• To begin your search for the perfect home or to sell your home in the Issaquah Highlands area, start by calling Rebecca Kuno at (206) 686-1661.
• 
  

• Recent Posts

  • Central Market is Coming to Issaquah Highlands!
  • Critter Free Crawl Spaces
  • Counter This! What Not to Do as a Seller in Today’s Market
  • Beautiful Bothell Home For Sale - Status = Contingent. What Does That Mean to Other Buyers and Agents?
  • Income Qualifications for Affordable Housing in Issaquah

• Recent Comments

  • tokio hentai necko on The Fed Cuts Fund Rate and Interest Rates Creep Higher!
  • hentai jungle of on Issaquah Highlands Has Affordable Housing
  • Jules Carney on Beautiful Bothell Home For Sale - Status = Contingent. What Does That Mean to Other Buyers and Agents?
  • rebecca on Welcome to Issaquah Highlands 9 Bar Espresso! and soon… World Pies.
  • rebecca on Issaquah Highlands Gets Some Healthy News…maybe…

• Archives

  Select Month July 2008 May 2008 February 2008 January 2008 December 2007 November 2007 October 2007 September 2007 August 2007 July 2007 June 2007 May 2007 April 2007 March 2007

It’s been an interesting ride with the Federal Reserve and our market place hasn’t it? Most people are asking me what the heck is happening and why aren’t the rates rolling down like we thought it would. In a nut shell, the Federal Funds Rate does NOT impact the 30 year interest rate. It only impacts HELOC’s (Home Equity Lines of Credit) and credit cards. Last week we had a 5% interest rate available to us on the 30 year fixed and, in a blink of an eye, it was gone. It’s crazy to say the least.

Economic notes, new jobs created numbers were up per the “speculated” numbers. As further numbers come in, the actual numbers may go down slightly. We are still doing good America!

Fourth quarter GDP report came in lower than expectations significantly. The GDP (Gross Domestic Products) grew only 2.2% during 2007, the slowest growth rate since the economy was coming out of a brief recession in 2002.

Now we know that the Fed lowered the fund rate by 50bp ( bp = basis points), what could happen next? Well remember when the Fed cuts the Fund rate, typically rates react the opposite. It creates fears of inflation. Remember fixed mortgage rates are directly affected by inflation, because a fixed rate mortgage provides the investor with a fixed rate of return for a long period of time. As inflation increases, the buying power of the fixed return is eroded and the dollar goes down.

Here is some history to react to, supplied by Barry Habib on his Mortgage Market Guide:

The last time the Fed had a long cutting cycle was back in 2001. The Fed cut eleven times in eleven months, and eight of those cuts were by 50bp, for a total of a 4.75% drop in the Fed Funds Rate. But mortgage rates were actually higher throughout this drastic cutting cycle, because inflation ticked higher. Let’s look at more recent history, and as we have pointed to previously: the Fed cut by 50bp on September 18, 2007, and after prices enjoyed a move higher that afternoon, Mortgage Bonds lost 94bp over the next two days. On October 31st, the Fed lowered by 25bp…and over the next five trading days, Mortgage Bonds lost 78bp. On December 11th, the Fed lowered by another 25bp, and over the next two days, Mortgage Bonds lost 64bp. Most recently - the surprise 75bp cut by the Fed cost us about 150bp on our rate sheets over the next two days.

What is the lesson learned by this? If you are sitting on the fence, you need to ask yourself why? What do you have to gain by sitting there? Interest rates are moving up at least again today. Could you be missing out on some great opportunities? Only you can answer that for you and your personal situation. I do think people need to start putting themselves in a position to take advantage of what is happening out there though.

Has anyone been paying attention to what the interest rate market has been doing lately?  The 30 year conventional loan which allows for amounts up as high as $417K has gone as low as 5.25% today!  We are almost at the all time low here?  This is some interesting times going on don’t you think?  If you aren’t ready to refinance or purchase your new home now, when will you be? 

Regardless of what is happening in the economy right now, you MUST take a look at your own finances and see if this is the time for you to take advantage of these incredible rates.  Do anything you can to consolidate your 2^nd mortgages or credit card obligations into these rates.  If you’ve got the equity to do so this is your time. 

