Brian Leavitt, REALTOR®

Congressional action raises interest rates..

If you are thinking of a refinance or for that matter a home purchase, now is the time.

Conforming prices will increase based on recent Congressional action. Freddie Mac and Fannie Mae are increasing their guarantee fee effective with April settlements which will
worsen pricing. In order for a loan to meet the April settlement requirement it must fund prior to February 29th 2012.

The guarantee fee increase will worsen prices up to 80 basis points (8/10 of 1%) depending upon the note rate. Some lenders are staggering the increase based upon when the loan is locked in an effort to offer lower rates to consumers in the market for as long as possible.

If you are considering a refinance or purchase do it now if you can . Although interest rates remain at record lows there's no telling how long they will remain low and with this announcement we know that the cost of obtaining financing will increase.

Please note that the guarantee fee increase does not impact government loans.
For more details on this and any other financing options please call Brian Leavitt at Northstone Mortgage.

The Top 10 myths and misunderstandings about refinancing in today’s market..

1. It is just too hard to get a loan. The fact is for some time lending guidelines
   were just too easy. Today's guidelines have moved to a place that really does make sense. Qualified borrowers are finding the process to be reasonable and streamlined. The restrictions that have been put in to place are good for borrowers and for the banks making the loans.
2. I'm waiting for rates to go down. Right now rates are the lowest that they have
   ever been. Although it is possible rates could go down more it is unlikely. The Federal Reserve has indicated that they will be holding rates down for a period of time in order to help stimulate the economy but today's low rates are not going to last forever.
3. Since home values have dropped my loan would be above 80% so I would have mortgage insurance. Many borrowers qualify under the new HARP refinance program. Under HARP guidelines if you do not have mortgage insurance now you would not have it with the new loan. With rates now under 4% it is an amazing time to refi.
4. My credit score is just too low. Your credit score is not the only criteria
   the lender looks at. Often there are compensating factors that can mitigate a low score. For owner occupied homes refinances are available with scores as low as 620.
5. A refinance is just not worth the expense. Maybe true, maybe not. It is a simple calculation to determine the “recapture” time for the refinance. If your payment
   goes down $200 per month and the cost is $2,000 then $2,000 (cost) divided by
   $200 (monthly savings) equals ten months for recapture. If you plan on owning the home more than 10 months then it makes sense. Right now Northstone Mortgage is closing refinance loans with costs averaging in the range of $2,000 including all closing costs. *
6. My debt to income ratio is too high so I think it is likely I won’t qualify. Again
   this is a case by case decision taking into account multiple factors. I am seeing some high debt to income ratio loans get approved but when it makes sense. For example a borrower who is current on all of their obligations and having their monthly housing expense reduced is a “makes sense” loan with a high probability of getting approved.
7. I was on unemployment so my income was interrupted so I don’t think I can qualify. If you are back to work in the same line of work this is easily covered by a simple letter of explanation and a verification of employment from your present employer indicating that continued employment is likely.
8. I don’t want to start over with my loan. Good point. Rates are so low that we are moving many borrowers from 30 year loans to 10 or 15 year loans often without a significant increase in payment. We also offer 20 year loans. Paying your loan off quickly is one of the smartest money moves you can make. Call me anytime for more details on this one including a simple step by step plan to do it.
9. As soon as values come up I am selling so I don’t want to spend the money on a loan that I am paying off soon. Again, good point, however if you are waiting for values to rise it could be a long wait. Goldman Sachs released a report recently indicating that they do not believe we will see house values return to 2006 levels before 2023… that’s not a typo. It goes straight to the recapture question discussed in myth 5 above.
10. I have a second mortgage that I want to keep. I have been told that if I refinance I will have to pay it off and close the account. This one is sometimes true but usually not. Most of the time we can do what is called subordination. The way loans work is that when you close the loan you sign a promissory note which is your promise to pay the loan back and you also sign a deed of trust which is a document that is a lien on your home securing the promissory note. Each deed of trust is in lien priority based upon when it is recorded. When you pay off your existing first mortgage your second mortgage would then become the first lien UNLESS we ask the second lien holder to allow the new mortgage to be in first lien position or “subordinate” to the new first loan.

