March 19th, 2012
Mortgage News
I read an article in the Seattle Times yesterday, March 18, 2012. The article was about how the housing market recovery is just round the corner because of the increase in rental prices. Since there is a larger demand for rental properties, rental prices go up. One of the reasons they gave for people not buying homes was how difficult it is to get a mortgage.
The news I want to share with you today is: mortgages are not difficult to get! If you are comparing the old days when you could get a mortgage without proper documentation of income, then, yes, mortgages are difficult to get. The so-called liar loans didn’t need income verification nor much of a credit score. And if a 20% down payment is out of your reach, you might think you can’t buy a house. But these days you can get a mortgage loan for 3% down if you have a credit score of 62o or higher.
Stop reading about how hard it is to get a mortgage and talk to a lender about what it will take to qualify for a mortgage. One mortgage lender that I have talked with about loans told me the following;
In December of 2011 he wrote seven loans. Two were for the purchase of a home and the rest were for refinancing. In January of this year he wrote 14 loans. Two were for refinancing. The rest were for purchase pre-approval so the clients could buy a home. Was it difficult for them to get a loan for a purchase? No, and you can do it, too. Contact me if you’d like a referral to a lender.
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March 14th, 2012
City of Burien, Washington
I will be presenting several cities, and communities within those cities, in coming blog posts. The posts will be designed to inform you about the communities, hopefully giving you enough information to help you decide if you want to live there. I chose Burien to start, because that is the city where my office is located.
Burien is a city south of Seattle and west of the SeaTac International Airport. A fairly new city, it was incorporated on February 28, 1993. It has a population of 48,072 people living within the boundaries of the City. It has a downtown core that consists of a Town Square, Old Town, a number of interesting businesses, and a new library building which also houses the City Hall. It also has a brand-new transit center and parking garage for excellent transportation options.
There are a lot of events that make the Town Square home. Most recently, the Cove to Clover 10k and 5k Run had the finish line there. Let’s not forget the Wee Run that was also a part of the Cove to Clover Run. During the spring and summer months there is a bustling farmers market on Thursdays. “Discover Burien” has several events throughout the year that I will let you know about in upcoming blogs. Why don’t you subscribe to my RSS feed so that you do not miss any of the events?
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March 12th, 2012
CoreLogic Brings New Credit Score Reporting to Lenders.
CoreLogic presents CoreScore a new way to look at credit history and credit scores for consumers. It presents some “non-traditional” information into the traditional credit score market. Some of this information may not be presented by the top 3 credit reporting companies. By presenting this information to mortgage lenders CoreLogic hopes to present a more complete picture of someones credit and financial habits.
CoreScore is not designed to compete with your FICO score. It is meant to supplement the FICO score. FICO is currently working with CoreLogic in the development of CoreScore. Once a lender looks up your FICO score they can look up your CoreScore and get a more complete picture of what your financial habits may show. CoreScore is being designed to inform a lender where your FICO score will likely be in the future. The two scores combined will give a picture of your financial habits that may show possible financial trends.
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March 8th, 2012
Frequently Asked Question About Escrow.
Why do some title reports call for an inspection?
When we inspect, which is about 15-25% of all sale orders, we look for the following:
A. Evidence of recent improvements (thus, potential mechanic’s lien rights)
B. Evidence of encroachments
C. Evidence of parties in possession
D. Evidence of unrecorded easements
E. Evidence of anything else that might impair our coverage
The inspection is “triggered” if:
- Tax values jump significantly (thus potential new improvements)
- The property has not been insured in many years
- We are told there is an encroachment/potential encroachment
- There is a recorded survey disclosing potential matters listed above
- It is a sale/refi/construction loan of new construction or new subdivision
We pay for the inspection, and do not pass the cost on to the customer. If we do not inspect, and something that is covered would have been disclosed in an inspection, we are usually responsible for it. The inspection is not a survey, but a pretty accurate snapshot of the above issues. To find out definitively, the client would need a survey.