Even jumbo rates have started to come down again.  Those are loan amounts over $417.  The scare of the summer when lenders were uncomfortable lending in those higher loan amounts are starting to calm their nerves and I’ve seen those rates as low 6.5% for the 30 year fixed loan.

I know it is scary out there with our questionable economy.  But don’t be afraid to make things better in your own finances.  As I said earlier this year, my goal is to give everyone positive information to make their lives better.  Here is one way it may work for you!  Call us to see if this is a possibility for you and your family!

Happy New Years!  It should a year of renewal.  I have hopes this year for our economy to finally get to the bottom of things and start moving on.  The whole daily surprise that the “housing” sectors numbers are low is getting old!  It is not that I want our economy to go into recession; it is not that I want any of our fellow employees to have trouble holding their jobs or getting new jobs.  I just want our news industry to quit hyping on this like it is a surprise.  Everyone expected it sooner or later, it just here now.  The facts are that interest rates are spectacular right now.  The fact is our national employment is still wonderful and the fact that we don’t know that real estate is cyclical is NOT a surprise. 

My goal this year is to look at the positives.  Homeowners are recognizing that home values are changing.  That there are pockets of appreciation but when they put their homes up for sale they are now listening to the real estate professionals and listing for “true” values instead of inflated values.  That there are many terrific bargains to be had and exceptional interest rates!  I appreciate that the lending sector has decided to go back to normal underwriting guidelines by having buyers do their due diligence in saving their money for down payments, buy within their means and show they can repay their debt with a solid credit history.  These are all good things and things I want to be a part of. 

I believe in American dream of owning a home and working for it.  I believe in hard work getting there and the satisfaction of achieving this dream!

My goal this year is to pass along all the good information that our country has available to us all.  We can work if we want to, we can save money in our stock markets and feel fairly safe and we are allowed to travel freely from state to state and spend our well earned money on the economy. 

My wish to you all this year is your PHYSICAL HEALTH, YOUR MENTAL HEALTH AND YOUR FINANCIAL HEALTH.  I also wish to you that you achieve your goals and dreams you’ve set for yourself this year.   Happy 2008

Yours truly,

Barb Paetzold

CTX Mortgage

425 820-0601 direct

800 591-5626 toll

barb.paetzold@ctxmort.com

206 217-0591 fax

Congress has approved or renewed several tax relief measures to keep the dream of home ownership alive for both new home buyers and existing home owners this week. One of the biggest relief’s is the extension of Mortgage Insurance (”MI”) tax deductibility.

The legislation itself is no different than what was passed last year. MI premiums are still fully deductible for taxpayers earning up to $100,000, and partially deductible for those with incomes between $100,000 and $109,000. The only difference is that the deduction now applies to policies written through the 2010 calendar year.

Extending MI tax deductibility is a crucial move for many reasons:

• Risky low down payment loans are no longer a viable option and are being replaced by more secure loans with mortgage insurance.
• Mortgage insurance is not only safe and predictable, but it’s also cancelable and packed with several features borrowers want today.
• Consumers today have an increased understanding of how mortgage insurance can benefit them, and the extension of MI Tax Deductibility will help continue that trend.

If you have any questions or would like to better understand if Mortgage Insurance is right for you feel free to drop me an email or give me a call.

People often ask me what do I think of the “sub Prime” lending industry and the “mess” that it has caused recently.

I think that the need to help people to get into a home is always important, however, I like to encourage people who want to buy to purchase within their own budgets. The sub-prime had and still does have a place in the home buying industry. It has been an interesting line to walk on as a lender. You have clients that really need it and can afford it. They understand the upsides and the pitfalls of taking out higher risk mortgages. If a home buyer understands these risks, have the financial resources when and if the products change then it can be a GREAT thing. It is the many clients who purchase without the full knowledge of how these products can touch their lives. Those clients who do not have the financial resources to hold them through the interest hikes.

