JAJohnson

Senior Loan Officer, Pacific Coast Financial LLC Jim Johnson E.A. retired; (Enrolled Agent, licensed to practice law in tax court) BS -19+ year experience as an independent loan officer. 15 years as an Enrolled Agent Licensed to Practice law in tax court, Real Estate Agent 15 years, BS Accounting, Economics University of Wisconsin - Milwaukee. Viet Nam Veteran

Buy a 4-plex with a low rate VA mortgage updated

 Everett real estate, investment property, King County property, Seattle Homes for Sale, Snohomish Property, VA mortgages  No Responses »
Feb 052012
 

The VA mortgage is the best mortgage on the market. Given the low market value of real estate now is the time to buy investment property. If you qualify for a VA mortgage this is a great time to use it. If you use a VA mortgage you must be an owner occupant. The VA mortgage allows you can buy a 4plex with zero down and have the other 3 rents make your full payment. Here’s how it works. Now to make your VA mortgage w the property must be in King county or Snohomish county. Snohomish County has 26- 4plexes priced at or below $481,250 (the VA mortgage limit for King County and Snohomish county) for sale right now. In Snohomish county the prices are a bit lower than King County The rental income is a bit more in King County than Snohomish county. There is another 48- 4plexes for sale in King County again priced at or below $481,250. The price is important for several reasons. One is the potential for appreciation when the market finally recovers. And believe me it will recover. I have been in real estate since 1981 and have seen the market go up and down. Just a few years ago these 4plexes sold for double the current asking price. Rents are way up because of all the foreclosures. The vacancy factors in King and Snohomish counties are very low and some even have waiting lists of applicants. The demand factors working here will compel prices up as soon as we have a responsible administration in Washington, DC. Another reason is the rental income from 3 units needs to equal or exceed the VA mortgage payment. That put a cap on how much you can pay for the property. Make sure that the 4plex you buy has all units with at least 2 bedrooms and 1 bath. The more the better for eventual resale and ease of renting in this competitive market. Fireplaces are an option that younger renters seem to like. Having all appliances and washers and dryers in all units will also increase the asking rent. Here’s how the numbers work. First you need at least a 620 credit score. If you don’t have that contact a good loan officer and see if they can help you get there within a reasonable time frame. Also you will need to have an annual income of at least $42,000. Next, 3 rents should equal ($750 X 3= $2250) enough to cover the full payment. Right now a fixed 30 year VA mortgage is available for around 4%, with an APR of 4.19%. With zero down the full payment (taxes, interest, principle and insurance) works out to around $2150. But that isn’t the whole story. Assuming you are buying an existing 4plex it will have a rental history. If you have a full 2 years on record you can use that to justify up to 95% of the rental income to defer the VA mortgage payment. If you don’t have 2 years then you can only use 75% of the income to cover the mortgage. That is a built in vacancy factor. Even though this is a zero down purchase there will be some out of pocket costs at closing. Assume about $1000 to close. Find a 4plex that does not need a lot of work. They are out there just look. Deferred maintenance in investment property is OK as long as it’s just cosmetic. When you make an offer for any multifamily property expect these conditions: 1) you will not be allowed to inspect the structure until you have a signed around agreement. The tenants have rights that must be respected. 2) When you buy with a VA mortgage you are expected to become an owner occupant. So something will need to be worked out for you to take over one of the apartments. 3) You will need to learn the landlord Tenant law in Washington State. You should also find out if your local city has additional laws concerning the landlord / tenant relationship. 4) You should have a complete structural / pest inspection done by a qualified inspector. Be there when it’s done. Expect minor blemishes no property is without them. If there are major problems you can do one of two things. First is bailout. Or you can negotiate with the sellers to see if they will repair the problems. When you make your offer ask your real estate broker to include a seller concession of 3% of the selling price back to you. This will allow your mortgage broker to offer you a much lower interest rate. A VA mortgage requires a VA appraisal. The VA appraisal can be a major hurdle. The VA is very protective of its buyers. They tend to low ball appraisals. Have your real estate agent do a very through price comparison to determine the market value prior to making the offer. You are responsible for the appraisal so if the property comes in low you will have to pay for it out of pocket. You should hire experienced real estate personal to represent your interests. That will make a complex transaction much easier on you. There is a lot more to this story but the best way to learn about investment property is OJT. If you have questions I will be glad to answer them at 425-346-0830. Remenber the low rates will not last forever so usethat VA mortgage and invest in your future. Jim Johnson MLO 99405 Broker-Pacific Coast Financial Broker- Gilmore Real Estate
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Twitt
 Posted by JAJohnson at 3:29 pm

