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Bad news for Real Estate In Everett

Wednesday, January 6th, 2010

This is a triple dose of bad news for real estate in Everett. These three separate bits of information spell bad news for homes for sale Everett. If I hear any more talk about a recovery I am going to puke.

NAR (National Association of Realtors) said pending homes sales showed the biggest declined in several months. “Experts” were expecting a 2% decline and they got a 16% plunge.

Why is it that the “Experts” never expect bad news? Why call them experts if they don’t know their jobs?

Then on top of that we hear that personal bankruptcies increased over 32% from the previous years highs. If you remember back in 2005 the Feds changed the law to make it harder to file for a bankruptcy. So in 2005 a record number of filings were set to beat the law change. Guess what; those records were just beat as we now have another new negative record set at 1.41 million new bankruptcies filed in 2009.

And here is the other shoe dropping from this 3 legged monster, construction activity. It fell for the seventh consecutive month for both residential and commercial projects. The Commerce Department said Monday that construction spending dropped 0.6 percent in November, a bigger decline than the 0.4 percent drop that economists had been expecting. Again those “experts” were stumped. The “experts” expected a 0.4% drop and we got a 0.6% drop.

Personally I would like to be one of these constantly bemused “experts” because I would simply guess at results and never be held accountable. Wouldn’t that be great to be paid to be wrong all the time. Sounds like politics to me.

Let’s consider the decline in pending home sales was the largest drop, point-wise, since NAR started the index in 2001, dragging the indicator to its lowest level since June 2009. NAR officials blamed this decline on the deadline for the First Time Home Buyer Credit that was scheduled to end in November. The credit has since been extended to April 30, 2010. NAR “experts” said that home sales normally slow in winter and should pick up in the spring.

I think NAR is whistling in a dark graveyard on this. I think without jobs there will be no recovery in pending home sales. Remember in Everett real estate a pending contract may take several months to close. So if someone signs a contract on new construction now they may not close until April.

Now if I combine the decline in pending home sales with the increase in personal bankruptcies and the decline in construction spending we have the recipe for a double dip recession.

I don’t need an “EXPERT” to connect the dots. Mr. Obama affordable health care is a laudable goal, cap and trade is a spacious goal and amnesty for illegals is a terrible goal. You have only one goal and that is JOBS, JOBS and MORE JOBS.

I want to see real estate in Everett moving again. I want to see homes for sale Everett back on tract again, Mr. President focus on creating jobs.

PS How is the Hope and Change working for you?

Thank you for reading this, Comments are welcome.

Jim Johnson

Posted in Homes for Sale Everett, Mortgage Everett, Real Estate Everett | No Comments »

Everett Mortgage Home Loan Refinance

Thursday, December 31st, 2009

Thinking of a home loan refinance? Better do it quick. The baseline 30 year fixed mortgage averaged 5.05% up from 4.94% last week. And that is still slightly lower than a year ago when it was 5.14%. If you are thinking of a 15 year fixed home loan refinance that is still very attractive at 4.45% compared to 4.91% from last year.

The Federal Reserve Board market consensus called for no increases in the immediate future.

The best deals were still in the FHA mortgage 5/1 ARM’s. They averaged 4.4% up from 4.37% last week but still more than a full point below the last years rate of 5.49%.

All the above rates are predicated on conforming loan amounts with an LTV (loan to value) of 80% or less. Remember that pricing adjustments may increase or lower your rate or cost that you actually receive. Consult a reputable mortgage broker for an estimate. Also California jumbo rates are usually a full point higher.

Now my crystal ball predictions for the end of 2010. Mortgage rates hit an all time low just last month. By the end of 2010 they will be at or above 6% for a baseline 30 year fixed mortgage. A home loan refinance will get harder too. New disclosure rules that are bound to confuse borrowers even more than they are now go into effect January 1, 2010.

Why am I saying California mortgage rates will be at least 6% next year end? Because the Fed is slated to stop buying MBS (mortgage backed securities) by the end of March 2010. That will cause illiquidity in  the secondary market and make mortgage loans much harder to get.

So now is the time for that home loan refinance.

