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Keep Your Credit Report Healthy

June 17th, 2010 | No Comments | Posted in Buyer's Corner, Real Estate Q&A

Most people would rather think about water skiing or tulips than credit scores, at least until they apply for a mortgage or some other kind of loan. But it’s a good idea to pay attention, however briefly, to your own credit situation.

Here’s How It Works

Credit scores give lenders an idea of your ability to repay loans. But your score isn’t determined by the lender; rather, several credit information bureaus compile and calculate them. Your credit report shows all of your outstanding debts: credit cards, mortgages, student loans, car loans etc. The report also provides your payment history with respect to each of these debts.  

Things to Know
Each time you apply for credit, your credit report is checked which can cause your score to drop slightly. So when you receive those junk mail “pre-approvals” don’t be tempted to apply simply because they are offered to you. Too many open credit cards, credit cards charged to the hilt, or 30+ days late payments can cause credit headaches. Judgments and collections will cause bigger problems and need to be paid before a mortgage lender will close a loan.  Please call us, we’re never too busy to offer guidance with your credit. There are often very simple solutions.

Now the Serious Stuff
It makes sense that mortgage foreclosures, bankruptcies and vehicle repossessions tend to give lenders pause. However, if enough years have passed and a clean credit history has replaced any “kisses of death”, lenders will take that into account.  

No Need for Hypochondria
People who tend to be very careful with credit often think that being a few days late on a utility bill is going to sink their credit scores into bad credit risk territory. Not so! Payments made after the next due date are considered 30 days late. However, you’re still better off paying your bills on time–who wants to pay credit card fees or risk a slow mail delivery?!  

Yearly Checkups
It’s a great idea to get a copy of your credit report yearly. Even when you know you’ve been careful with your payments sometimes the wrong information shows up on credit reports. A similar name or an incorrectly entered social security number can appear without your knowledge. You can challenge the error with the creditor, or with the credit reporting agency. Either way, it’s important to fix it as soon as possible. 

Lynette Hensley
Associate Broker

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Buying vs. Renting

April 22nd, 2010 | No Comments | Posted in Buyer's Corner, Real Estate Q&A

Picture2If you’re still renting because you don’t think you can afford to buy, try this:

Take your current rent and multiply that by 12 (months in a year). Then take that number and multiply that by 30 (number of years for a typical mortgage). If the result is greater than the average price of homes in your area, you can afford to buy!

By the way, the median home price in King County last year (2009) was $380,000. The median price in Snohomish County was $299,950.

When to Buy?

This is a GREAT time for buyers. Home prices are down, and interest rates are still at or near record lows. This makes now an affordable time to enter the market.

The Investment

Build up your equity. Don’t pay rent and help your landlord build up his equity. Homeowner tax advantages include interest and property tax deductions. Payments to principal put money back in your pocket. Money spent on rent is just gone.

The DreamHouse

Start small. Your first house may not be your dream home, but smaller houses typically appreciate considerably faster — about 20% – than larger ones. It’s an advantage to become a homeowner sooner rather than later.

Rent for Example of Savings Buy For
5% interest/30 year loan $350K
Loan (P&I Payments) $1879
Taxes & Insurance $325
$1500 Rent N/A
$1500 Monthly Payment $2204
Monthly Interest $1458
Property tax $275
Monthly deductible $1733
X.32% Tax rate X.32%
Monthly Tax savings $485
$1500 Monthly payments $2204
Less Tax savings $485
Less Principal reduction $421
$1500 Now Compare $1298

At your service!
Lynette Hensley
Associate Broker

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203K Loans Expand Possibilities

HammerRenovation and Remodeling loan programs can offer you some options when buying a home, particularly a home that needs updates or repairs where the seller is unable or unwilling to make the repairs before closing. There are so many bank owned properties on the market that are great deals, but banks don’t typically fix anything during the sale process. This has put a speedbump in more than one transaction in the recent past.

To overcome this obstacle, you might consider a renovation or rehab loan, otherwise known as a 203K loan. David Hatlen at Homestreet Bank offers four products:

  • FHA 203K
  • Fannie Mae
  • Portfolio Owner Occupant
  • Portfolio Investor

The easiest one to use, and the one that is used most often is the FHA 203K streamlined loan. This is what I’m going to cover in this post.

Here’s a brief explanation of how this works:

  • The cost of work must not exceed $35,000, and must be at least $5000
  • A final inspection is only required for repairs exceeding $15,000
  • Work must be completed by 6 months after closing
  • Changes can be for improved function and modernization
  • Health and safety issues can be included
  • Repair or replace plumbing, heating, AC and/or electrical
  • Roofing, gutters, downspouts may be included
  • Floor coverings
  • Energy conservation and weatherization
  • Handicapped accessibility
  • New kitchen appliances
  • Interior and exterior paint
  • Repair/replace or add exterior decks, patios, porches
  • Basement finishing and remodeling which does not involve structural repairs
  • Window and door replacements and exterior wall re-siding
  • Septic system and/or well repair or replacement

Here are a few interesting uses for a 203K you might not have thought about:

  • Use on 1-4 dwelling units
  • Convert a one unit dwelling to 2-3-4 units or vice versa
  • Convert non-residential to residential use
  • Move an existing home to another site
  • Place a detached garage or an ADU onto the site
  • and more….