Refinance even if you lost market value

 Home Loan Refinance, mortgage, Mortgage Everett, Refinance Everett, Refinance Seattle, Seattle Mortgage Companies  No Responses »
Feb 042012
 

HARP 2 actually works and promises to help thousands of home owners. Wonder of wonders the government has made a program that will actually help underwater home owners who have lost market value. When was the last time you could say that a government program actually works the way they wanted it to? Don’t be confused by who services your loan, that’s who sends you the bill each month,  it’s who holds your loan that’s important. So look it up, see if Fannie Mae or Freddie Mac owns your loan by using the links below. Did you think you would miss out on these low rates, again? Have you tried to refinance and couldn’t because you didn’t have any equity? Did your second mortgage prevent you from refinancing? Did your mortgage insurance company say no to your refinance? Has your home lost market value? Is your mortgage balance over market value by more than 105%? Has this affected your credit score so now you’re below 620? If you looked into HARP before but were the fees to high? Did the lender add on “loan level price adjustments” so that the closing costs were bloated? So that the new payment wasn’t lower than the original or so close that it didn’t matter. Was the new mortgage balance so high it just didn’t make sense. Were the low rates they offered you not the one offered in the ad? The new HARP 2 program will help thousands of home owner refinance and take advantage historically low rates. The old HARP 1 program didn’t address the many problems of negative equity mortgage insurance, second mortgages and low balled appraisals. But now the new HARP 2 program fixes these and many other problems. Fannie Mae and Freddie Mac have been working with the mortgage insurance companies (MI). The MI companies know that if the borrower is allowed to refinance they will be in a better position to keep making payment. The same strategy works for second mortgage holders. The old HARP program stopped at 105% of market value but HARP 2 doesn’t. But with the real estate values falling so fast that many lost 25-50% of the value of their homes so the 105% limit stopped many from refinancing. Well here are the high points of HARP 2.

  • MI (mortgage insurance) is now transferable. New insurance can be issued by any provider.
  • The is no cap on the loan to value so appraisals will not be needed in most cases. These means market value doesn’t matter.
  • Closing costs or loan fees have been lower and set. No add-ons euphemistically called “loan level price adjustments”.
  • Your loan must be held by Fannie Mae or Freddie Mac and originated before May 2009.
  • You must have made the last 6 payments on time and have no more than 1 late in the last 12 months.
  • The program has been extended to end of 2013.
There are web sites to check to see if your loan is held be Fannie Mae or Freddie Mac. Here they are Fannie Mae. And here is Freddie Mac. You can take advantage of these low rates and you don’t have to use your current lender. I suggest ou contact a responsible mortgage broker because they will save you money and hassle.
One last what should I write about next? Please comment below.
Twitt
 Posted by JAJohnson at 5:46 pm  Tagged with: , , , , ,

29 Bargin Homes for sale Everett

 VA mortgages  No Responses »
Jan 242012
 

Homepath Homes

720/2011

Everett/ Snohomish County

How does a 3 bedroom, 2 bath, stick built on site, home in Everett with a full payment of only $1622.00 per month sound?

Well I have 29 homes and all have 3 or more bedroom and 2 or more baths in Everett right now. And in Snohomish County have 136 of these homes ready to go today. All with a payment of $1622.00 or less. The rate on a 30 year fixed mortgage is 5.625%, APR 5.826%.

The payment in reality is actually less because your interest is tax deductible and at the end of this discussion I’ll explain how owning a home will impact your federal taxes.