Posted in Home Loan Refinance, Mortgage Everett | 5 Comments »

Everett mortgage- lets start another RE bubble

Sunday, December 20th, 2009

This will definitely affect homes for sale in Everett. This will definitely affect homes for sale in Snohomish County. It will have an affect on mortgages in Everett and everywhere else in America.

Here’s the bogus idea of the year- Lets start another real estate bubble. We didn’t learn from the last one so lets do it again.

Democratic Representatives Al Green, Maxine Waters, Robert Wexler and nine others in Congress are backing a bill now that would restore zero down loans to buy homes for sale in Everett. This practice was banned as of last October, called “seller assisted down payments”. And can you believe it these loans will be backed by FHA mortgages so, Ya you guessed it, the taxpayer will be on the hook for more foreclosures.

Deja vu all over again

HR600 is about “Seller Assisted Down Payments,” which is a euphemism for a scheme that enables people who cannot save enough money to make a down payment, to qualify for FHA insured mortgages. Take a person who can’t save 3.5% of the purchase price and now what makes you think they will honor a mortgage?

Here’s how it works: A seller can make a 3.5% donation to a charity that in turns makes a donation back to the buyer of the 3.5%. The charity charges a fee for this. Now the seller can up his price or can take it from his proceeds. That will depend on what the market is like. The home must appraise for the new price. But here is one thing for sure; the buyer will have no real equity in the home.

The charities are big backer of this, and I’ll bet you just wonder why. Ya again there is big money in it. There are 11 democrats and one republican backing this. Oh lets not forget National Associations of Realtors, Homebuilders, and Mortgage Brokers lest you be surprised.

Last October the seller assisted down payment plans were eliminated because it was found that these mortgages defaulted at a MUCH higher rate than ones with a buyer who had real money in the deal. Ya I’ll bet that’s a big surprise too.

The supporters of this bill think it is a great time to buy real estate. And just who you think they want to buy? Ya you guessed it, those who can’t save up a lousy 3.5%. Don’t we already have enough of a problem with mortgages being underwater? Why would we want to create more of them?

Why would you the taxpayer want to reinstate a failed program just so the taxpayers can bail it out again? I guess somebody didn’t get the memo, zero down is not a good idea. It wasn’t between 2006 at 2008 and it will not be now.

Rep. Maxine Waters and her peers say the legislation is important because it helps African Americans and other minorities who cannot come up with a down payment to “realize the dream of home ownership”. Well I say that is as bogus a statement as I have ever heard. These loans have a 28% failure rate. That is an astronomical foreclosure rate. We would have to raise mortgage insurance rates on every existing FHA loan just to cover the expected loses.

Ya this will effect homes for sale in Everett but not in a good way.

Jim Johnson and comments are always welcome.

Posted in Homes for Sale Everett, Mortgage Everett, mortgage | 5 Comments »

Everett mortgage-Building code changes may affect mortgages

Tuesday, December 15th, 2009

Are you thinking of remodeling? Do you want to build a home? Do you think you will have a home for sale in Everett soon? The cities honchos are mulling over changes to the building codes. Specifically changes in what the definition of an MIL is. What is an MIL well that’s a Mother in Law unit.

Allan Giffen, Everett’s director of planning and community development said this about Mother in Law units. MIL’s offer the home owner the benefits of affordable housing and extra money from a small rental.

Currently an owner can make an MIL within their home but it can’t be a separate unit. You are allowed only one utility service for the whole property. The home owner must live in one of the units. That by the way is a totally unenforceable rule. These rules were designed to prevent too many duplexes within the city limits, again an unenforceable idea.

The proposed changes will do away with those rules but only for properties north of 41st St. Why, you say only north of 41st St? I haven’t a clue. If you know please tell me because it doesn’t make sense. The idea is to keep mother- in-law apartments small, partly so large families aren’t moving in and overloading neighborhood streets with too many cars, Giffen said. This is total baloney.

The new rules allow for up to 600 sq ft additions separated from the main house by at least 18 feet. In other words you can now convert a garage if it’s 18 feet off the main house.

