Category Archives: mortgage

Home Buying Class

This Thursday, April 26th, Julia Eaton of Axia Home Loans, and I will be teaching a class on learning to buy a home. Topics include: steps in the home purchase process; understanding today’s real estate market; options for financing your purchase including how to obtain a mortgage; and why it might be in your best interest to buy sooner rather than later.

Thursday, April 26, 2018, 6:00-8:00pm at the Phinney Neighborhood Association, Blue Building, Room 3

To reserve your space or with questions, please email Jamie@JamieFlaxman.com or call/text 206-790-0081.

Don’t Listen to the Media!

“Is the housing market ready for a crash?”

“Will I ever be able to afford a house?”

“Zillow says my house is worth $________.”

These are headlines that both the Seattle and national media are spreading. Here’s the reality:

Housing prices are appreciating at record rates. However, if we go back to 2007, when the market was at it’s peak before the crash, prices have increased 52% – that comes out to 5% a year appreciation over the 10 years.

Buying a home is within reach for many. The media often says it’s hard to get a mortgage, but that’s not the reality. The two most important factors for getting a mortgage are your credit score and the amount of debt you have. Only a lender can tell you if you qualify or not.

The “Zestimate” from Zillow is not an accurate representation of what your home will sell for. Zillow is an automated valuation, there are other companies who provide similar numbers. Because it’s automated, the algorithm has no idea of the special features of a home, the quality of the finishes or view, and any updates that have been done without permits. Even Zillow admits that their numbers are not accurate – the last time I looked Zillow said their Zestimates typically are off 10-20%.

So didn’t listen to the media! Talk to a real estate professional to get your questions answered. You can reach me at 206-790-0081 or mailto:jamie@jamieflaxman.com.

 

New Changes Coming to Buying and Selling Process – What You Need to Know

The Consumer Financial Protection Bureau (CFPB) is a Congress-established agency with regulatory control over federal consumer protection laws. Their goal is to make rules in our various financial markets more effective and consistent to protect consumers. Recently the CFPB created some new rules aimed at helping buyers and sellers have a better understanding of the borrowing process. Below are some of the changes you can expect to see beginning August 1, 2015.

Buyers buying their home with a mortgage will receive a standardized Loan Estimate document from the lender which outlines variables such as the type of loan, payment schedule, interest rate for the mortgage, information about prepayment penalties and other terms of the transaction (such as balloon payments or mortgage insurance), costs to close the loan, and State Law provisions. This document is provided to the loan applicant no more than three days after the buyer submits a loan application.

In addition, Buyers will receive a Closing Disclosure no less than three days before the loan is scheduled to close which reiterates the above variables.

The mandatory three day review period for both of these documents was put in place to allow borrowers the time they need to read through them and have a thorough understanding of exactly what they are committing to. Furthermore, these documents include instructions to the borrower to compare the Loan Estimate to the Closing Disclosure verifying the two documents have the consistent information.

The biggest impact of these changes is that the lender will need more time to process your loan and turn documents over to escrow. At a minimum, it is likely buyers will need 3 more days, but more likely it will be 5-10 days.

The forms themselves have been streamlined and are easier to understand. The interest rate, monthly payments, and the total closing costs are clearly indicated on the first page of the documents for easy reference and to make it easier to compare loan products with different lenders.

Both the Loan Estimate and Closing Disclosure are used for closed-end mortgages, meaning they are not used for home equity lines of credit, reverse mortgages, or for any loan not attached to land. Furthermore, these rules do not apply to creditors who produce fewer than five loans per year.

These new policies will make the process easier and more transparent to borrowers. If you are buying or selling a home this summer and expect the contract for purchase and sale to come in around the end of July, remember that these policies may impact your transaction as lenders and closers navigate through the new documents and timelines. I have attended several workshops on the changes and would be happy to answer any questions you may have. Please give me a call: (206) 790-0081 or send an email to :jamie@jamieflaxman.com.

