The Mortgage Porter

What a Relief! The Home Buyer Tax Credit is Extended

Whether you are for or against the tax credits created by our Congress and President Obama trying to recover our housing industry, you could hear a huge sigh of relief from professionals in the mortgage, escrow and real estate industry on Friday when President Obama signed the extension for the first time home buyer tax credit which was set to expire at the end of this month.

If you've been reading my posts for the last few months, you know I've been trying to warn potential home buyers eying that credit of what a short month November is for closing real estate transactions--with or without the tax credit.   The November 30th deadline did spur on some last minute transactions for first time home buyers.  Many mortgage companies issued memo's to borrowers regarding the tax credit stating they would not be held liable in the event the transaction did not close in time. Now, if the transaction closes on December 1, and the borrower qualifies for the credit, the home buyer won't be robbed of the credit...which could be up to $8,000.   Whew!

Speaking of relief, check out this vintage Alka Seltzer commerical singing about passing bills in Congress.  

Not only was the first time home buyer tax credit extended to April 30, 2010, Congress added a tax credit for existing "long time residents" (defined as owning a home during the last 5 out of 8 years) buying another home of up to $6500.  In addition, income limits for the tax credits have been dramatically increased. 

I will be providing more details soon about both of these tax credits for home buyers at Mortgage Porter soon!

Domestic Partners, Real Estate and Mortgage

In May of this year, Governor Gregoire signed legislation providing registered domestic partners in Washington State the same rights as married couples, which has been confirmed by the passage last week of Ref 71. In our State, domestic partners are defined as either same sex couples or where at least one partner is over the age of 62 (they do not have to be of the same sex).  

From E2SSB 5668:

"It is the intent of the legislature that for all purposes under state law, state registered domestic partners shall be treated the same as married spouses.  Any privilege, immunity, right, benefit, or responsibility granted or imposed by statute, administrative or court rule, policy, common law or other law to an individual because the individual is or was a spouse, or because the the individual is or was an in-law in a specified way to another individual, is granted on equivalent terms..."

When a couple registers as a domestic partner and if one or both partners (or spouse) owns real estate where they reside, they are now subject to community property issues as Washington is a community property state.

From the Washington State Bar Association (regarding community property):

Under this system, all property acquired from earnings during marriage (such as real estate, automobiles or household goods) belongs equally to husband and wife, even when only one is employed.

Similarly, both husband and wife are personally liable for certain types of family expenses, even if both did not agree to the particular obligation....

Moreover, neither may give community property without the consent of the other. Finally, neither may sell, convey or encumber real property (land) without both parties signing appropriate documents.

Recently I was helping a man with a refinance whom I thought was "single".  He was the sole person on loan application and did not indicate that he had a partner.  The title company discovered that he and his partner registered as domestic partners with the State of Washington.  

With regards to the refinance, this meant that my client's partner would need to either be approved on the mortgage as well or have to sign a quit claim deed and acknowledge the transaction to be in compliance with state laws.  NOTE:  Please seek legal counsel before signing legal documents that may impact your rights.

As of today, November 6, 2009, there are 6,311 domestic partnership registrations in Washington.  If you and your partner have a registered domestic partnership--CONGRATS!  If you have a registered domestic partnership and you are involved in a real estate transaction; be sure to inform both your mortgage originator and real estate agent.  One cannot buy or sell or mortgage/encumber real estate with out the other's consent...just like being married.

FOMC leaves the Fed Funds Rate Unchanged

I'm just reading through the Fed's press release which announces that they are leaving the Fed Funds rate unchanged at 0-0.25%.  Good news for those of you with variable rates on your home equity loans--your rate is not going up...yet.

From today's FOMC Statement:

Conditions in financial markets were roughly unchanged, on balance, over the intermeeting period. Activity in the housing sector has increased over recent months. Household spending appears to be expanding but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit.