I would like to say that IT IS UP TO THE LENDER to explain this process THOUROUGHLY and then the borrower needs to be responsible for the loans they sign up for. There are still 100% loans with GREAT rates for the buyers that can afford it and have the financial resources to make it work. There is also the FHA loan which requires as little as 3%. There is even talk that FHA may restructure the down payment into lower restrictions but with higher interest rates to absorb the bigger risk. FHA also allows for some past credit blemishes. Still a great program! The 2nd mortgage that helps to avoid the Private Mortgage Insurance is getting harder to get. Many lenders are requiring higher credit scores and larger down payments. Private Mortgage Insurance (PMI) may become more prevalent again. It is now tax deductible for many buyers. You will need to check with your lender if you are one of them. I love the lending market now. It allows for borrowers to once again to plan when and if they want to buy and not pressure them into purchasing now because the market may be buying them out of a qualifying position!

How do I feel about what the governments is doing for those clients who need to be bailed out? Well that is a whole other subject. If you really want to talk about that one, you will need to reply and ask me about my opinion

***Cartoon provided by Maine Cartoons***

Do you have little or no credit lines or limited credit period? If you have a friend or a relative with great credit, become an authorized user on their revolving credit cards. Become an authorized user on a spouse or parents account. The line will show the history of that account on your credit report.

How should you select which card will improve your FICO score the most? Here are the most important criteria:

• Revolving account
• At least 5 years old (the older, the better)
• High or significantly large available credit
• Low balance carried (preferably paid down to $0 every month)
• Perfect payment history.

Current Rates

30 Year Fixed: 5.625% (APR 5.752%) - Lower

30 Year Fixed with 10 Year Interest Only: 6.25% (APR 6.363%) - Unchanged

40 Year Fixed: 6.50% (APR 6.615%) - Higher

5/1 ARM (2/2/6 caps): 5.50% (APR 6.530%) - Lower

5/1 ARM 10 Year Interest Only Payments: 5.625% (APR 6.834%) - Unchanged

FHA/VA 30 Year Fixed: 6.00% (APR 6.467) - Lower

JUMBO (Non-Conforming) Rates

30 Year Fixed: 6.625% (APR 6.752%) - Lower

30 Year Fixed with 10 Year Interest Only Payment: 6.75% (APR 6.867%) - Lower

5/1 ARM: 6.750% (APR 6.878%) - Higher

5/1 ARM Interest Only: 6.875% (APR 6.915) - Higher

Conforming loan limits are currently up to $417,000 and Jumbo loan limits are $417,001-$650,000. Quotes above are based on 30 day pricing with a 1% loan fee and a credit score of 680 or better. Quotes are also based on full loan documentation files and a minimum of 5% down. If you are planning on putting less than 20% down you will need Private Mortgage Insurance or a second mortgage to cover the difference.

The programs above are only a sample of what is available. Rates were published Monday, December 3, 2007 @ 10am and are subject to change.

For further information on any of these programs or additional programs or questions about improving your credit score, please feel free to email me or give me a call on my direct line (425) 820-0601 or my mobile.

Many buyers have been pondering the decision of whether or not to buy a home over the past few months. It’s no wonder - it has been a scary market out there. With so much news focused on the turmoil caused by the increase in mortgage defaults, foreclosures and mortgage houses closing their doors, it seems like it is all doom and gloom. The reality though, is that it is not doom and gloom at all. In my opinion, if buyers continue to sit on the fence, they may miss out on some opportunities that currently exist in the market.

Interest rates are still historically low. Going back the last 30 years, a 30 year fixed still is averaging around 9.4% or about 3.4% higher than where we are sitting at today. What has changed is the amount of documentation needed to get those loans. With the right loan officer you can be guided through the increased documentation requirements.

Along with the historically low rates, you can still get FHA assistance with down payments. While, most down payment assistance programs were shut down on October 31, 2007, non-profit group, Nehemiah, received a six month extension.

If low interest rates and down payment assistance programs aren’t opportunity enough, how does being in a very strong position at the negotiating table sound?While most sellers aren’t considering ridiculously low offers, they are considering more concessions than they have in the past. Sellers are making these concessions because there is currently a surplus of inventory available for buyers to choose from. In fact some buyers are so confident in their negotiating position, that they made five offers at the same time just to see which offer “stuck”. In that situation, it was the seller that was willing to give the most that “won”. That said, many buyers are in a good position to save thousands of dollars on the purchase price or their closing costs (by having the seller pay them). This can be very helpful as it can reduce your mortgage and/or conserves cash, reserving extra monies for important things like furnishing a new home.