Sources:

http://www.consumerfinance.gov/

http://files.consumerfinance.gov/f/201503_cfpb_tila-respa-integrated-disclosure-guide-to-the-loan-estimate-and-closing.pdf

http://files.consumerfinance.gov/f/201506_cfpb_factsheet_will-the-new-mortgage-disclosures-delay-my-closing.pdf

 

Market Update

I have been so busy over the past week that I barely have time to write this post. Any question about how hot the market is? Here’s a story for you. Yesterday I submitted an offer on behalf of a client for a wonderful Phinney/Greenwood home. There were 9 offers including ours, and I believe all but one conducted pre-inspections. As one of the other brokers submitting an offer said, it was going to be a “blood bath.” Many of the offers had escalation clauses – and boy did it escalate. I can’t disclose how high it went until after the transaction closes, but my buyer did not have the highest – we came in 3rd. The offer that had the highest dollar amount had weak financing and wasn’t willing to do anything to change the financing situation; the next offer was only a few thousand more than ours but also had weak financing. MY CLIENT GOT THE HOUSE because she had strong financing (30% down and the lender talked with the listing agent) and my buyer was willing to come up a few thousand dollars more.

The bottom line. Financing is as important as price. And who the lender is may make a difference. My client’s lender was willing to go above and beyond to advocate for the client. On-line lenders and big banks often won’t do this. With them, you’re just one of hundreds of mortgages – personal relationships make a difference.

The bottom line. The market is still hot. A colleague had 11 offers on another listing. Inventory is low demand is still high.

Contact me at jamie@jamieflaxman.com or 206-790-0081 to discuss putting your home on the market or buying a home.

 

FICO Credit Score Changes and Mortgages

If you are considering a move and will be applying for a mortgage, you may be biting your nails wondering what your FICO (Fair Isaac Corp.) score means for your ability to borrow. Your credit score determines if you are given preferred interest rates, will have to pay more due to missed payments or a high debt to income ratio, or are able to qualify for a loan at all. The FICO credit score ranges between 300-850 and weighs payment history, amounts owed, length of credit history, new credit, and types of credit used according to myFICO.com.

Shockingly, one-third of Americans struggle to pay their medical bills each month and medical is the number one leading cause of bankruptcy in this country according to Forbes. Medical bills have affected the credit scores of millions. In fact, Forbes indicates 64 million Experian credit bureau consumers have medical collection on their credit report which impacts their credit score and their ability to get a loan. According to Anthony Sprauve, FICO’s director of public relations, 50% of all unpaid collection debt is medical debt.

Under the new FICO 9 credit scoring formula which is set to be implemented this fall, the impact of medical debt will be reduced and the average credit score will increase a median 25 points per person with medical debt but who are otherwise financially responsible with their bills. Additionally, medical debt that has been paid in full will not affect the credit score negatively at all.

The rationale for this change is that having one-time medical debt is much different than chronic credit card debt. However, more than 11 million Americans use credit cards to take care of medical debt each year. Under the new FICO rules, doing that would hurt their credit more than if they made a payment plan directly with the medical facility or medical collection agency.

Another change in the FICO scoring model is that past, closed debt associated with collection companies will also have a lesser-impact.

Steve Brown, President of the National Association of REALTORS®, welcomed the change, indicating it will “make a real difference in the lives of millions of Americans, who have been shut out of the housing market or forced to pay higher mortgage interest rates…since the housing crash, overly restrictive lending has been the greatest obstacle to homeownership.”

FICO 9 will change the credit scores of many.  While these changes seem like a step in the right direction, Fannie Mae, Freddie Mac, and a host of other lenders are still using older FICO scoring methods and have been slow to adopt changes in credit-scoring conventions. Therefore, although you may benefit from a better credit score under the new FICO 9 formula, your lender may or may not take the new formula into consideration when you apply for a loan. Additionally, some lenders already discount medical debt when determining someone’s creditworthiness.

If you have questions or concerns about your credit score, the time to talk with a financial professional who can get you on the right track to homeownership is now. I have lenders I can refer you to. Please give me a call: (206) 790-0081 or send an email to jamie@jamieflaxman.com.

Sources:

http://www.realtor.org/news-releases/2014/08/new-credit-scoring-calculation-will-improve-access-to-homeownership-say-realtors

http://www.forbes.com/sites/christinalamontagne/2014/08/26/medical-debts-will-soon-weigh-less-on-your-credit-score-but-theyre-still-a-problem/

http://www.housingwire.com/blogs/1-rewired/post/31236-adopting-fico-9-could-increase-first-time-homeownership

http://www.foxbusiness.com/personal-finance/2014/09/10/what-fico-new-credit-score-formula-means-for-home-buyers/

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

 

 

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New Website, Same Great Content

I haven’t written a post in a few weeks, as I’ve been in transition to a new website and blog host. The new site is up; if you’re reading this, you’re on www.jamieflaxman.com. I made the switch to a WordPress site as I feel it’s cleaner, easier to read and navigate, integrates my blog better, and it has a simpler search tool.