The Fed's statement is fairly positive and good news for the economy means that investors will trade the safety of bonds (such as mortgage backed securities) for stocks; causing mortgage rates to trend higher.  In addition, the Fed reiterated they will be phasing keeping mortgage rates at artificial low rates by March 2010.

To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. The amount of agency debt purchases, while somewhat less than the previously announced maximum of $200 billion, is consistent with the recent path of purchases and reflects the limited availability of agency debt. In order to promote a smooth transition in markets, the Committee will gradually slow the pace of its purchases of both agency debt and agency mortgage-backed securities and anticipates that these transactions will be executed by the end of the first quarter of 2010.

The next big market mover that tends to dramatically impact mortgage rates is the Jobs Report.  Watch for it this Friday morning.

Mortgage Rates for Washington State

This week is packed with economic data that can impact the direction of mortgage interest rates.   Here's a quick snapshot of potential market movers:

Monday, November 2:  Pending Home Sales and ISM Index (both came in better than anticipated).

Wednesday, November 3: ADP National Employment Report and the FOMC Meeting

Friday, November 6:  The Jobs Report...will we 10% unemployment reported for October?

I post live rate quotes from area home buyers whether they're buying a home in Bellevue or refinancing in Tacoma--I share the live rate quote on Twitter.  You can follow me and unfollow me whenever you wish...and it's FREE!

Conforming Mortgage Rates (loan amounts up to $417,000 for 1-unit properties). The conforming rate quote below is based on owner occupied with a mid-low credit score of 740 or higher, "full doc" purchase with a sales price of $500,000 and a loan amount of $400,000 single family dwelling (non condo). This scenario includes reserves (taxes & insurance) not being waived. Rates quoted are priced based on a 30-40 day closing with no prepayment penalties on any of the rates quoted below.

30 Year Fixed w/1 Point*: 4.750% (APR 4.904%).

15 Year Fixed w/1 Pt: 4.250% (APR 4.511%).

10/1 ARM 5/2/5 CAPS w/1 Pt: 4.250% (APR 5.656%).

7/1 ARM 5/2/5 CAPS w/1 Pt: 3.875% (APR 5.959%).

5/1 ARM 5/2/5 CAPS with 1 Point: 3.375% (APR 6.205%).

Conforming High Balance Rates. Pricing is based on the same criteria above except where the loan amount is $417,001 - $567,500 for properties in King, Snohomish or Pierce Counties; specifically priced for a sales price of $625,000 and a $500,000 loan amount. 

30 Year Fixed @ 1 Pt: 4.875% (APR 5.021%).

Jumbo/Non-Conforming. Loan amounts up to 1 million for ARMs and 1.5 million for the 30 year fixed. The quotes below are based on 740 or higher credit scores with 80% loan to value with a loan amount of $650,000.

30 Year Fixed at 1 point: 6.125% (APR 6.268%).

7/1 ARM 5/2/5 CAPS @ 1 Pt: 5.250% (APR 6.609%).

5/1 ARM 5/2/5 CAPS @ 1 Pt: 4.625% (APR 6.654%).

FHA. Pricing based on credit score of 620 or better and loan amounts up to $417,000 for FHA in King, Snohomish and Pierce Counties.

30 Year Fixed @ 1 Pt: 5.000% (APR 5.984%).

FHA-Jumbo/High Balance. Pricing based on loan amounts from $417,001 - $567,500 for King, Snohomish and Pierce Counties with a 660 or higher mid-credit score. 

30 Year Fixed @ 1 Pt: 5.000% (APR 5.631%).

FHA 203 (k) Rehab-Streamline. Pricing criteria same as FHA above with loan amounts up to $417,000. This scenario is based on a $400,000 base loan amount.

30 Year Fixed @ 1 Pt: 5.250% (APR 5.999%).

VA. Pricing based on credit scores of 620 or better based on loan amounts up to $417,000. VA loan amounts over $417,000 are also available.

