The Mortgage Porter

HUD Approves First Time Home Buyers Using Tax Credit Advance for FHA Loans

There's been a lot of rumbling about whether or not first time home buyers would be able to access the tax credit created by The American Recovery and Reinvestment Act of 2009 towards the purchase of their new home.  From HUD's announcement yesterday:

Current law does not permit approved lenders to monetize the tax credit to meet the required 3.5 percent minimum down payment, but, under the terms of today's announcement, lenders can now monetize the tax credit for use as additional down payment, or for other closing costs, which can help achieve a lower interest rate. Buyers financing through state Housing Finance Agencies and certain non-profits will be able to use the tax credit for their downpayments via secondary financing provided by the HFA or non-profit. In addition to the borrower's own cash investment, FHA allows parents, employers and other governmental entities to contribute towards the downpayment. Today's action permits the first-time homebuyer's anticipated tax credit under the Recovery Act to be applied toward the family's home purchase right away.

Here are some important points for you to know regarding using the tax credit towards a home purchase:

• The tax credit advance loan cannot be used towards the mandetory 3.5% down payment.  (Update: unless it is through a State Housing Financing Agency).
• The tax credit advance loan may not exceed the anticipated tax credit due to the home buyer based on the computations of form IRS 5405. 
• The borrower will need to provide a copy of their tax refund and/or form IRS 5405.
• Borrower cannot have unsettled obligations with the IRS.
• If the tax advance is in the form of a loan with payments, the borrower must qualify with that payment (unless the payments are deferred for at least 36 months).

Reminders about the First Time Home Buyer Tax Credit...

You can claim the tax credit if:

• You purchased your main home after April 8, 2008 (who picked that day?) and before December 1, 2009.
• You (and your spouse, if married) did not own any other main home during the 3 year period ending on the date of purchase.

The IRS defines "main home" as the one you live in most of the time.  It can be a house, hosueboat, housetrailer, cooperative apartment, condominium, or other type of residence.

You cannot claim the tax credit if:

• Your modified adjusted gross income is $95,000 or more ($170,000 or more if married filed jointly).
• Your home financing comes from tax-exempt mortgage revenue bonds.
• You are a nonresident alien.
• You aquired your home by gift or inheritance.
• You acquired your home from a related person.

You must repay the tax credit if your home ceases to be your main home within the 36 month period beginning on the purchase date.  

HUD warns that homebuyers should beware of mortgage scams and carefullly compare benefits and costs when seeking out tax credit monetization services.

Don't forget, Mortgage Master is a direct endorsed HUD lender.  If you're buying a home in Washington State and are interested in an FHA loan, I'm happy to help you.

Rates at Rain City Guide Today

I had full intentions of posting rates at Mortgage Porter today...I really hoped to post them this afternoon however business called.   It's really important that loan documents are signed as the borrower's name appears--this is especially critical with the Note.  A good Escrow Officer will watch the clients sign to make sure the signatures are consistant throughout.  Long story short, I received a frantic call from our Funding Department since the Note was signed without a middle signature and everything else was signed with.  I know this must sound like small picky potatoes for most folks reading this; however, it can make the difference between a lender buying or not from our credit line.  The good news is all is saved...their loan funded! 

For this morning's rates, please visit my post at Rain City Guide.  The bond markets closed up nicely today...so I'm *hoping* for further price improvements Monday.

I hope you enjoy the sunny weekend!

Hey LO's! Join Me at Safeco Field on Friday, June 19, 2009

RSVP by clicking here!

 

Question from a Mortgage Porter reader: My Loan Officer Didn't Lock...What Can I Do?

Last night, I received this email from a borrower who's dealing with yesterday's dramatic rise in mortgage rates:

I was wondering if there was anything we can do if we asked our lender to lock in Monday (which I would suppose would mean Tuesday am) and he didn't because he was sick.  Now he is balking at giving us the rate that he quoted us.  We think that the lending institution should make good on their rate, since we HAD decided to lock in and it was their delay that caused the problem.  Is there a chance for us? 

Monday was Memorial Day and therefore, the mortgage originator probably could not lock and most likely was enjoying a day off.   On Tuesday, it sounds like the loan officer took another day off for health reasons. 

Unless the mortgage originator provided you a written lock confirmation, I'm not sure that you have a leg to stand on.   A rate quote is not a guarantee of rate.  In fact, it's only valid the moment the loan originator is providing it.  Rates change constantly--yesterday, most of the lenders our company works with issued 5 different rate sheets. 

Not being able to reach your loan officer when you want to lock is a risk when floating your mortgage interest rate.  If I have the day off (due to health or vacation) I do have a manager who will take care of locks and/or any issues that may arise.   Consumers may also find it difficult to make contact with their mortgage professional to lock because they may be working with another client at the moment (either locking another loan or in a consultation).  