What happens when your seller is going to be out of town when signing day rolls around? Or, what if grandma is unable to physically sign because of a disability?
That’s when a Power of Attorney can come in handy. But, there are few different kinds and which one is most applicable? Here are some brief descriptions of a few types:
Special Power of Attorney for a Sale
This type of power of attorney is used for the sale of a specific piece of property. It must include the legal description of that property, be notarized and recorded. This type of power of attorney typically has a 6 month (or less) expiration date.
Special Power of Attorney for a Purchase/Encumber
This type of power of attorney is used for the purchase of a specific piece of property. And, with lender approval, can also be used to financially encumber the property with a security instrument. It also must contain the legal description of the property, be notarized and recorded. It is only valid for that the particular designated property, and cannot be used to sign a purchase and sale for a different property. This type of power of attorney typically has a 6 month (or less) expiration date.
General Durable Power of Attorney
This is typically a more broad-based document created by an individual giving power of attorney to a representative for a broad array of activities (medical, financial, etc.). It needs to specifically include the right to convey (sell) or purchase property in order to be valid for title insurance purposes. General durable powers of attorney also need to be recorded.
Creating a Power of Attorney
A durable power of attorney is typically created for the client by an attorney. The special power of attorney documents can be prepared by an attorney or by using approved generic forms (visit cwtitle.net, and click on “Recordable Documents” for a link to the Washington
State Bar Association website, which contains recordable documents).
What is an ID Affidavit and why do title companies request them?
When we search title on a sale, we search public records on both the sellers and buyers. We look for judgments, liens, and any other complex issues that may affect the property.
We often need to have an ID Affidavit when a buyer or seller with a common name (i.e. John Smith) is involved. For example, if we run the name John Smith in King County, we would come up with around 5,000 complex issues that affect the property of parties with the name John Smith. So the information provided in the affidavit allows us to determine which items do and do not affect the subject party and or property.
Although it is sometimes time consuming for clients to fill out this affidavit, it is crucial information. It is a confidential affidavit, so rest assured that the information is private and secure.
What are mechanic’s liens?
A mechanic’s lien isn’t for a car-repair gone bad. It applies to a lien that’s been placed on a property for contractor’s fees, sub-contractor’s fees, construction materials, or any other items that have been used to improve a property. When laborers and product suppliers don’t get paid or dispute arises over amount paid, they can place a lien against the specific property. At that point, if the lien still has potential to be legally enforced, it must be dealt with prior to closing.
So, what to do if a property is the “liening” tower of Pisa?
1. The lien can be paid off with sale proceeds at closing.
2. If the lien is being disputed or if it impacts an entire condo building (and you’re selling just one unit), a Release of Lien Bond can be purchased from a bonding company and recorded. This does not cure the lien, it simply allows for closing while the lien is being disputed.
3. If the above solutions do not apply, you can contact your title company to discuss the potential option of a “holdback” securing an indemnity agreement. Like a Release of Lien Bond, this does not cure the lien, it simply allows for closing while the lien is still being disputed.
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March 5th, 2012
What Information Will My Lender Want?
The information that your lender will want to get from you, is dependent on your situation.
If you are employed by a business, then you will need the following information;
1. Pay stubs for the previous month.
2.W2′s for the previous 2 years.
3. Bank statements for the previous month.
If you are self employed or a business owner;
1. Full tax returns and 1099′s with all schedules for the previous two years.
2. Current Profit and Loss Statement and balance sheet.
3. Bank Statements for the previous month.
These and other documents may be required by your lender to get you pre-approved for a loan. This will let you know how much you will be able to afford when looking for a home. Remember that you need to be pre-approved for a loan before you make an offer on a home. The pre-approval letter will need to be submitted with the offer to purchase the home.
Be sure to contact your lender to see if they need any further documents or statements.
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March 1st, 2012
3 Techniques To Select the Right Neighborhood
According to national real estate statistics, the average person moves at least once every five years, for reasons such as corporate transfers, changes in economic status, marriage, divorce, etc. Before you move, you need to consider all the factors, especially if you have a family. It can be the best house in the world, but if the neighborhood does not fit,you can never really call it a home.