These are questions and concerns that I have been hearing from borrowers I have been recently serving. If you have questions about your specific situation please let me know. I am pleased to help any way I can. Usually the only way to learn if a refinance is a good idea is for us to “run the numbers.” There is no charge for this service.

*These fees are based on zero point loans with the lender paying the loan origination fee. Call for a free quote based upon your specific needs and situation.

Brian Leavitt

Northstone Mortgage

MLO#114864

The Big 6 keys to buying a home now

1.  Home prices have hit bottom or are very close to it. Especially where prices have experienced big reductions in the past couple of years, there will be little change this year or next, according to national economists.

2.  Affordability is the highest in 20 years, since 1991. It's defined as the ratio of the median priced home to median family income. Economists at Fiserv Case-Shiller, which tracks home prices, say the ratio is now 2.6, down from a peak of 4.1 in mid 2005.  Renters considering homeownership  are encouraged by the current difference between rent and the median monthly mortgage payment. It fell from $745 in 2005 to $102 now. Low vacancy rates will allow landlords to raise rents next year by up to 3.5 percent.

3.   Mortgage interest rates are about as low as they can go. Recently, the national average 30-year fixed rate was 4.5 percent.  Adjustable rate mortgages are even cheaper and rates for jumbo mortgages are down as well.

4.   It's a buyer's market. With many choices, buyers can find properties in good school districts or near their jobs. And shopping takes less time.   Some investors bought properties, remodeled, but can't find buyers. They may be willing to make deals.

5.   Distressed properties and bank-owned foreclosures are good buys. Bank-owned properties sell for an average discount of 35 percent off the per-square-foot price of other homes for sale, according to Realty-Trac.  It could take three to six months to close on a short sale, but values are outstanding.

6.   Homeownership is an attractive choice. It's a financial decision but there's more to it than that. When you own your home, you control your living environment, change the home as you see fit, and create a sense of rootedness in your community, according to Kiplinger's Personal Finance.

You don't have to deal with a landlord, and with a fixed interest rate, your payment will not rise because of inflation or rent increases.

Is now a good time to buy?

Ask Brian

We've heard so much about the stock market and the real estate market that we don't know if we should buy a house or not. Give us one good reason why we should take the plunge!

Ask Dolly Lenz, the most successful real estate agent in America. The other day, on a down-day in the stock market, she was interviewed on Fox Business.

First, she said that in most areas of the country, the real estate market is recovering. That means homes are probably priced about as low as they will be.

When asked who should be buying a house right now, she said it should be someone with a stable job that pays enough to afford the monthly mortgage payment. And that person would probably be someone who has been waiting for the right time to buy.

I could have told you that myself, but now you have the same advice from one of the foremost experts in America.

Lenz usually sells to a Hollywood star, a billionaire or a foreign dignitary. One of her sales in 2005was the Burnt Point mansion in Wainscott, New York. It sold for $45 million.

 

Looking for a short sale?

Right now, some attractive properties could qualify for a short sale. That means the lender agrees to sell the property for less than the amount owed on the mortgage.

The lender in these cases decides that it's better to make the short sale than to foreclose on the home, which would cost the bank or mortgage company more money in the long run.

The buyer doesn't have to feel sorry for the people who can't maintain the mortgage, because the short sale rescues them from foreclosure.

Obviously, it's a more complicated process than simply taking out a mortgage, but if you have the time and patience, the short sale could work out well for you.

And it is a good decision for both the lender and the seller.

If you're interested, I can start looking for properties that would interest you and that could be considered for a short sale.

IRS Provides Relief for Homeowners with Corrosive Drywall

The Internal Revenue Service today issued guidance providing relief to homeowners who have suffered property losses due to the effects of certain imported drywall installed in homes between 2001 and 2009.