If you are renting in Everett I’ll bet you’re paying more than $1622.00 per month in rent for a decent 3 bedroom, 2 bath home.

These are called Homepath homes and the loan is a Homepath mortgage.

My name is Jim Johnson have been real estate broker currently at Gilmore RE and a mortgage broker currently at Metropolitan Mortgage for over 20+ years.  I always tell home buyers that some of the best deals in real estate are available thru the Homepath mortgage.  Homepath is simply real estate that has been thru the foreclosure process To buy any one of the 136 homes all you need is 5% down or no more than $12,500 and a credit score of 660 or better.

BTW most of these homes have 2+ car garages, a good piece of land, decks, fences and more.

These are not short sales so they can close quickly.

Here are some of the great points about a Homepath loan.

  • No mortgage insurance means lower payments.
  • No appraisal so lower closing costs.
  • Fannie Mae has priced them competitively.
  • To qualify you will need a 660 credit score or better.
  • Just 5% down or more.
  • Down payment can be a gift.
  • These are risk priced mortgages. That means better credit scores and more money down gets a better deal.
  • BTW if your credit is not 620 to 660 or better contact me and I will help you get it there in just a few months.
  • Fannie Mae is giving 3.5% of the purchase price back for closing costs.

 

Everybody knows that the interest on a mortgage is tax deductable but what does that mean? In round numbers for anyone making about $70,000 or more per year (single or married) you are probably in the 28% tax bracket. In simple terms what that means is that out of every dollar you pay in interest you are getting 28 cents back as a tax deduction. I used to be an enrolled agent licensed to represent my clients in tax audits and at tax court.

Call me anytime and we can talk about this.                                  

One last thing the, original offer to purchase must contain certain language in order to make these numbers and loans work so I recommend you have a competent real estate broker write it up. The conditions must be in the original offer of the deal will never work.

I you would like to discuss this my cell number is 425-346-0830

 

 

 

 

 

 

Twitt
 Posted by JAJohnson at 9:30 pm  Tagged with: ,

How to buy a 4-plex with a VA mortgage

 Everett real estate, Homes for Sale Everett, Real Estate Everett, Seattle Homes for Sale, VA mortgages  No Responses »
Dec 272011
 

How to buy a 4-plex with a VA mortgage

In Everett WA.

          Right now you can buy a 4plex with a zero down VA mortgage and have the 3 rents make your full payment.  Here’s how it works.

Snohomish County has 11 4plexes priced at or below $375,000 for sale right now. There are another 21 4plexes for sale in King County again priced at or below $375,000. The price is important for several reasons. One is the potential for appreciation when the market finally recovers. And believe me it will recover. I have been in real estate since 1981 and have seen the market go up and down. The demand factors working here will compel prices up as soon as we have a responsible administration in Washington, DC. Another reason is the rental income from 3 units needs to equal or exceed the VA mortgage payment. That put a cap on how much you can pay for the property.

Make sure that the 4plex you buy has all units with at least 2 bedrooms and 1 bath. The more the better for eventual resale and ease of renting in this competitive market.

Here’s how the numbers work. First you need at least a 620 credit score. If you don’t have that contact a good loan officer and see if they can help you get there within a reasonable time frame.  Also you will need to have an annual income of at least $42,000. Next, 3 rents should equal ($750 X 3= $2250) enough to cover the full payment. Right now a fixed 30 year VA mortgage is available for around 4%, with an APR of 4.19%. With zero down the full payment (taxes, interest, principle and insurance) works out to around $2150. But that isn’t the whole story. Assuming you are buying an existing 4plex it will have a rental history. If you have a full 2 years on record you can use that to justify up to 95% of the rental income to defer the VA mortgage payment. If you don’t have 2 years then you can only use 75% of the income to cover the mortgage. That is a built in vacancy factor.  Even though this is a zero down purchase there will be some out of pocket costs at closing. Assume about $1000 to close.