What factors need to be considered?
Before you move to a new neighborhood, there are a few things you need to take into account, such as whether the streets are quiet or constantly trafficked, which would make it dangerous for young children. Is there access to good schools and quality education? Are there parks and trees to beautify the neighborhood, and playgrounds for the children? Is it a tight-knit community, or is it every man for himself? Is it within convenient walking distance to shopping, or easy commute to employment? What about the neighbors? When you consider all the questions you can do a little research and discover if it is the right neighborhood for you.
What are three techniques you can use to discover if it is the right neighborhood?
1. With all the information available on the internet today you can go online to search engines such as Google or Yahoo and type in a city or neighborhood. Internet research can provide information such as crime statistics, proximity to schools and businesses, the number of parks, population statistics, property values, and even how old the neighborhood is.
2. You can visit the local police department to ask questions about the neighborhood you are considering. They should be able to provide you with significant details about crime and safety and if there is a good neighborhood watch program where neighbors look out for each other.
3. One of the best and most popular ways to tell if it is the right neighborhood for you is to get in your car and scout around, both during the day and in the evening. If you see a graffiti problem it may raise questions. What is the local school like? If a school is well-kept it is a sign that the neighborhood is, as well. Visit and talk with your future neighbors and ask them a few questions. These are some of the factors that can help define the neighborhood for you.
If your dream house and the surrounding neighborhood fit together, the house will feel more like home.
About the Author: Hughes Real Estate Group is a Boise real estate agent servicing buyers and sellers in Idaho. If you’re looking for a great home in Idaho, you can visit Kevin’s website where you can search real estate including Boise homes, Meridian homes , Nampa homes , and Eagle homes.
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March 1st, 2012
| Seller is responsible for… |
Buyer is responsible for… |
| Owner’s title insurance policy* |
Lender’s title insurance policy* |
| 1/2 escrow fee* |
1/2 escrow fee* |
| Excise tax* |
Recording fees |
| Real estate commissions* |
Surveys |
| Utility payoffs |
1st year fire insurance |
| Loan balances |
1st year flood insurance (if applicable) |
| Doc prep fees – power of attorney, etc. |
Doc prep fees – quit claim deed, etc. |
| Misc. fees (wire, courier, signing fees) |
Misc. fees (wire, courier, signing fees) |
| Pro-rated property taxes |
Pro-rated property taxes |
| Home warranty (depends on contract) |
Home warranty (depends on contract) |
| Homeowner’s association fees: |
Homowner’s association fees: |
| Pro-rated association dues |
Pro-rated association dues |
| Resale certificate / misc fees |
Transfer fee / capital contribution |
| FHA/VA financing, other fees may apply |
Property inspection |
|
Pest inspection |
|
Lender fees including: |
|
Appraisal |
|
Credit report |
|
Loan origination fee* |
|
Loan interest* |
|
Private mortgage insurance* |
*Fees determined by sales price and/or loan amount.
Payment of fees above can be negotiated within contract.
Posted in Escrow Information, First Time Home Buyer, First Time Home Seller, Real Estate Information | No Comments »
February 27th, 2012
Rates Are Still Low.
Still waiting for the rates to get any lower? Your wait is over. The rates are as low as they are going to get and have even posted a slight rise. Make an appointment with your lender or mortgage broker and get pre-approved for that home loan.
Let’s look at the market again shall we? Rates are the lowest they have been in 40 years. Home prices are at an all time low as well. The number of homes for sale have decreased to the point that we have only 4 months of inventory. Less to choose from usually means that there will be multiple offers on a home. The market is poised to become a sellers market and the price you pay could be higher then last year or even a month ago. The entire housing market is starting to recover and you are still on the side lines.