Does this get your ideas goin’?

Here’s how it goes: You come to an agreement with the owner of the house you’d like to buy. You have the inspection and get all your bids (we can help with that) and put your bids together into a proposal for the 203K loan. Once they are approved the rest of the loan process is very similar to a regular sale. After closing all the work needs to be done within 6 months. Any unused money will be applied to the loan balance.  In a streamlined 203K you may also do some of the work yourself.

Contact us for more information or David Hatlen for inquiries

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Side Sewers and You

March 11th, 2010 | No Comments | Posted in Buyer's Corner, Real Estate Q&A, Seller's Forum

From Seattle Utilities: Good info for Homeowners

sidesewerHomeowners and building owners are responsible for maintaining and repairing this section of pipe that carries wastewater from your home or building’s plumbing system to the public sewer main (usually located under the street). As the property owner, you are responsible for replacing any sidewalks and roadway removed during the repair, potentially costing thousands of dollars. Maintenance is important. The primary problem associated with side sewers is sewer backups into homes or businesses. Some causes and solutions include:

• Tree root penetrating pipes, especially older ones made of clay. Rooter services
can unclog a side sewer.
• Fats, oils and grease improperly disposed of down drains also cause blockages.
Instead, they should be properly disposed of in a sealed container in your trash.

When there is a problem it is best to call a private company first, such as a rooter service or plumber, because the problem is likely in your private side sewer line and critical time may be wasted contacting the city. However, if sewage is coming into your home when you are not using water, you should call for a Seattle Public Utilities’ maintenance crew immediately at (206) 386-1800.

You can also learn more by visiting www.seattle.gov/util/sidesewer. Some Seattle residents may qualify for a low-interest loan from the Seattle Office of Housing’s HomeWise program to help fix their side sewer problem. For information about program guidelines or to request an application, email homewise@seattle.gov or call
(206) 684-0244.

Residents may qualify for a low-interest loan from the Seattle Office of Housing’s HomeWise program to help fix their side sewer problem. For information about program guidelines or to request an application, email (206) 684-0244.

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Buying Now VS Waiting ~ pro’s and con’s

March 11th, 2010 | No Comments | Posted in Buyer's Corner, Mortgage News, Real Estate Q&A

The chart below may look foreign to you. PLEASE contact me if you don’t understand–you need to fully understand this graph. I will be glad to explain in person, by phone, by email. Below is based on $180,000 loan amount –

  • If you bought today with a rate of 5% your payment would be $966 before taxes and insurance
  • If house values went down 10% and rates go back up to 6% (the average for 30 year fixed loans) the payment would be $971 before taxes and insurance.
  • If house values didn’t appreciate over next 12 months and rates go back up to 6%, the payment would be $1,079 before taxes and insurance.
  • If house does appreciate (which it will, appears market is stabilizing, especially in price range below 400k) and values go up 5% and rates go back up to 6% which is 30 yr fix average the payment would be $1,079 before taxes and insurance.

Bottom line…Historically low rates, Home prices at 2004/2005 levels, now is the time to buy.
Other items to consider:

  • $8,000 tax credit if you’re in contract by April 30th and closed by June 30th. You can amend your 2009 tax return and get an $8,000 check back.
  • Standard interest write off – Check with your CPA for exact amount. It’s based on your income / estimated interest paid on the $180k loan amount you should receive $2,000 to $3,000 back at end of year.
  • If you’re a 1st time buyer you qualify for an additional tax credit “MCC program“, this is offered through WSHFC – again, based on your income / sale price this will be $2,000 to $2,500
  • Down payment assistance available up to $10,000
  • No house payment for 30 to 59 days

Once you take into account the tax savings $4,000 to $5,500, your actual payment once you receive the refund is $333 to $458 less per month. Granted you don’t receive this until the beginning of next year, unless you amend your W4 withholding you can start receiving right away.

 

Interest Rate Vs. Price Changes  
 
Original Loan $ 180,000.00          
             
Price Change

0%

-5%

-10%

-15%

-20%

 
Loan Amount $ 180,000.00 $ 171,000.00 $ 162,000.00 $ 153,000.00 $ 144,000.00  
             
Interest Rate Monthly Payment          

4.000%

$859.35

$816.38

$773.41

$730.45

$687.48

 

4.500%

$912.03

$866.43

$820.83

$775.23

$729.63

 

5.000%

$966.28

$917.96

$869.65

$821.34

$773.02

 

5.500%

$1,022.02

$970.92

$919.82

$868.72

$817.62

 

6.000%

$1,079.19

$1,025.23

$971.27

$917.31

$863.35

 

6.500%

$1,137.72

$1,080.84

$1,023.95

$967.06

$910.18

 

7.000%

$1,197.54

$1,137.67

$1,077.79

$1,017.91

$958.04

 

7.500%

$1,258.59

$1,195.66

$1,132.73

$1,069.80

$1,006.87

 

8.000%

$1,320.78

$1,254.74

$1,188.70

$1,122.66

$1,056.62

 

( *this is for illustrations purposes only, rates and payments subject to change…had to put the disclaimer in there;)
Kudos to K. Carlson of ARG for the compilation

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When the Feds Stop Buying Mortgage Backed Securities

Why should you care about this?  Well, the fact is that the government has been buying these loans that were all bundled into investments that turned out to be poor risks. This influx of $1.25 trillion in government $$ has propped up the housing market, kept banks solvent and allowed market interest rates to remain low, between 5% and 5.25% for much of 2009. By about the second quarter of 2010, this activity is scheduled to discontinue.