Revenue Procedure 2010-36 enables affected taxpayers to treat damages from corrosive drywall as a casualty loss and provides a ”safe harbor” formula for determining the amount of the loss.

In numerous instances, homeowners with certain imported drywall have reported blackening or corrosion of copper electrical wiring and copper components of household appliances, as well as the presence of sulfur gas odors. In November 2009, the Consumer Product Safety Commission (CPSC) reported that an indoor air study of a sample of 51 homes found a strong association between the problem drywall, levels of hydrogen sulfide in those homes and corrosion of metals in those homes.

Revenue Procedure 2010-36 provides the following relief:

• Individuals who pay to repair damage to their personal residences or household appliances resulting from corrosive drywall may treat the amount paid as a casualty loss in the year of payment.
• Taxpayers who have already filed their income tax return for the year of payment generally have three years to file an amended return and claim the deduction. The amount of a loss that may be claimed depends on whether the taxpayer has a pending claim for reimbursement (or intends to pursue reimbursement) of the loss through property insurance, litigation or otherwise.
• In cases where a taxpayer does not have a pending claim for reimbursement, the taxpayer may claim as a loss all unreimbursed amounts paid during the taxable year to repair damage to the taxpayer’s personal residence and household appliances resulting from corrosive drywall.
• If a taxpayer does have a pending claim (or intends to pursue reimbursement), a taxpayer may claim a loss for 75 percent of the unreimbursed amount paid during the taxable year to repair damage to the taxpayer’s personal residence and household appliances that resulted from corrosive drywall.

A taxpayer who has been fully reimbursed before filing a return for the year the loss was sustained may not claim a loss. A taxpayer who has a pending claim for reimbursement (or intends to pursue reimbursement) may have income or an additional deduction in subsequent taxable years depending on the actual amount of reimbursement received.

For purposes of this revenue procedure, the term “corrosive drywall” means drywall that is identified as problem drywall under the two step identification method published by the CPSC and the Department of Housing and Urban Development in their interim guidance dated January 28, 2010.

Further details and limitations can be found in Revenue Procedure 2010-36 on IRS.gov.

  NWREporter November 2010

“Wise Buyers” Taking Advantage of Chance to Get Stellar Homes

KIRKLAND, WA, October 5, 2010 – Home sales remained subpar around most of Washington during September, but directors from Northwest Multiple Listing Service say they are encouraged by some positive signs.  

“It’s a slow recovery, but it’s trending in the right direction,” said Joe Spencer, president and COO of John L. Scott Real Estate and a member of the NWMLS board of directors.

Among positive indicators the directors cited were pending sales (“starting to show signs of life”), month’s supply of inventory (pointing toward a more balanced market), stabilizing prices (with more homes being priced competitively), the market adjusting to no more tax credits, and strong sales of “specialty homes.”

Northwest MLS members reported 5,741 pending sales during September across the 21 counties in its service area.  That’s a drop from August (down 4.9 percent) and from the same month a year ago (a decline of 24.3 percent), but an improvement on the total number of mutually accepted offers for May, June and July. 

MLS director Pat Grimm, managing broker at Windermere RE/Capitol Hill in Seattle, reports an upsurge in people looking at properties, particularly move-up buyers. He attributes some of that activity to homes “finally being priced competitively.”   The new pool of potential buyers are “getting their feet wet, but they’re taking their time before they jump in,” he commented.

Prospective buyers have plenty of choices across the price spectrum.  MLS members added 9,038 new listings to inventory during September, bringing the total selection to 42,153 active listings.

Spencer, of John L. Scott Real Estate, said he is encouraged by the month’s supply of inventory at the end of September. “The three-county area of King, Snohomish, and Pierce are reporting about six months of inventory, which is a positive indicator based on the last 30 years of market data.” Historically, the MLS director noted, this points to a more balanced market and stabilizing home prices. “That’s not to say we should expect prices to increase right away, but it’s a positive sign nonetheless, especially when you consider that the national supply of inventory is more than 11 months,” Spencer stated.