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February 24th, 2012
Real Estate Escrow Payment
Escrow Payment is the common term that refers to the portion of the mortgage payment that is designed to pay property taxes and insurance, also referred to as T & I. It is the amount that is over and above the payment for principal and interes, which are referred to as P & I. These payments combined are usually called PITI: Principal, Interest, Taxes and Insurance. Some mortgage companies require that you maintain a minimum balance in your escrow account to pay the property taxes when due and the hazard insurance premium when due.
Check with your lender to find out about their policy for an escrow account balance.
Posted in Escrow Information, First Time Home Buyer, Real Estate Information | No Comments »
February 20th, 2012
Rates Are Starting to Rise.
Mortgage rates for 30 year fixed loans are starting to rise. Rates are starting to rise as the economy starts to recover. With the Dow Jones Average going in an upward direction, so do mortgage rates. The rates will soon be over 4% and will continue to rise as the housing market improves.
If you have not started your home search you need to do so as quickly as you can. Rates are not going to go down anytime soon. Housing prices are starting an upward trend in the Seattle, Washington area as well. Inventory is down to 4.5 months of inventory and that is good news for the housing market.
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January 30th, 2012
Prices at 2003 Level
If you look at today’s real estate prices you will find that they have fallen to the level of prices in 2003. That is good news for today’s buyers, but not so good for today’s sellers. But that is not what I want to talk about today. Markets, whether it is the stock market or the housing market, always seek equilibrium. We had a quick run-up of prices over several years before the “bubble burst” and prices started falling. I have heard a lot of real estate experts say that prices today are at the level they were in 2003.
What does that mean to you, the home buyer, in today’s market? If you bought a home in 2003 that was worth $200,000 with a 20% down payment, your payment for Principal, Interest, Taxes and Insurance (PITI) would be $1,122.92, assuming you were paying the average of the interest charged in 2003, which was 5.94% for a 30-year loan. If you were to buy that same $200,000 home with 20% down today—the interest rate as of Friday, January 27, 2012 was 3.70%. That would make your payment of PITI $910.78. That would be a savings of $212.14 per month, which calculates to a savings of $76,370 for the life of the loan.
Prices are the lowest they have been in eight years. The interest rate is at historic lows. So what are you waiting for? Contact me or a real estate broker near you and buy that home you have had your eye on.
John Paulson said in September of 2010:
“If you don’t own a home, buy one. If you own one home, buy another one. And if you own two homes, buy a third and lend your relatives the money to buy one.”
Posted in First Time Home Buyer, Mortgage Information, Real Estate Information | No Comments »
January 23rd, 2012
Examples of Mortgage Fraud
Kickbacks that are undisclosed
One kind of mortgage fraud is if you (the buyer) and the seller agree that you will receive a check or a cash payment for a new roof, for example. If your lender does not know about it because it is not disclosed in the Purchase and Sale Agreement nor any addendum to the P & S, nor disclosed on the HUD-1, then you are guilty of mortgage fraud.
Silent second mortgage
If you do not have a down payment you can commit mortgage fraud if you borrow the down payment from the seller. If you give the seller a second mortgage that is not recorded or is unrecorded after closing, then it is mortgage fraud.
Non-owner occupant claiming occupancy
You will pay a higher interest rate if the home you purchase is not owner-occupied. To avoid paying a higher interest you might tell your lender that you intend to occupy the home. You then rent the home to some one else and do not occupy the home. That is fraud.
Down payment gift repaid
You are allowed to receive a gift to assist you with the down payment. However, you must remember that a gift is just that, a gift. It can not be repaid.
Falsifying income
Overstating your income to the lender so that you will get approved for the loan to purchase your new home is committing mortgage fraud. You will need to supply your lender with current pay stubs and income tax statements to prove your income.
Falsifying earnest money deposits
Borrowers who state that their earnest money deposit is made outside of escrow are committing mortgage fraud. The buyers’ broker/agent should ensure that the earnest money deposit is turned over to escrow in the allotted time as agreed upon in the P & S.
