Everett Mortgage On Line

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

Risk Based pricing for Seattle Mortgages

VA mortgages No Responses »

Feb 132011

In Seattle your mortgage rate when applying for a new home loan, will depend on a number of factors. What is this “Risk Based Pricing” and how does it affect all home mortgage rates? A bank perceives risk as far as repayment of a mortgage as being directly related to a number of factors. They are (not 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 possibly add or subtract other factors.
The single most important factor is your credit score. Your score is an indication of how you have handled credit in the past and how you will handle it in the future.
So how exactly does a lender price out a mortgage in Seattle or for that matter anywhere else? There are 2 ways to price a home loan. The first is obvious and it’s the interest rate. The second is the cost of that rate. According to Risk Based Pricing if your credit score is low than you should expect to pay a higher interest rate and higher loan costs. How do they determine what the risk is? Simple, based on your credit score you will be charged a fee that is added to the cost of the loan. Some lenders will charge a fee even to borrows with 720+ scores. If your score is 640 you might have to pay 1-2 points just to get the loan. So if your mortgage is $350,000 than the cost just to get the mortgage is $3500-$7000. Then you still have closing costs on top of that. If your score is 720+ you might have a cost of ¼ point. How will you know? Simple you will never know because even your mortgage broker will not know. The cost will be hidden in the rate sheet and only the lender will know for sure.
These costs are added not by bankers but by bureaucrats. This appears to be another idea formulated by people who are not in the industry and will have negative consequences. Given how fragile the recovery of our economy is anything that makes it harder to get a mortgage is not a good idea. If lenders were responsible for loans that would be best for America. What is really scary is having a politician like Barney Frank in charge of the housing industry. That was the case until this last January. When politicians are in charge of industries that they have absolutely no idea they work we get the worst of all worlds.
So for the foreseeable future mortgage rates in Seattle will be risk based priced.

It is cheaper to Buy in Seattle area than it is to rent

mortgage, Seattle Mortgage Companies, VA mortgages No Responses »

Jan 302011

Yesterday I met with some clients to discuss getting a mortgage instead of leasing another apartment. They are renting a 3 bedroom 1 bath apartment in Everett, a suburb of Seattle WA, for $1210 per month. She called me to ask about finding another rental. I told her that I don’t deal in rentals but maybe if she wanted she could buy a home for the same money as what she rents.
At first she didn’t believe me but I had proof. I went to an agent friend of mine and we searched the MLS for homes for sale in Everett, WA. To no surprise we found many homes for sale below $200,000. Our parameters were minimum 3 bedrooms, 1.75 baths and 1000 square feet and no short sales. Well there was 28 homes in Everett all of them ready to go. Given that her son is on active duty he can buy with his VA mortgage and her as a co-signer. The full payment for a $169,000 – 3 bedroom, 1.75 bath, 1250 square foot home with a 2 car garage is $907 per month. That’s with a 5% fixed 30 year mortgage with an APR of 5.22%. Add taxes and insurance they are at $1097 and that is less than the rent they are paying now.
Next we had to address her poor credit. After pulling a tri-merge credit report we knew she would not qualify for a home mortgage until she got her credit to the magic 640 score. It may take her a few months to get there but so what. Because you see even if it takes 6 months to fix the credit there will still be homes for sale she can afford. And if she didn’t fix her credit 6 months from now she will still be renting and still have poor credit.
Let’s examine this in greater detail.
What does it take to buy today?
First you need a 640 middle credit score. That is not hard to do but may take some professional help. I know of half a dozen repair services that will get you to 640 in a few months. There is a cost but again so what. Imagine what you can save if you have decent credit. Well the next time you renew your car insurance you will save a few bucks, the next car you buy a car you will save a whole lot more and so on. So even if you have to invest $400 to $500 to fix your credit, again so what.
Next you will need a down payment. If you must buy in the city you will need 3.5% down. On a $200,000 home that’s only $7000. That down payment can come as a gift from relatives, your boss or a 401K from savings. On a $175,000 home it’s only $5950 down. How much was your tax refund?
Or you can buy out in the country east of Hwy 9 and get a home for ZERO down. Or if you or someone in the family is a veteran you can buy anywhere for ZERO down.
Interest rates of a fixed 30 year mortgage are in the low %5 to high 4% range.
Given low interest rates and low home prices you simply can’t wrong.
Consult a good loan officer and find out if you can take advantage of this once in a lifetime opportunity of low mortgage rates and low home prices.