“There are many very wise buyers taking advantage of what may be a once-in-a-lifetime opportunity,” said Mike Skahen, whose real estate career spans nearly 30 years.  “We haven’t seen a summer like this in home sales since 1982 when interest rates were hovering around 16 percent,” he observed.

Skahen, the owner and designated broker at Lake & Company Real Estate in Seattle and a member of the NWMLS board of directors, said the buyers they’re seeing have good jobs with Google and Amazon. “They realize they have the chance to get stellar homes in great locations at 25 percent off what they were selling for three years ago and at interest rates approaching 4 percent.  I doubt you’ll see a market and selection better than right now,” he commented.

Skahen said his office just had a $600,000 Green Lake mid-century home sell with four competing offers, and his company was one of three brokerages that presented offers on a $770,000 Ravenna listing, but they were outbid.

“Buyers are snapping up homes in all price ranges that are well located, in good condition, and that are priced fairly,” Skahen reported.

NWMLS members reported 3,997 closed sales during September, down from the same month a year ago, when members notched 5,132 completed transactions.  Year-to-date, the volume is up about 9.8 percent from the first nine months of 2009 (40,318 closings through Sept. 2010 versus 36,714 closed sales through Sept. 2009).

Last month’s closed sales of single family homes and condominiums (combined) had a median price of $257,600.  That’s down about 5.6 percent from the year-ago price (area-wide) of $273,000.  Ten of the 21 counties served by NWMLS reported year-over-year price increases.

“The types of homes that are selling particularly well are specialty homes-- homes that have a unique mix of character and amenities.  It can be a waterfront estate or a Craftsman cottage, but there are qualities about the home that really make it stand out. Those homes are one of a kind and they're never bought on price alone,” said OB Jacobi, general manager of Windermere Real Estate Company.     

“Crazy requirements” are impeding the pace of sales, according to NWMLS director Dick Beeson, broker/owner of Windermere Commencement Associates in Tacoma.  “Agents are finding it’s much more difficult to navigate the closing process than ever before.  If it’s not the conditions of an inspection report, it’s the appraisal coming in off sale price or lenders reviewing and re-reviewing the buyer’s qualifications or buyers rethinking whether or not to buy,” he explained.

Looking ahead, Beeson expects the balance of the year to be “somewhat fickle,” in part because of upcoming elections and lingering uncertainty around the slow pace of the recovery.

“Sellers know they must position themselves better than their competition on all levels – price, condition, terms,” Beeson stated, while noting buyers who procrastinate risk losing purchasing power because of anticipated increases in interest rates. 

“Interest rates below 5 percent are an extraordinary event, and buyers need to take advantage of them,” Beeson emphasized.  A 1 percent increase in the interest rate on a $300,000 mortgage increases the monthly payment by $183, he explained, adding experts expect rate hikes. “It’s not if, it’s when,” he contended.

Northwest Multiple Listing Service, owned by its member brokers, is the largest full-service MLS in the Northwest. Its membership includes more than 24,000 brokers and agents. The organization, based in Kirkland, currently serves 21 counties in Western and Central Washington. 