Posted in Mortgage Information, Real Estate Information | No Comments »
January 19th, 2012
Title And Escrow Explained
Title insurance is an insurance product that protects an insured owner (or lender) against various adverse claims, encumbrances, and defects against title to real property.
When a request for title insurance is received, the title company will examine the title history to the property in question and issue a title commitment that reflects the title’s current status. This commitment displays who owns the property, any taxes and assessments due, unpaid mortgages, liens, easements, covenants, and any other matters that may indicate someone other than the owner has rights to all or part of the real estate under search.
When the commitment is issued, the seller and purchaser (or lender) agree upon which items can remain on the title and which should be eliminated. Once title is acceptable to the purchaser and/or lender, the transaction is closed and the title insurance company issues a policy showing the condition of the title at the time of closing.
Unlike automobile or life insurance, title insurance is a one-time fee paid at closing of the transaction. In the Puget Sound Region, unless agreed upon otherwise in your purchase and sale agreement, typically the seller purchases the buyer’s title insurance policy. The buyer pays for a policy of title insurance for the lender (if any).
Escrow is an impartial third party in which documents and funds are deposited by buyers, sellers and lenders to facilitate the closing for a real estate transaction. As a fiduciary player in the transaction, escrow is required to follow mutual written instructions from all parties.
Escrow will coordinate with the buyer, seller and lenders to obtain required signatures on all documents, work closely with the title officer to clear liens and encumbrances against the property, and record the documents with the county.
Posted in Escrow Information, First Time Home Buyer, First Time Home Seller, Real Estate Information | 1 Comment »
January 16th, 2012
What is Mortgage Fraud?
Any one who lies or falsifies information on a loan application commits mortgage fraud. If you do not disclose all of the information that your lender asks for, or if you just adjust the figures a little bit so that you look better, you have committed mortgage fraud. This is often done because the applicant does not know any better. Sometimes it is because the lender, or even worse, the real estate professional, says it is not a big deal.
Creative financing is illegal in today’s real estate transactions. If your lender discovers that any of the information on the loan application is false, you could have your loan called due and payable, pay a fine, go to jail or a combination of all or part of the three. Worse, you could find the FBI knocking on your door.
The FBI defines mortgage fraud as “any material misstatement, misrepresentation or omission relied upon by an underwriter or lender to fund, purchase or insure a loan.”
Lenders can also commit mortgage fraud. Being in business for a long time is no guarantee the your lender is not committing mortgage fraud. A Pennsylvania broker was convicted of defrauding 800 borrowers over a 20-year period using a Ponzi scheme. He somehow managed to keep this fraud going for 20 years. The next 30 years he spent behind bars. A Kansas City, Missouri appraiser was sentenced to 20 years and had to pay a $500,000 fine for his part in a mortgage fraud scheme.
If you suspect mortgage fraud, contact the authorities immediately and report the incident. It could save you a trip to jail and/or a large fine.
Next week: Examples of mortgage fraud.
Posted in First Time Home Buyer, First Time Home Seller, Mortgage Information, Real Estate Information | 1 Comment »
January 9th, 2012
Is The Market Picking Up?
Real Estate offices throughout the Greater Seattle area are seeing an increase in activity. There are even reports of bidding wars in the more desirable neighborhoods. Pending sales going into the holidays were up. That is a time when sales usually slow down. Closed sales have shown an increase as well. These sales will not be reported for one to two months from now, so the market is certainly picking up.
With interest rates at an all time low, and prices at their lowest since 2003, why are you not looking for that dream home? The Fed announced that they are considering an increase in the interest rate. If that happens then you can kiss the current interest rate of sub 4% good bye.
Current homes for sale have reached and inventory level of 6 months. That is a neutral market, but is lower than the 15 months we saw in early 2011. Prior to the bubble burst, inventory was at a 4-month level. The market is poised to do very well in 2012.
Give me a call and let’s talk about what your real estate needs are and how you can buy that dream home you have always wanted.
Posted in First Time Home Buyer, Mortgage Information, Real Estate Information | No Comments »
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