Under state law, cities with a population of more than 20,000 are required to allow homeowners to add some kind of extra unit, but the law doesn’t tell cities what standards to set. Everett’s population is more than five times that number.
The city’s Planning Commission put its stamp of approval on the plan, and it’s set to go to the City Council in the next month or two. A date hasn’t been set yet. So there you have it if you have a home for sale in Everett and it fits the above rules maybe you can remodel. And turn a garage into an MIL and thereby get a higher price for you home.

As always comments are most welcome. Jim Johnson

Posted in Homes for Sale Everett, Mortgage Everett | No Comments »

Everett mortgage Home Loan Modifications outrageous results

Tuesday, December 15th, 2009


Well the Obama administration has taken the cake and eaten it and left the dishes dirty. Home loan mods or mortgage mods call them what you will but the taxpayer is getting screwed BIG time.

1) Lets consider SAXON mortgage services. This was the number 1 bad boy on the list that Obama was going to shame into complying with the contract they signed with the government. As of December 10th these criminals has issued 42 permanent loan mods out of 35,608 trial home loan mods. Do you know how much money Obama offered these crooks to do 42 loan mods? $886,400,000.00. That’s right $886.4 million dollars of your cash.

2) Now lets consider the number 2 offender. That would be Indymac Bank / One West Bank. This is a lender that was once close to the number one subprime lender in America. Right behind Countrywide. OK they did 19,623 trial mods. And lets see just how many permanent home loan modifications did they do? ZERO that’s right ZERO, none nada zip. Now I’ll just bet you are dying to know just how much money Obama paid these guys to do loan mods, right? Well it was $814,200,000.00. Are you thinking like me that maybe I am in the wrong business?

So what do we have here. We have $1,690,600,000 in YOUR TAX DOLLARS. And what did you get (that’s right not even kissed) well the number is kind of hard to calculate- Oh that’s right 42 loan mods. I will let you do the math. PS how is that Hope and Change working out for you now?

So that’s the way Everett’s mortgage market is going.

Jim Johnson and comments are always welcome.

Posted in Mortgage Everett | 1 Comment »

Everett Mortgage: FSBO – the Good, the Bad and the Ugly

Monday, December 7th, 2009

Yes you can sell your home yourself but do you really save money?

Yes you can sell your home yourself. And yes you can save money doing it that way, sometimes.

There are many services available to help you sell your home yourself. Sites such as ForSaleByOwner.com, Owners.com and Fizber.com offer good exposure for reasonable prices. This exposure doesn’t come free but you can save money this way.

The typical real estate commission is made up of 2 parts. One is the listing commission. This part is for the agent who lists your home and does the marketing for you. Marketing a home can be expensive in a down market. Most experts recommend using online marketing as opposed to newsprint advertising. Newsprint is very expensive and no longer as effective as it once was. Online marketing is much more effective these days as almost everyone starts home shopping there.

The second part of a real estate commission is the selling commission. This is paid to the agent who brings a buyer to the transaction. Offering a good selling commission is essential to a quick sale. Buyers’ agents are “force multipliers” in that each one brings, usually, several buyers with him. By offering a good commission you enhance your chances of a sale. Here’s a note to remember: Almost all buyers hire a buyers’ agent to represent them in a purchase. If the commission on one home is higher than another’s which do you think the agent will show?

Typically both commissions are 3% for a total of 6% of the selling price. REMEMBER commissions are negotiable.

In the past For Sale By Owners’ (FSBO) homes have averaged about 15% of the market. That figure goes up and down during different markets. In a good market where it’s easy to sell FSBO’s go up to about 20% of closed sales. When the market is bad, like right now, the FSBO share can go as low as 5%.

Now lets cover some of the online FSBO sites available. ForSaleByOwner.com offers several plans starting for $81 per month to a full blown plan for $809.  Owners.com offers a simple plan for free and then better plans up an agent assisted plan for $695. Fizber.com offers the same very basic plan for free and then better plans up to $495.

Last year was a very tough year to sell any home. Last year the median sale price for a for-sale-by-owner property was $153,000, while it was $211,000 for sellers who used an agent, according to the National Association of Realtors.