Everett Real Estate the Hits just keep on Rolling

Everett real estate, Homes for Sale Everett No Responses »

Feb 252010

Zillow Home Value Index

More US Home Values

Experts wrong again and again and again

Homes for sale in Everett and Everett real estate in general just took another “unexpected” drop. Are you getting as tired of the “experts” being wrong, wrong, wrong again and again as I am. This broken record is not unexpected to me. For almost a full year the number of sales of new homes has dropped. There was a minor blip in October / November 2009 from the new home tax credit but all that did was suck purchases from December and January and put them into October/November. Month after month the “experts” have been wrong. I am whining but why can’t I get a job where I can be paid well and be wrong over and over. In my business and I am sure yours too, you get paid to be right.

Well new home sales PLUNGED to historic lows in January. Just to show you how wrong the MSM (main stream media) is Bloomberg wrote on February 24^th that housing would be up. Here is a quote from the story.

“Purchases increased 3.5 percent to an annual pace of 353,000 new homes, according to the median estimate of 71 economists surveyed by Bloomberg News. Demand slumped 7.6 percent in December, the month after the incentive (the tax credit) was originally scheduled to expire.”

That’s right 71 over paid economists predicted a completely wrong scenario.

What really happened was New Home Sales plunged to 309,000 the lowest level since the US Commerce Department has kept records starting way back in 1963. How does this affect Everett real estate and homes for sale in Everett in general? Well think about this, if you can’t sell or will not buy a home then the economy in general will not recover. If consumer confidence doesn’t go up we will never see the “good times” again.

Right now as I write this Obama and the Liberals are arguing about health care. Mr. Obama stop the BS and get us some Jobs. Nancy Pelosi claims that 4 Million jobs will happen if we just pass the Obamacare health bill. What hogwash! If congress passes a bill that lowers payments for healthcare do you think that will increase the number of jobs?

The litany of bad news goes on and on.

Inventories went up to a 9.1 month supply. That’s from an 8.1 month supply in December and a 7.9 month supply in November.
In January the median price fell again by 2.4% compared to a year ago. And a year ago was a disaster.
In January, new home sales plunged 35% in the Northeast, fell 12% in the West, and decreased 10% in the South; they rose 2% in the Midwest.
Investors will note that new home sales, historically, correlate to an economic expansion.
The “unexpected” drop in new home sales should (but probably will not) raise questions about the efficacy of Obama’s new home buyer credit. You know the one that robs sales from the near future just to inflate the current numbers.

My friends please vote all incumbents out. Get rid of the incompetents that we have running this government.

How will we improve the market for Everett real estate and homes for sale in general? JOBS, JOBS AND MORE JOBS Mr. Obama.

Jim Johnson and comments are always welcome

Everett Mortgage on Line

Everett Real Estate Federal Tax Credit

Everett real estate, Homes for Sale Everett 6 Responses »

Feb 222010

Another Obama plan that will do nothing for Everett real estate

This information will not have a major impact on homes for sale in Everett and / or Everett real estate in general. The IRS finally got around to clarifying the guidelines for the home buyers tax credits. That’s right the $8000 credit for first time buyers and the $6500 credit for move along buyers.

This is the same credit that many think, myself included, hasn’t made a single additional sale since its inception.

Think about it, if I am on the market for a home for sale in Everett I am going to buy regardless of an $8000 credit. I personally think this credit is just like so many other things the Obama administration has done in that it is completely ineffectual. I think this credit has had no affect on demand for Everett real estate or the prices of homes for sale in Everett.

Because of abuse of the original credit the IRS and Congress revised the program last November. They also extended the credit life and included the $6500 move along portion.

In a few cases IRS and Congress found phony claims and so with typical reaction they punished everyone equally. For a while they didn’t pay legitimate claims. Using a sledge hammer to kill this fly here is what Congress wanted IRS to do. Congress directed the IRS to spell out documentation standards in detail and to install monitoring systems to try to spot fraud upfront. Among the keys to the monitoring system is that all documentation accompanying credit claims must comply with IRS’ detailed rules.

Here is what IRS came up with for anyone claiming the credit:

You must fill out the IRS form 5405 (the form is here www.irs.gov). This provides basic information supporting the claim for eligibility, appropriate dates, income information and amount of credit claimed.
A copy of the settlement statement called the HUD-1. This proves the transaction actually took place and who was party to it.