Find a 4plex that doesn’t need a lot of work. They are out there just look. Deferred maintenance is OK as long as it’s just cosmetic. When you make an offer for any multifamily property expect these conditions: 1) you will not be allowed to inspect the structure until you have a signed around agreement. The tenants have rights that must be respected. 2) When you buy with a VA mortgage you are expected to become an owner occupant. So something will need to be worked out for you to take over one of the apartments. 3) You will need to learn the landlord Tenant law in Washington State. You should also find out if your local city has additional laws concerning the landlord / tenant relationship. 4) You should have a complete structural / pest inspection done by a qualified inspector. Be there when it’s done. Expect minor blemishes no property is without them. If there are major problems you can do one of two things. First is bailout. Or you can negotiate with the sellers to see if they will repair the problems.

A VA mortgage requires a VA appraisal. The VA appraisal can be a major hurdle.  The VA is very protective of its buyers. They tend to lowball appraisals. Have your real estate agent do a very through price comparison to determine the market value prior to making the offer. You are responsible for the appraisal so if the property comes in low you will have to pay for it out of pocket.

There is a lot more to this story but I think OJT is appropriate. If you have questions I will be glad to answer them at 425-346-0830. So use that VA mortgage and invest in your future.

Jim Johnson MLO 99405

Broker-Pacific Coast Financial

Broker- Gilmore Real Estate

Twitt
 Posted by JAJohnson at 11:40 am  Tagged with: , ,

Pricing a Seattle Mortgage

 VA mortgages  No Responses »
Feb 142011
 

Just what factors go into the pricing of a mortgage here in the Seattle area? They are (not all inclusive): Credit score, ability to repay, desire to repay, job status, type of property, property location, whether property will be owner occupied or non owner occupied, purpose of the loan, documentation level and buyer’s assets. Each lender will assess these factors differently and will possibly add or subtract other factors.
A factor that most borrowers don’t realize is that the lender is making the loan for an investor. This investor may be an individual, an institution, a business, a state or even a nation state. Each investor has different parameters and different objectives. So each loan they do for that investor will be guided by what the investor wants.
Credit score is the first and most heavily weighted factor. If your score is over 720 some lenders will offer a rebate to the borrower for the loan. Scores between 680 and 719 usually will cost nothing and rebate nothing. Scores below 679 down to 640 can cost anywhere between .5% and 1.5% of the total loan amount. Personally I think this is counter-productive and will delay the recovery, possibly for years. Scores below 639 have a very difficult time getting funded. Lenders have told me they will do these loans but somehow they never seem to actually fund them.
The ability to repay usually goes with job status. Lenders want to know you have job stability and through that the ability to repay the loan. Debt ratios play a part in this also. Job status will also include whether the borrower has at least 2 years work history in the field they are in right now. If self- employed, has the borrower had a business license at least 2 years.
Desire to repay is just plain credit repayment history. Has the borrower repay on time and in full. Paying up a debt early doesn’t always help because the repayment needs a history of paying over time to show the pattern.
Type of property: A SFR (single family residence) is best. Residential property is considered up to a 4plex. Lenders give different weight to multi-family properties.
Location of property has some impact. Lenders can no longer red-line certain area and refuse to loan within those boundaries. But as far as individual loans being made in specific areas the lender can refuse to fund a particular loan. Also an atypical property within a certain area will have a hard time getting funded.
Owner occupied properties will always be favored over investment property. Obviously an owner occupied property will have someone who makes their home there and that makes a big difference in the performance of the loan.
Propose of the loan: Cash back will always draw more scrutiny than a purchase loan. In a cash back refinance the lender will ask what you plan to do with the money, that is reasonable and also due diligence.
Documentation of the loan: Believe it or not there are no doc loans out there. Logic tells you that the more documentation a loan has, the more information the lender has, the clearer the picture becomes. So more information makes for a better picture and an easier loan to make.
The last item, not really, is the assets of the borrower. If someone makes $100,000 per year for any length of time they will accumulate assets. The amount and type of assets help paint a picture of the borrower. Assets can also be used to repay a loan.
I hope this discussion of how loans are priced in Seattle helps you when you actually make a loan.

Twitt
 Posted by JAJohnson at 9:39 am
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