So maybe you can save a buck or maybe you might be better off negotiating with a good real estate agent. Remember you have to do all the work. You will also have the expenses and hassles of making flyers, installing yard signs, installing ground signs and open houses. Everything depends on how much time and experience you have. Good luck.

All comments are welcome.

Jim Johnson

Posted in FSBO, Homes for Sale Everett, Mortgage Everett | No Comments »

Everett mortgage: 5 Things to look for when buying your first Home

Monday, November 30th, 2009

The smart way to use your VA mortgage or your FHA mortgage

These ideas work for California real estate and Everett real estate. Before we even start looking for homes for sale Everett I will assume you have done what I call the 3 basic tasks you need to do before buying your first home.

  1. You have found a good loan officer and have qualified for a VA or FHA mortgage. The reason I suggest a VA mortgage is because it is the only true zero down mortgage available without heavy restrictions. Now if you don’t qualify for the VA mortgage you should be able to qualify for a FHA mortgage. The FHA mortgage has the lowest down payment (3.5% of the purchase price) and is the easy to qualify for.
  2. Next before anything else I suggest you see a qualified tax professional. The reason I suggest this is because if you have never owned a home before you will be surprised at the tax benefits of home ownership. Tax planning is always best done before the act not after.
  3. Find a good real estate agent. Be sure that the agent knows the area you are considering.

1) Ask you agent to look for a neighborhood in transition. Usually your best bargains for a home for sale in Everett are in neighborhoods in transition. Now what exactly is a neighborhood in transition? The first thing is how many of the homes look to be rental as opposed to owner occupied? If you really want to know that here is a simple way. Have your agent ask a title insurance company for an area report of owner occupied vs. non owner occupied homes. In the report they will have dates of sales recordings. This way you can get a feel for the way the neighborhood is going.

2) Next really look at the homes in the area. Look for well kept yards, signs of home remodeling, new paint, new roofs, etc. Does the neighborhood have CCR’s? CCR’s are codes, covenants and restrictions. In Everett there is the historic area. In this area you have to maintain your home in certain ways. In an larger area developed by a single developer you will usually find CCR’s. These can be minor to major restrictions. If you are buying a Condo there are ALWAYS CCR’s.

3) Another source of information is the local police records. These records can show which way crime is going. Usually owner occupied homes will have a lower crime rate than rentals, for obvious reasons. Look for bars on windows and doors.

4) Just because a home for sale in Everett isn’t listed doesn’t mean you can’t buy it. When I go shopping for real estate bargains I look for homes owned by very long term owners. Retired people who may be snowbirds or simply not able to keep a home up anymore just might be open to an offer.

5) How about expired listings, there are plenty in California real estate. In this market many homes haven’t sold for various reasons. Here is when you can find so interesting bargains. Here is when creative financing can occur. If the seller is wiling you can actually buy a home without a formal loan. I don’t recommend this unless you have the help of someone experienced in this. This is true sweat equity. This is the way I bought my very first home in West Lynn OR. I bought it then fixed it up and got formal financing later.

You are allowed only one VA mortgage at a time. The same is true with an FHA mortgage. Use them wisely and they will make you a lot of money.

Comment and suggestions are most welcome.

Jim Johnson

Posted in California Real Estate, FHA Mortgage, Homes for Sale Everett, Mortgage Everett, Mortgage Fraud, VA mortgages, mortgage | No Comments »

Everett mortgage: Why is my interest rate higher than going interest rate

Saturday, November 28th, 2009

Why is my interest rate higher than going interest rate

Why it that the TV and newspapers say the mortgage rate is 4.85% for a fixed 30 year loan but I am getting 5.25%? It seems like that is false advertising.

I contacted my Everett mortgage lender and he said that interest rates for a fixed 30 year loan were 4.85%. Then we met at his office and all of a sudden I am at 5.25%.