30 Year Fixed @ 1 Pt: 5.000% (APR 5.285%).

USDA Rural Housing. 100% financing with income limits and properties must be located within a specific area (this program is generally available in rural towns with populations of 10,000 or less). For eligibility, click here. 

30 Year Fixed @ 1 Pt: 5.000% (APR 5.321%).

Prime Rate (what HELOCs are based on): 3.25%

This is just a small sample available of rates and products. This is not a guarantee nor is it a commitment of interest rate. New rate sheets are currently issued around every 4 hours. I actually received a rate sheet from one of the lenders we work with informing me of a price improvement just prior to publishing this post so these rates may or may not be accurate (sometimes the price changes are very slight).

*For purposes of this post: "1 point" is 1% of the loan amount and would be reflected in line 801 or 808 (depending on whether the loan is brokered or not). Unless the rate is bought down; there are zero discount points referenced which would be reflected on line 802 of the GFE/HUD-1 Settlement Statement. Zero points means no points are paid on lines 801, 802 or 808 (this applies to all rates quoted on this post).

Rates are as of November 2, 2009 at 2:00 p.m. and may change at any time. Available programs may change at anytime as well.  To see rates that I'm quoting "live" click here.

Fall Back, Seattle

Just a reminder to set your clocks back one hour when you go to bed tonight...or you can be official and roll your clocks back at 2 a.m. on Sunday, November 1, 2009.

Daylight saving time is over after this evening.

Friday Funny: Seattle Tunnel Vision

We've all seen the nicely produced video (to the tune of $80k) of what could happen to the viaduct if Seattle experiences an earthquake... but have you seen the low budget version of what would happen to the proposed tunnel in a similar circumstance?

Note: I'm trying out posting mortgage rates at Rain City Guide on Friday's and on Mortgage Porter on Mondays.

PS:  Don't forget to VOTE by next Tuesday.

Do I Really Have to Provide All Pages of My Bank Statements?

When assets are being used for down payment of a new home, towards closing costs on a refinance or even to document that the borrower has enough reserves (typically a couple months of mortgage payments) in the bank after closing; they need to be documented.  

This means that depending on how much assets are required to be documented, you may have to supply copies of your bank statements, stocks, retirement or other asset accounts...all pages.   "All pages" of your accounts means that if you have a bank statement which states there are 1 of 4 pages, all four pages must be provided to the lender even if the last page is blank and only states "page 4".   And even if your portfolio statement consists of 20+ pages, be prepared to provide the entire document.

Why is this?  The truth is, your statements are being reviewed for large deposits (plan on documenting where your large deposits come from) and even NSFs/bounced checks.  Every page is being reviewed.

You will also need to provide documentation to show that, at the very minimum, you have enough funds to cover the funds due at closing and the required reserves (Mortgage Master has a minimum two months reserves required--this may be higher depending on the type of transaction).  Lenders typically use what is showing as the ending balance on your most recent bank statement for your current balance. 

It does seem very anti-environment with all this paperwork to obtain a mortgage--thank goodness for PDFs!

Book Review: The Big Score by Linda Ferrari

Last month I had the opportunity to speak at The Mortgage Girlfriends Mastermind Summit and to meet Linda Ferrari.  Linda is someone who I've known of for a long time.  She's an expert at credit scoring and is passionate about consumers knowing and understanding their credit score.  She is the author of "The Big Score -- Getting It and Keeping It".

This book is a great resource--for young and old alike.  We are impacted everyday by our credit scores and Linda does an excellent job shedding light on mystery of credit scoring.   Her book is structured in an easy to read and research format.   If you need help working on repairing your credit, you'll find step by step advice in this book.  It could be the best $20 you ever spend.

For the record, I paid for my copy and I am not receiving any compensation for my review. 

Count Down to November 30th and the First Time Home Buyer Tax Credit

You may be surprised to see how many days are available to close a transaction by November 30, 2009 in King County when you factor holidays and furloughs.  