So we do expect that the government will indeed close the program down in an attempt to return to more normal market conditions.  This is what they are telling us.  This will leave private investors to pick up the slack, which they may or may not do at a rate necessary to keep interest rates low.

Brian O’Connell of BankingMyWay.com says,

“If the economy doesn’t cooperate, and sends private investors into the mortgage marketplace to plug the gap (a good bet right now), then look for interest rates to rise next March. [2010]

The Fed may not do deadlines, but it’s not above firing a warning shot to the American consumer. If you want to buy a home, do it in the next three or four months. After all, the difference in monthly mortgage payments of 5% or 6% can be measured in tens of thousands of dollars over the life of the loan.”

Brian’s right. Every 1%  of interest rate increases your costs over the life of the loan, and it also reduces the price of the house you can qualify to buy. For instance if you qualify to buy a $400,000 home now at 5%, you will qualify for $358,000 at 6%.

Maximum buying power comes with low rates. We have the triple benefit of low interest rates and low prices right now, (some REO’s are ridiculously low) and government tax credits. It really is an incredibly inexpensive moment to buy.

Lynette Hensley
Associate Broker

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10 things buyers want in a home

February 1st, 2010 | No Comments | Posted in Buyer's Corner

29059308_Kitchen 3 (1 of 1)What is it that new home buyers are looking for in their homes?  Here’s a list of 10 things from an annual survey about what buyers want in a home:

  1. Large kitchens with islands
  2. Energy efficiency, including energy-efficient appliances, super insulation, and high-efficiency windows.
  3. Home offices
  4. Main-floor master suite
  5. Outdoor living space
  6. Ceiling fans
  7. Soaking tub in the master suite and/or an oversize shower with a seating area
  8. Stone and brick exteriors rather than stucco or vinyl
  9. Community walking paths and playgrounds
  10. Two-car garages, but three-car garages are even more desirable

From a survey by Avid Ratings via Realtor Magazine

Lynette Hensley
Associate Broker

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Open House coming up on Saturday, January 30, 2010

Open House coming up on Saturday, January 30, 2010 from 1-4PM. 11908 & 11904 89th Place, Kirkland, WA 98034.
 
Rainier View from Roof Top Deck of Legendary Homes

Rainier View from Roof Top Deck of Legendary Homes

We were holding open house a week or so ago, and the sky was just right to take these photos of Mt. Rainier from the roof top deck. The mountain can be seen from at least three levels of the home. Hm, I’ll have to check out the lower level when we are there on Saturday.

Come visit!  They are stellar homes, and the views are fabulous!

Feel free to call with questions

Lynette Hensley
Associate Broker
425 772 7231

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Homebuyer Tax Credit

January 24th, 2010 | No Comments | Posted in Buyer's Corner, Real Estate Q&A, Seller's Forum

This is one of those things you should take advantage of if you were going to buy a house anyway sometime soon.

First time homebuyers:

  • The $8000 tax credit is for first time homebuyers only. For the tax credit program, the IRS defines a first time home buyer as someone who has not owned a principal residence during the three-year period prior to the purchase.
  • The tax credit does not have to be repaid.
  • The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8000.
  • The tax credit applies only to homes priced at $800,000 or less.

Repeat Home Buyers:

  • To be eligible to claim the tax credit, buyers must have owned and lived in their home for five consecutive years out of the last eight years.
  • The tax credit does not have to be repaid.
  • The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $6500.
  • The tax credit applies only to homes priced $800,000 or less.

LarryandLynetteThis info is not intended as legal or tax advice. I just wanted you to know the basics to see if you might be qualified and to find out more. Here is a link to the current info: Tax Credit

Let me know if I can help in any way!

Lynette Hensley
Associate Broker

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Homebuyer Credit Extended

Tax Credit extended and expanded for first time home buyer and existing home owner tax credit through April 30, 2010 

 Friday, November 6th President Obama signed the legislation.   

 The bill passed the house on a 403-0 vote and the senate on a 98-0 vote on Wednesday.

 KEY CHANGES

~   Written binding contract signed by April 30, 2010 / Close by July 1, 2010
~   Income limit increase:  Single $125,000 / Married $225,000
  Cost of home cannot exceed $800,000

~   Existing homeowner credit eligibility of $6,500 tax credit.  Must have owned principal home for 5 of the last 8 years  (& be purchasing a new home).    

Link to Chart for more detailed information and  FAQ’s .  Great info. 

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