ComeBuyAHouse.com

Starting young–when to buy?

Today I spoke with the young lady at our optometrist’s office about the real estate market.  She asked how the market is, and then wanted to know if prices are going down.  I’m sorry, but the answer is no.  I haven’t really seen a bursting bubble. Prices will increase over time in the Seattle area at a rate of at least 7% a year.  That means that homes will be twice as valuable (or more), and yes, twice as expensive (or more) in ten years.  So that begs the question, when should you buy?  You should buy as soon as you are ready.

Think about this, though:  if all you are looking at is home prices, you are looking at only part of the picture, unless you have cash for the whole purchase price.  The other part of the picture is the rate/terms of your loan, or how much your money costs. 

See, you qualify for a payment amount when you are applying for a loan.  When the interest rate is higher, more of your payment goes to pay your interest, less to cover the house price, so you get less house.  The inverse occurs when the rates are lower.  We like lower.  So when you are ready to buy, the thing to watch is interest rates.  You also want a loan officer that will quote a reasonable rate (not the teaser that can’t possibly be honored) and keep you informed about rates until you are ready to lock it in, once you are under contract. 

Our friend mentioned that she might want to get a place with more bedrooms than she needed in order to rent to roommates.  I told her that there are loans that will use the rental amounts as income to help qualify the borrower.  Not all lenders allow that income to be used, but if you can afford a place then you use the rent income to give you a financial cushion, well that can be a good conservative move. 

Though it might start out a bit more expensive, the larger (3 bedroom) property appreciates at the same rate as others around it.  I would rather have the equity growth on a $300,000 house than a $200,000 house, yes?  And if you own a three bedroom instead of a two bedroom, and the next step in your strategy is to move up into a nicer place, it will be easier to sell.  Or rent.  Hmmmm…. another avenue to take. 

Another young future client is working with me on building her credit and job history right now, and plans to own a building that houses not only a dance studio, but apartments to rent.  These are ambitious plans, and what a great idea! 

Loan Originator Licensing

I’ve lifted this right from Jillayne Schlicke’s (http://www.bpiconsulting.net) newsletter because I thought you ought to know…

Alert to homebuyers to look for the license number of their loan originator on their loan application after January 1, 2007.

On this date all loan originators who work for a mortgage broker must be licensed by their regulator, the Washington State Department of Financial Institutions. This includes being fingerprinted and undergoing an FBI background check.  Loan originators will be issued a license number by the state which must appear on your client’s loan application.  This new licensing law does not affect loan officers who work for a bank, credit union, consumer finance company, or any other entity exempt from licensing.  Here is a link to the DFI website for you and your homebuyers.
http://dfi.wa.gov/cs/loan_originator.htm

I want to continue to help people with financing their home purchase and so I have applied for my mortgage loan originator license–a new development in the State of Washington.  It’s a great move onthe part of WA State toward regulating individual competence and compliance.  I was known as the compliance officer at my last job, watching my agents and loan officers for possible problems, protecting clients, and my associates as well as the brokerage—-the real estate brokerage and the mortgage side too.  As RE broker, being compliance officer was part of my job.  I was to be very aware of the laws, to feel when a red flag might be flying and to check out that possible violation.  Often when an agent or LO thinks outside the box in advertising, or in getting a loan for someone who really does not qualify, there’s a reason to check for violations. I’m all for creative advertising, and even creative financing, but not for anything that will end up hurting a client financially.