What I didn’t know was that rate is for a fixed 30 year mortgage with certain parameters. They are;

  1. At least 20% or more equity in my home. So if my home has a value of $300,000 and my loan amount with costs is less than $240,000 I just might get that 4.85% rate.
  2. But wait there are a few more hooks involved. How is my credit? If my credit score is under 620 I might not get any mortgage. If my score is between 620 and 680 there will probably be a few “hits”. What do you mean hits? Usually these are charges to the borrower because of a higher risk involved. There will probably range around .25% to .5% of the interest rate you receive.
  3. If I have had late payments on my credit I will probably have a combination of increased interest rate and additional fees.
  4. Even if I have these “dings” on my credit I can still get that very low rate but I may have to “buy” my rate down. If I have enough equity in my home I can use that equity to pay the fees and then I will get that super low interest rate.

Unless my credit is 720 or better and my total loan amount is less than 80% of the value of my home I can expect a few extra charges. So the next time I contact my Everett mortgage lender I will need to remember a few things. Do you have a comment?

Jim Johnson

Posted in Mortgage Everett, mortgage | No Comments »

Mortgage Everett: The Life of a Mortgage

Thursday, November 26th, 2009

How Does the Financial Market Really Work?

Or

The Fools March On and we pay for it.

An Everett mortgage originated right here in Everett doesn’t stay here. Wow what a surprise. Here is how it works.

Lets say I have am a mortgage bank. I don’t have my own money so I borrow $1,000,000. I am paying 1.5% on that money. Now I go and originate 4 mortgages each for $250,000.

On each of these mortgages I am charging 5%. You might think that’s the end but really it’s just the start. I sell these mortgages to an Investor. That investor may be another bank, a real person, some kind of institution or right now FHA. Because right now the only one buying these mortgage is the federal government. PS they have said as of next March they will stop buying these mortgages.

But back on track. I made 4 mortgages and now I’ve sold them to FHA. I get my $1,000,000 back and a bit of profit. Let’s say I got $12,500 for each loan. That’s a profit of $50,000. I can do this every single day of the week. Remember these mortgages will have an average life of about 5 years and produce interest for that time. At 5% if each loan produces and stays current FHA will make ($1 Mil X .05% X 5 = $250,000) $250,000 less the $50,000 FHA paid to me.

OK if I am a banker and I have my own money at risk I check to make sure that I am making good mortgage. But if I am lending out your money (tax dollars, bailout bucks) I might be a bit more lax about it.

This is how the market basically works until you get politicians involved. Once you get elected idiots involved they screw everything up. You see they don’t care how the market works all they care about is getting reelected.

So how can Mr. Politician use this to get reelected?  This is were it get Machiavellian. If I can change the rules and get more people into homes then I have more people who will vote for me. This is a simplified version but it all boils down to more votes for Mr. Politician. But here’s the problem Mr. Politician can’t keep the rules bankers would use because most of these new home owners will not qualify for an Everett mortgage. So what does Mr. Politician do he lowers the standards. Now when this all blows up what does Mr. Politician do he blames the bankers and gets reelected. I give you Barney Frank and Chris Dodd.

Do not think for one minute that I am absolving Mr. Banker here because he went along for the ride and got rich doing it. Tim Geithner is the Secretary of the Treasury. He is a Wall Street banker. He made deals with these banks that the US taxpayer will be paying for for years.

You my fellow taxpayer will be in debt over this until your grandkids are old.

I have simplified this down. There are parts I have left out because they only obscure the end.

I have left out how Mr. Politician forced the banks to lower their standards under Bill Clinton and Janet Reno. I also want you to know this problem has been in the making for almost 30 years. It starts with the Community Reinvestment Act of 1976 and Jimmy Carter. It builds steam under Clinton. In Bush 2 second term it was recognized that problems were occurring. At least 8 different times Bush administrations officials tried to rein this in. Chris Dodd and Barney Frank railed against any tightening of the rules. You can see this for yourself on Youtube.

http://www.youtube.com/watch?v=_MGT_cSi7Rs

http://www.youtube.com/watch?v=hxMInSfanqg&feature=PlayList&p=8B1B870D4C95652C&playnext=1&playnext_from=PL&index=37

Here is John McCain trying to rein in FANNIE MAE but stopped by Democrats Barney Frank and Nancy Pelosi

http://www.youtube.com/watch?v=63siCHvuGFg

In business if you fail you lose and are out of business. In politics if you fail you get reelected. Go figure.