There are problems with the HUD-1. IRS wants both the buyer and sellers to sign the HUD-1. In some states that isn’t required. On February 12, 2010 IRS loosened up that requirement and said they will allow whatever the respective state allows. That was very big of them.

Will this spur more sale of Everett real estate, I doubt but who knows? Will this improve the outlook for homes for sale in Everett again who knows?

The form 5405 does say that both parties must sign the HUD-1 but IRS is now saying don’t worry be happy.

Nationwide, according to estimates by the National Association of Realtors, about 1.5 million repeat purchasers and 900,000 first-timers are expected to apply for credits this year.

Also don’t forget that if you are a repeat buyer you will need to prove that you lived in the home for 5 continuous years out of the last 8. They say property tax records or hazard insurance records or mortgage interest statements can help that. I say that stuff is open to abuse and doesn’t prove a thing.

I personally don’t think the credit will produce one single extra sale of any home for sale in Everett. I don’t think this credit will produce any measurable effect on Everett real estate at all.

Jim Johnson and comments are always welcome.

Everett mortgage on line.

Jobs key to Recovering Value of Everett Real Estate

Everett real estate, Homes for Sale Everett No Responses »

Feb 202010

Again the Law of Unforeseen Consequences strikes at the heart of Government Actions

Or how to not think something through.

More wasted tax dollars and how that affects the market for homes for sale in Everett. Don’t expect the feds to help improve the outlook for homes for sale in Everett or the Everett real estate market in general. To put it politely they can’t find their behind with both hands at the same time.

Let’s take the new the weatherization plan, it’s part of the porkulis or stimulus plan, and your wasted $500,000,000 so far. (PS that’s a drop in the bucket) This is part of the Obama administrations $5,000,000,000 ( 5 BILLION DOLLARS) green jobs program that’s going to create 87,000 new jobs.

Fat chance.

It was going to make 593,000 homes more energy efficient, again fat chance.

Well the General Accounting Office has declared the program woefully behind. In fact about 98.24% behind and it may never catch up. Now how does that affect the market for homes for sale in Everett or Everett real estate in general? It’s those 87,000 green jobs that will not materialize. Or if they do these jobs will be temporary and not really help. I keep harping on this but without real private sector jobs there is no recovery. And “green” jobs that don’t last will not help either anyway.

Now I don’t know about you but if I wanted to weatherstrip my home I wouldn’t need to spend $8432 to do it. Nor would it take 5.9 guys to do it. But consider these statements directly from Joe Biden and Mr. Obama himself. The plan is not to insolate but to weatherize the homes. No new windows or new doors but simple stuff, just caulking and weather stripping only.

If I project to weatherize 593,000 at a cost of $5,000,000,000 then I am going to spend $8432 per home. If I am going to create 87,000 temporary green jobs then I will use 5.9 guys per home. This is typical of a government boondoggle that hasn’t been thought through. And sad to say some of you trust this government to do healthcare properly.

Why has it taken so long to get started you might ask? Again assuming that government can do anything right is an oxymoron. I defy you to name one thing the government does well outside of the military. And even the military has its problems if you are keeping up with current events.

It seems that a depression era law (the Davis-Bacon Act) requires that the Labor Department pays the going wage rate in every single county in America, and that’s about 3000 different counties. So after screwing around for almost a year they are finally starting to work.

If you remember a few months ago I had came out with my ideas on how to curb the bloated governments that are drowning us in red tape. If you recall I wanted term limits on every elected position and a sunset of every law and regulation for city, county, state and federal agencies. Term limits prevent absolute power from corrupting these eminently corruptible politicians. Sunsets would keep unelected bureaucrats from enacting more and more regulations that are killing our entrepreneurial spirit. Like the EPA declaring CO2 to be a greenhouse gas. The same CO2 that is necessary for life on this planet. Unelected bureaucrats are strangling our economy with a blatant power grab. Thank God Texas is fighting back, because Washington State with our political hacks would never do that.

A friend pointed out that if the government has an energy audit on your home they could come along and say your home must be upgraded or we will fine you. Given how starved for new revenue sources that isn’t as farfetched as it sounds.

As I started out I will end. There will be no recovery for Everett real estate nor will the market of homes for sale in Everett recover until we have real private sector jobs.

Jim Johnson and comments are always welcome.

Everett Mortgage on Line.

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