The borrower pays a premium for the insurance on an annual basis until the loan is paid to 80% of the value. Note: Some lenders require that you carry the insurance for a minimum of 2 years. Check with your lender.

Mortgage Insurance (FHA only):  Mortgage insurance is required on all FHA transactions regardless of the amount paid down. Mortgage insurance has to be prepaid in cash by either the Buyer, Seller or most can be financed as part of the loan. A monthly installment is also made. FHA will refund unused mortgage insurance if the loan is prepaid (refinanced or if you sell). However, the mortgage insurance will not be removed until the FHA loan is paid off (sale or refinance), it will not be removed at the 80% mark.