Some things you can now do on my website:

If there’s something you’d like to see me include on the site, let me know. Future plans  include a page of downloadable resources, such as referrals to mortgage brokers and sample purchase and sale contracts. I’d also love to have your feedback on the new site.

There Still Are Affordable Homes Out There

People say it’s expensive to buy a home in Seattle. For many that is the case. But there still are affordable homes out there. Case in point, this Saturday (3/22) I’ll be holding open a rambler in Wedgwood that’s listed for $349,000.

The details – 3 bedrooms, 1 bath, 1,030 sq. ft, and a 6,658 lot. With that much land, you have a fabulous place for kids playing outside or to enlarge the home at a later time. And don’t let me forget, it’s got a 2-car garage with a lot of storage space. Currently the schools for this address are Wedgwood Elementary, Eckstein Middle, and Nathan Hale high, all high demand schools (but do recognize that school boundaries may change year to year).
Now you say, $349,000, is that really affordable. Let’s look at some numbers:
Down Payment (20%) = $69,800
4.5% 30 year loan = monthly payment of $1419 (you will need to add property taxes and homeowners insurance to that number for a monthly payment most likely less than $1,800)
Don’t have 20% down, there are other options. You’ll need to add mortgage insurance in as well. And if you have a combined household income of less than $97,000 with a credit score of at least 620, there are loan options that include down payment assistance of up to 4% of the loan (about $14,000) or there’s even a program with the City of Seattle that will provide down payment assistance up to $45,000.
On this home, offers will be looked at early next week (and I do expect that there will be multiple offers), so contact me ASAP if you’d like a private showing or more information on mortgages. Or please stop by on Saturday and let me know you learned about the open house from my blog.

Buyer Tips for Winning a Multiple Offer

In our fast-paced market with low inventory, it is inevitable that two buyers will see the same property, like the same property, and decide to make an offer to purchase at the same time, oftentimes within days – or hours – of a property coming on the market. This scenario is called a “multiple offer” situation.
Typically a buyer will quickly learn if his or her offer will be competing against others. If you are in this situation, there are several things you can do or include in your offer to make it more appealing to the seller. You might be surprised to learn the best offer is not always the highest offer!
Below are seven tips for buyers hoping to win a multiple offer situation:
 
Money talks  for many sellers it is all about the money.  It is your agent’s responsibility to educate you quickly on the market and where market values are so you can feel good about making a strong offer. In many cases the offer will be above “full price” (the price the property is listed at).  Be smart about how you make that offer and make sure your offer is as “clean” as possible.  Typically home purchase agreements can include “contingencies” (provisions in the contract which specify the contract would be voiced when certain events do or do not occur) which may include: financing (if the buyer cannot obtain a loan), inspection (if the buyer does not feel he or she can handle the inspection results such as when major repairs are needed), or even the sale of the buyer’s current home.  Limit as many conditions as you possibly can so your offer is cleaner than the competition’s.


Approval letter from lender – take the time to get pre-approved before you make an offer so the seller will be more comfortable in your ability to obtain a loan.

Pre-inspection– find out if you can do a pre-inspection (an inspection which occurs before an offer is made). This will enable you make an offer that does not have an inspection contingency.  However, this can be a gamble as the inspection will cost money and this is not a guarantee that your offer will be accepted.

Money down – when competing against other offers, consider increasing your down payment. This settles most seller concerns about your financial viability.

Earnest money – putting as much of your down payment into your earnest money deposit makes a very strong impression.  Sellers like high earnest money amounts because they feel that this ensures you won’t break the contract because you will be worried about losing this money.

Reports/disclosure – have your agent find out everything they can about the property and get copies of all reports and the seller disclosure up front.  Approve these reports and simplify the offer. 
   
Personal letter – if you really want the home, write the seller a letter indicating why their particular home is a good fit for your needs. You would be surprised at how many multiple offer situations are decided based on the letters that buyers have presented to sellers.

 

 

A combination of the above seven ideas can give you the edge you need when competing in a multiple offer situation. If you have been thinking it is time to make a move, give me a call at 206-790-0081 or send an email to jamieflaxman@cbbain.com. Together we can strategize how you can make a strong offer and secure yourself in the home you have been waiting for.