So if you have been thinking about taking the plunge and want to take advantage of the wonderful opportunities currently available to buyers, my suggestion is to stop sitting on the fence and start exploring some of the opportunities that exist.

Previously, a friend reached out to me with some concerns about buying real estate given the current state of the sub-prime lending market. It is a common concern that I hear being spoken about around the water cooler. Part 2 in this series covers what will happen to the sub-prime lending market; specifically if it will go “belly-up”.

Missed Part 1?

So let’s refresh…

Question: What are your thoughts on the sub-prime market going belly up?

Question Restated: Predict whether or not an entire segment of the lending industry goes away (and takes thousands of jobs with it).

Answer: It won’t completely.

So what are my real thoughts?

This is a hard question to answer in some respects, because it depends on what one means by “belly-up”. And even more-so, how you define sub-prime. Certainly the sub-prime market is going to look and feel dramatically different than it has in the past few years, but based on what I am hearing, there will still be options for buyers out there that can’t afford to put 20% or even 10% down.

A few years ago, the prevalence of FHA loans was much higher, but I haven’t had a Buyer with an FHA loan in over 3 years. With FHA, there are some wonderful programs out there that use adown payment assistance program that allows the seller to contribute to the buyer’s down payment. With the recent shake-up of the sub-prime market, I wouldn’t be surprised if the use of these programs becomes more prevalent again, but without a doubt, these loans will be under more scrutiny during the approval process.

For those buyers that are not able to come up with a 20% down payment, a new benefit has come forth - tax deductions for mortgage insurance. One of the many reasons 100% financing became so popular was that it provided a way to eliminate mortgage insurance . This was a huge benefit to a buyer/borrower because the interest on the second mortgage was tax deductible, while there was no tax deduction with mortgage insurance. There are limitations to this tax deduction however; you have an income cap of $100,000.00. In some parts of the country, this is still a substantial income, but here in the NW, and specifically in Issaquah where the average household income is $139,204.00, that is not so much.

Overall I think that there will always be some options out there for those who want to pursue the dream of home ownership, the money is just not going to flow as “fast and free” as it has in recent years.

Next up…my thoughts on how this shake up will or won’t effect the Seattle market.

Of course it is…and it isn’t. Hmmm…

I recently had a friend email me and ask my opinion of what is going on in our local marketplace and whether I would feel comfortable buying right now.

Specifically they asked:

• What are your thoughts on the sub-prime market going belly up?
• Do you think Seattle is insulated enough (real estate wise) to not be affected?
• Do you think the sub prime mess will trickle into our economy and cause a big recession?
• Would you advise against buying right now especially with a 5 yr I/O mortgage?

First off, WOW, that’s a lot to cover. Let me see if I have this straight.

1. Predict whether or not an entire segment of the lending industry goes away (and takes thousands of jobs with it).
2. Predict the effect of an event, that may or may not happen, on the Seattle real estate market.
3. Predict the effect of an event, that may or may not happen, on the Seattle economy.
4. Advise someone on the viability of purchasing a home using an Interest Only loan product with no knowledge of their financial situation.

Here is my short answer:

1. It won’t completely.
2. If I were a betting person, it won’t effect it in a meaningful way.
3. See Response #2
4. Do I look like a mortgage broker?

Obviously I gave them some more color than that, but I will save that for another post…or four.

Subscribe

Frequent Contributors

Rebecca Kuno
Realtor & ASP
(206) 686-1661
Post Archive | RSS Feed

Barb Paetzold
Mortgage Expert
(425) 820-0601
Post Archive | RSS Feed

• Links

  • Issaquah Highlands Community Forum
  • My Business Website
  • My LinkedIn Profile
  • Property Search

• Categories

  Select Category Blog Blogging Buyers Events Household Tips Issaquah Issaquah Highlands Lending Misc Mortgage Update Other Development Parks Real Estate Restaurants Retail Development Sammamish Sellers Trails Weather