Statistical Summary by Counties: Market Activity Summary - September 2010

Sept 2010 Single Family Homes + Condos	LISTINGS		PENDING SALES	CLOSED SALES
	New Listings	Total Active	#Pending Sales	# Closings	Average Price	Median Price
King	3789	13,922	2187	1467	$431,968	$349,950
Snohomish	1404	5768	895	615	$296,319	$261,353
Pierce	1355	6108	985	628	$247,080	$220,250
Kitsap	357	1904	283	213	$289,336	$240,000
Mason	115	859	58	53	$215,773	$185,000
Skagit	198	1271	113	87	$237,583	$215,000
GraysHarbor	133	1032	80	52	$152,287	$120,250
Lewis	110	873	65	34	$198,451	$170,450
Cowlitz	125	681	69	62	$170,926	$153,500
Grant	91	674	53	47	$171,691	$165,000
Thurston	432	1932	319	247	$260,034	$233,000
San Juan	30	499	17	13	$520,225	$420,000
Island	138	1081	100	74	$305,948	$254,089
Kittitas	72	577	60	48	$302,325	$233,500
Jefferson	52	613	31	25	$291,275	$240,000
Okanogan	38	452	21	16	$179,589	$171,500
Whatcom	360	2027	256	173	$294,613	$239,900
Clark	46	296	30	42	$246,186	$217,450
Pacific	40	460	38	21	$120,615	$95,000
Ferry	5	57	3	4	$107,500	$115,000
Clallam	67	508	31	35	$231,994	$226,000
Others	81	559	47	41	$226,459	$190,000
MLS TOTAL	9,038	42,153	5,741	3,997	$324,779	$257,600

4-County Puget Sound Region Pending Sales (SFH + Condo combined)
(Totals include King, Snohomish, Pierce & Kitsap counties)

	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
2000	3706	4778	5903	5116	5490	5079	4928	5432	4569	4675	4126	3166
2001	4334	5056	5722	5399	5631	5568	5434	5544	4040	4387	4155	3430
2002	4293	4735	5569	5436	6131	5212	5525	6215	5394	5777	4966	4153
2003	4746	5290	6889	6837	7148	7202	7673	7135	6698	6552	4904	4454
2004	4521	6284	8073	7910	7888	8186	7583	7464	6984	6761	6228	5195
2005	5426	6833	8801	8420	8610	8896	8207	8784	7561	7157	6188	4837
2006	5275	6032	8174	7651	8411	8094	7121	7692	6216	6403	5292	4346
2007	4869	6239	7192	6974	7311	6876	6371	5580	4153	4447	3896	2975
2008	3291	4167	4520	4624	4526	4765	4580	4584	4445	3346	2841	2432
2009	3250	3407	4262	5372	5498	5963	5551	5764	5825	5702	3829	3440
2010	4381	5211	6821	7368	4058	4239	4306	4520	4350

__________
Copyright © 2010
ALL RIGHTS RESERVED
This material may not be published, broadcast, rewritten or redistributed without prior permission.

Reprinted with permission of NWMLS

Dear Zillow please blog this

From Zillow April 27, 2010

 

“Dear Brian,

 

In reviewing your recent quote ZQ-XXXXXX, we see that this rate is too low. If you feel this is not the case please provide information with the details such as who is the investor, what is your base rate, and lastly what are the ad-ons.

Community Relations

Zillow.com”

 

Response April 27, 2010

 

“Dear Zillow,

I reviewed the quote, and in fact reviewed all of my recent quotes, and have verified that indeed the quote is correct.  I suspect that once again my competitors are complaining about our rates.  You might find this surprising but our clients NEVER see this as a problem.  As far as telling you who my investor is that information is confidential.  My base rate and all fees are disclosed in the quote.  Perhaps the best way for you to verify these rates is to allow me to refinance your home or assist you in a purchase.  Upon completion of a loan application I will be delighted to lock your loan as disclosed in the quote and guarantee this rate.  What is your rate now?

 

If you have an opportunity I would appreciate it if you would blog about this on the Zillow website.  I find it interesting that just because my competitors can’t compete this is viewed as a problem.

 

A mutual friend of ours works for Zillow and I forwarded him a confidential copy of our wholesale pricing matrix so that you may verify the authenticity of these rates although he will not provide you with the investor details.

 

P.S.  If you think this is low wait until you see our new JUMBO program rolling out this afternoon.