Jim Johnson

Posted in Mortgage Everett, mortgage | No Comments »

Everett mortgage: More Government screw ups

Monday, November 23rd, 2009

More Government Interference in the Real Estate Market

or

The LAW of unintended consequences

HVCC (Home Valuation Code of Conduct) was supposed to help with inflated appraisals. It was supposed to keep appraisers from being pressured by lenders. Instead it killed the real estate market. It lead to fewer choices for the consumer, lower fees to appraisers, non certified non professional people doing appraisals and many more unforeseen consequences. It practically killed the conventional mortgage market.

Now we have more government interferences. And we will have more unforeseen consequences.

Since the real estate bubble collapse FHA mortgages have saved the American economy. The share of purchase applications for government-backed loans by the Federal Housing Administration and other agencies surpassed 40% in August, up from 38% in July and 32% in August 2008.  That’s the highest share that the MBA has measured since February 1991. That was just before the subprime mortgage boom.

Without the FHA mortgage there simply would be no real estate market. And now the fools in Washington want to “fix it”. The very people who are responsible for the mortgage meltdown are now going to fix the only thing that is keeping our economy going. Here’s what they are considering:

  • It is true that FHA mortgage insurance funds are below federal mandated minimums but this is really an accounting issue. It is not a solvency problem. It is true that some FHA mortgages are behind or into foreclosure. But so are many prime conventional loans. A vast majority of these bad loans were the result of a ZERO down scam type of FHA mortgage. These loans were called Nehemiah or Hart or some other name but allowed for a FHA mortgage to be used without any money from the buyer. These loans are no longer allowed.
  • Currently if you have at least 620 (and most lenders are going to 640) credit and 3.5% down you can buy a home with an FHA mortgage. Until early this year FHA rules allowed a buyer to qualify with a credit score as low as 560 in some cases. Now it’s 620 and more often 640. So now a buyer needs pretty good credit to buy. Critics say the credit score should be increased but that defeats FHA’s purpose and that is to serve the marginal buyer. A 620-640 score is not a bad score. Critics also say 3.5%  isn’t enough “skin in the game” and want to increase the down payment. Some want 5% and few even want 10%. I want you to know that raising the minimum down payment would defeat the basic idea of an FHA mortgage.
  • Currently there are 2 different types of mortgage insurance on every FHA mortgage. First there is UFMIP (Up Front Mortgage Insurance Premium) and is 1.75% of the loan amount. This is up from 1.5% at the end of last year. Next there is a MI (Monthly Insurance) and this is .5% or .55% of the monthly payment depending on the amount of down payment. Here I think we can tweak some. We can raise the UFMIP or increase the monthly MI or increase both. Please remember that increasing these fees will lower the loan amount that a buyer can qualify for. This will lower the amount of home they qualify for. I believe that minor adjustments here is the only way to improve the insurance coverage without screwing up an already fragile market.
  • Next some would cut the amount a seller can contribute to a buyer for closing costs. Again this is short sighted. Currently a seller can give back to a buyer up to 6% of the purchase price for closing costs. Usually closing costs will run around 3.5% +/-. Well any good loan officer will use the extra money to buy down the buyers’ interest rate and make the loan / home even more affordable to the buyer.
  • Next some say we should toughen the credit standards. Well the free market has already done that. Because the buyers of mortgage backed securities (MBS) will not buy a loan that has credit score of less than 620 there is no need to do this. In fact the market has said that unless the buyer has a 640 score most will not buy the MBS.

So I say to the guys who screwed this up in the first place keep your mitts off and let the free market do it. Just as they should have done right from the start. Every time the government gets involved they screw it up. I mean EVERY SINGLE TIME.

Jim Johnson

As Featured on ArticleCity.com

Posted in FHA Mortgage, Homes for Sale Everett, Mortgage Everett, VA mortgages, mortgage | 3 Comments »

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