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.

Twitt
 Posted by JAJohnson at 2:37 pm

FHA Mortgage rates to Rise

 FHA Mortgage, Homes for Sale Everett, VA mortgages  11 Responses »
Feb 082010
 

Everett Mortgage Expect higher Interest Rates Soon

As of March 1st expect FHA mortgage rates, VA mortgage rates, and all other long term interest rates to rise. Expect prices for homes for sale in Everett to fall. I am not Chicken Little and saying the sky is falling but there is going to be some very dark clouds coming soon. Here is why. The Federal Reserve Bank (the Fed) will no longer be buying Mortgage Backed Securities (MBS) on the open market. I know you are saying how is that going to effect FHA mortgage rates?

Well a lender makes a 100 or a 1000 home loans and then packages them into a MBS. They sell that MBS on the open market. The price the open market is willing to pay is what determines what interest rate will be charged on the mortgage. If the interest rate on a particular VA mortgage or an FHA mortgage isn’t high enough the MBS will not get sold and that’s not good. Banks only make their outrageous profits if they churn your money several times. Remember that the deposits they use to make an FHA mortgage or a VA mortgage is your money. Simply lending it out once isn’t enough they have to lender it out several times over but that’s another story.

The Fed has been buying MBS with below market interest rates and in doing so they have kept the interest rate below market. You the taxpayer have been subsiding the mortgage market. I’ll bet you didn’t know that did you?  When the Fed stops buying the open market must buy the MBS or the entire housing industry will come to a screeching halt. To sell the MBS banks will inevitably have to charge more interest.

Now why will prices fall on homes for sale in Everett? The price a home can sell for has a great deal to do with mortgage money liquidity. If interest rates are up that means a buyer with a limited budget can not buy as much home as before. If I have a $1000 a month maximum payment I can buy more home at 5% than I can at 6.5%.

So when the fed stops buying MBS on March 1, 2010 expect prices to fall on homes for sale in Everett. Expect interest rates to increase on all FHA mortgages, VA mortgages and all long term projects.

Jim Johnson and comments are always welcome.

Everett Mortgage on Line.

Twitt
 Posted by JAJohnson at 12:39 pm

Value of Real Estate in Everett Affected by Govt Program

 Real Estate Everett, VA mortgages  5 Responses »
Jan 162010
 

1 In 4 Out of work affects value of Everett Houses

How do Everett houses keep there value when 1 in 4 out of work? The value of real estate in Everett is hurt when 22% are unemployed. I have been shouting this for months.. Mr. Obama we need JOBS.

Today the White House breathlessly announced that a $2,300,000,000 “Green Jobs” program that will create approximately 17,000 subsidized TEMPORARY JOBS.

Well let’s see $2,300,000,000 divided by 17,000 equals $135,295.19 per TEMPOARY JOB.

Heck of a deal Mr. Obama.

These TEMPORARY JOBS he has created will be in wind and solar industries. These industries have to have a 30% subsidy to get even close to being economically viable. NONE of the technology is invented yet. Without a staggering improvement in technology they can’t compete in the market place. This is unsustainable.

The stupidity of the Obama administration is appalling. If he really wanted to create jobs he could start with simply drilling for the oil we will need for any recovery that might take hold, even in this political environment. In just a year or two when (if) a recovery starts, unless we drill now we will see $6 and $7 a gallon gasoline. Then when that happens any recovery is dead before it even starts.

How are we going to pay our mortgages in Everett? How will we keep the value of real estate in Everett from falling thru the floor? If 22% or about 1 in 4 is out of work how does that affect the value of houses in Everett?

Now you have idiots like the Governor of Wisconsin, a state I used to live in. Wisconsin Gov. Doyle says a clean energy bill will mean thousands of green jobs and result in energy savings for consumers and business. This guy takes you for a complete fool. He says that this Clean Energy Bill will create 15,000 green jobs by 2025. What we do until then is a mystery to me.

The value of real estate in Everett will remain stagnate for the foreseeable future. Everett homes will not appreciate in value without more jobs, it’s that simple.

Jim Johnson and comments are always welcome.

Everett Mortgage on Line.

Twitt
 Posted by JAJohnson at 5:59 pm

Everett Mortgage Homes for Sale Everett Shadow Inventory

 VA mortgages  8 Responses »
Jan 022010
 

Shadow Inventory may be 1.7 million homes

I am getting conflicting numbers on the “shadow inventory” of REO property. This can have a major impact on homes for sale Everett. First let me define shadow inventory and REO property. Shadow inventory is the foreclosed homes not yet on the market. REO property is the real estate owned by banks. REO property can be on the market or not yet available for sale.

Last April the San Francisco Chronicle and many other media outlets were reporting we had about 600,000 homes owned by lenders that were not on the market. It was reported that the lenders were not getting these homes ready for sale but simply holding them for better market conditions. Some reports suggested that as many as 70% of the REO homes were not on the market.

The problem with shadow inventory is they tend to degrade neighborhoods. They tend to get rundown quickly by attracting squatters, vandals and animal critters. They also depress prices for homes for sale Everett in 2 ways. One they depress resale values and two they make it hard to refinance.

There is real benefit for investors and regular buyers because these homes mostly have nothing wrong with them they just smell bad.

Now the real problem is that they will threaten any significant market recovery until they filter through and become available for sale.

The Really Bad News

Now here’s the really bad news. First America Core Logic published a report that as of September 2009 we have 1,700,000 homes in the shadow inventory. The report is in conflict with the April reports and stated that one year ago we had 1,100,000 in the shadow inventory. Because the Core Logic report is a real data source I tend to believe it much more the unreliable newspapers. The Core Logic does offer some good news in that the total inventory of housing for sale did drop somewhat. One year ago it was 5.7 million and now the total inventory is 5.5 million. But wait that silver cloud has a black lining.

Right now based on current rates would take about 11.1 months to sell. But we have artificially low interest rates and a first time buyers credit that will end next spring. When the Fed stops buying mortgage backed securities next spring interest rates will climb quickly. Combine that with a buyer credit expiring and I think it will take a lot longer to sell any home for sale Everett.

Jim Johnson and any comments are welcome.

Twitt
 Posted by JAJohnson at 9:12 am

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

 FHA Mortgage, Homes for Sale Everett, mortgage, Mortgage Everett, Mortgage Fraud, VA mortgages  No Responses »
Nov 302009
 

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

Twitt
 Posted by JAJohnson at 11:38 am
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