 

Brian Leavitt

Designated Broker

Northstone Mortgage

425-837-4700

broker@northstone.net”

Dibbs

There was an interesting story on the news this week about a homeowner who discovered that someone had moved into their vacant home claiming that the home had been abandoned.  The new occupant said she rented the property from a property management company who in turn claimed that they had acquired the property by filing a "deed of adverse possession" with the county recorders office.  Pretty good trick if you can pull it off.  Last I checked there were a couple of elements of adverse possession that I suspect this property manager may have forgotten. As a refresher, adverse possession is a means of acquiring title where an occupant has been in actual, open, notorious, and continuous occupancy of a property under a claim of right for the required statutory period.  In this case the period would be 7 years.   The property manager is 6 years 12 months short of the requirement.   Since a real estate license is required to manage property here in Washington it makes me wonder how some people actually pass the license test in the first place but that is another story.  

The property owner, in my opinion, was quite gracious to the occupant allowing her and her family to move out over the weekend.  I have heard that similar claims to vacant property been happening in other parts of the country but this is the first time I have heard about it here.  If you have seen this in your market I would love to hear about it.  Part of my initial reaction is that consumers could be protected against becoming entangled in this sort of mess by using trusted real estate professionals except that in this case the renter thought that is what they were doing.

This reminds me of a transaction I worked on a number of years ago where a man rented a home from one of my clients and then proceeded to offer it "for sale by owner" at a drastically reduced price drawing in several buyers and obtained cash earnest money deposits before fleeing town cash in hand.  The would be buyers then contacted my client to get a refund.  The problem is my client did not sell the home.  Tough luck for the buyers.  The moral of the story here is to know who you are dealing with.  As a consumer remember that true authority withstands questioning.  As a broker I always determine if in fact my client has the legal right to sell, or in this case, rent the home.  As a consumer or selling/leasing agent, you can do the same.  To do this simply review the tax records to see if the person claiming the right to sell or rent is the person in title.  If the home is for sale ask for a copy of the preliminary title.  Verify that your agent is a member in good standing with the Association of Realtors and check the status of their license.  In many states you can do this in a few seconds online.  Sorry, no "Dibbs" today.

Freddie Mac you broke my heart

Freddie Mac you broke my heart.  You teased me with your beautiful little condo nestled on the wooded hillside by the lake.  Two ample bedrooms and two sparkling baths complete with tile floors and sleek tile tub surrounds.  Your spacious south facing living room took full advantage of the fleeting Seattle sun.  But you, unresponsive, communication challenged and unable to commit.  My intentions were clear from the very start, I wanted your condo to be my own to have and to hold in sickness and health to sale do we part, but it seems it was just not to be.  Perhaps you have been wounded by other less serious suitors but 30 days is way too long to expect me to wait.  Terms agreed to orally but no written response.  As beautiful and seductive as your condo is I have left you for another. 

Three days from offer to inspection and now ready to close.  My new condo is beautiful and fully committed, closer to the city center and in way better shape. You my old flame, I wish all the best.  Perhaps we can still be friends but more likely I think not.  Freddie Mac, until you clean up your act and deal with your skeletons you are destined to keep your own condo company.

 

Thoughts from a buyer after waiting 30 days for a signed agreement from Freddie Mac that never materialized.

Tax Credit Extension

Right now a battle is being waged in the House of Representatives over extension of the $8000 tax credit for first-time buyers.  On Monday the House voted unanimously to extend the deadline for one group of home buyers.  The extension was granted for military personnel, Foreign Service and intelligence officers.  HR 3590 was passed granting the extension to those that meet the underlying criteria and who are serving overseas or have spent at least 90 days deployed outside of the US during the current calendar year.  The bill was introduced by Rep. Charles Rangel (D-NY) because families serving overseas were being passed over for the one time opportunity to purchase a home.  Under the original law, a homeowner was required to occupy the home for 36 months or the credit would be recaptured.  Because the military and other Foreign Service employees frequently relocate many have been reluctant to apply for the credit even if they did purchase a home.

As far as the extension for the rest of us, there is no news as of yet as to whether any extension will be approved.  Both the National Association of Realtors and the National Association of Home Builders are strongly in favor of the extension.