Mortgage Interest Rates for the Seattle-Bellevue Area

Conforming Mortgage Rates (loan amounts up to $417,000 for 1-unit properties). The conforming rate quote below is based on owner occupied with a mid-low credit score of 740 or higher, "full doc" purchase with a sales price of $500,000 and a loan amount of $400,000 single family dwelling (non condo). This scenario includes reserves (taxes & insurance) not being waived. Rates quoted are priced based on a 30-40 day closing with no prepayment penalties on any of the rates quoted below.

30 Year Fixed w/1 Point*: 4.875% (APR 5.030%).

15 Year Fixed w/1 Pt: 4.250% (APR 4.511%).

10/1 ARM 5/2/5 CAPS w/1 Pt: 4.375% (APR 5.731%).

7/1 ARM 5/2/5 CAPS w/1 Pt: 4.000% (APR 6.018%).

5/1 ARM 5/2/5 CAPS with 1 Point: 3.625% (APR 6.295%).

Conforming High Balance Rates. Pricing is based on the same criteria above except where the loan amount is $417,001 - $567,500 for properties in King, Snohomish or Pierce Counties; specifically priced for a sales price of $625,000 and a $500,000 loan amount.  (NOTE: Remember--these are temporary loan limits through 2009).

30 Year Fixed @ 1 Pt: 5.000% (APR 5.146%).

Jumbo/Non-Conforming. Loan amounts up to 1 million for ARMs and 1.5 million for the 30 year fixed. The quotes below are based on 740 or higher credit scores with 80% loan to value with a loan amount of $650,000.

30 Year Fixed at 1 point: 6.125% (APR 6.268%).

7/1 ARM 5/2/5 CAPS @ 1 Pt: 5.375% (APR 6.674%).

5/1 ARM 5/2/5 CAPS @ 1 Pt: 4.750% (APR 6.706%).

FHA. Pricing based on credit score of 620 or better and loan amounts up to $417,000 for FHA in King, Snohomish and Pierce Counties.

30 Year Fixed @ 1 Pt: 5.000% (APR 5.984%).

FHA-Jumbo/High Balance. Pricing based on loan amounts from $417,001 - $567,500 for King, Snohomish and Pierce Counties with a 660 or higher mid-credit score.  (NOTE:  These are temporary loan limits through 2009).

30 Year Fixed @ 1 Pt: 5.125% (APR 5.724%).

FHA 203 (k) Rehab-Streamline. Pricing criteria same as FHA above with loan amounts up to $417,000. This scenario is based on a $400,000 base loan amount.

30 Year Fixed @ 1 Pt: 5.250% (APR 5.999%).

VA. Pricing based on credit scores of 620 or better based on loan amounts up to $417,000. VA loan amounts over $417,000 are also available.

30 Year Fixed @ 1 Pt: 5.000% (APR 5.285%).

USDA Rural Housing. 100% financing with income limits and properties must be located within a specific area (this program is generally available in rural towns with populations of 10,000 or less). For eligibility, click here. 

30 Year Fixed @ 1 Pt: 5.250% (APR 5.568%).

Prime Rate (what HELOCs are based on): 3.25%

This is just a small sample available of rates and products. This is not a guarantee nor is it a commitment of interest rate. New rate sheets are currently issued around every 4 hours. I actually received a rate sheet from one of the lenders we work with informing me of a price improvement just prior to publishing this post so these rates may or may not be accurate (sometimes the price changes are very slight).

*For purposes of this post: "1 point" is 1% of the loan amount and would be reflected in line 801 or 808 (depending on whether the loan is brokered or not). Unless the rate is bought down; there are zero discount points referenced which would be reflected on line 802 of the GFE/HUD-1 Settlement Statement. Zero points means no points are paid on lines 801, 802 or 808 (this applies to all rates quoted on this post).

Rates are as of October 26, 2009 at 8:00 a.m. and may change at any time. Available programs may change at anytime as well.  To see rates that I'm quoting "live" click here.