Not locking your rate at application (if you're closing soon) is gambling the rate not only are your betting that rates will go down, you're risking not being able to lock for the reasons mentioned above and also with constant changing guidelines in this current environment.  Locking the rate is also a form of gambling (that the rate will go up).   Always consider which worse case scenario you can live with when making the decision to lock or not lock.

With that said, rates may come back down since the Treasury is not done spending their allotment towards mortgage bonds (which has been keeping mortgage rates artificially low).  No one can say precisely when this will happen or how much rates will be manipulated lower.  

True Story from a Rate Shopper

Back in December, I was contacted from someone who is relocating to Seattle in June wanting rate quotes.  Right off the bat, I see this as a bit problematic because the rates I'm quoting along with the fellow mortgage suitors in December of 2008, will be different in June 2009 (or whenever this person is prepared to lock).  A rate quote is really just numbers spewed in the air.  Hopefully the mortgage originator who's providing the quote is honestly giving you the quote they would provide if you were locking at that moment.  Consider this: today most lenders issued 5 rate sheets--quotes would vary from the most ethical of mortgage originators in just an hours time.

Months of emails back and forth and good faith estimates including what if we bought this or that at this or that price with this or that down payment, the shopper opted to go with a mortgage originator based on the quoted rate.

Yesterday I received an email from this person asking if I could close their mortgage in four days:

Rhonda,

Went with a broker who now cannot deliver locked loan on closing date, one week from today. Wondering if it's possible at all for you....

My answer:  Sorry...no.  A four day closing?  I could never look at my Processor again...we could manage a quick closing but not that quick!  I asked for more details:

Apparently lender is saying they are "behind" and can only close a week later i.e. the 9th instead of the 2nd. Broker can get a higher rate 5.25% from another lender, so that's the fall back. We had originally locked 4.875%. In the meantime the truck will be heading towards Seattle...grrr! I do have a copy of the appraisal if that's of any help.

This sounds fishy to me (but I'm only getting one side of the story).  Lenders should be following a purchase and sale agreement that has a clear closing date.  The loan originator should be able to review the contract and know upfront whether or not they can accomdate the closing date. 

I also don't understand how a mortgage originator would say someone was locked at 4.875% one day and then say they can only close later at a higher rate?   If the rate was truly locked, an extension would be available and based on yesterday's rates (when I was contacted and not today's jump in rates) an extension would be a breeze with no change in rate...maybe a small fee that should be flexible if it's no fault of the borrowers on a purchase transaction.

With moving trucks planned from out of state, this homebuyer is in a bind. 

The locked rate will only be available a week later than promised, thats what the lenders have told the broker, and she told us. If not we have to she has lined up another lender but at a higher rate. I guess rates have gone up since we locked in :(

Rates go up and down after you lock.  Rates can also be extended if done as a "best efforts" lock.  The locked rate only being available a week later than promised is troubling.

My last email from the homebuyer after I offered a quick closing (longer than 4 days however!)

Broker now says her local lender can close on the 2nd so we go with that. We really have to close on the 2nd if not the sellers are going to hit us with a bunch of costs. Apparently the original lender just plain ran out of money in May and now has to wait till June to get more money from their "warehouse" source. if that makes sense. If only I had another week to change funding..

I only wish that consumers could understand that when they use rates to select the person who is going to guide them through the mortgage process on one of their most important lifetime investments, they're using a moving target (rates change constantly) that might detract them from the most qualified, hardworking, dedicated professional.

There's so much more to the picture than rate...and I know when I discuss this, it could appear that I have higher rates...you can always check out the rates I post on Friday here or better yet, check out my live rate quotes on Twitter. 

Mortgage Interest Rates

Conforming Mortgage Rates (loan amounts up to $417,000 for 1-unit properties).  The conforming rate quote below is based on owner occupied, "full doc" purchase with a sales price of $500,000 and a loan amount of $400,000.  Rates are priced based on a low-mid credit score 740 or higher unless otherwise noted.    This scenario includes reserves (taxes & insurance) not being waived.   Rates quoted are priced based on a 45 day lock with no prepayment penalties.  For your personal rate quote with or without points, please contact me.   Refi's are requiring a 60 day lock and therefore, a rate-term refi is approx. 0.125% higher in rate or higher in fee (points)...cash out refi's are a whole other story with Fannie/Freddie price hits.

30 Year Fixed Priced w/1 Pt:  4.500% (APR 4.638%) ~ priced with 0 points: 4.750% (APR 4.803%).   

15 Year Fixed Priced w/1 Pt:  4.250% (APR 4.489%) ~ priced with 0 points: 4.500% (APR 4.590%).

7/1 ARM LIBOR 5/2/5 CAPS w/1 Pt: 4.25% (APR 6.112%).

5/1 ARM LIBOR 5/2/5 CAPS w/1 Pt: 3.75% (APR 6.317%) ~ priced with 0 points:  4.000% (APR 6.322%)

Conforming High Balance. Pricing is based on the same criteria above (including zero points) except where the loan amount is $417,001 - $567,500 for properties in King, Snohomish or Pierce Counties; specifically priced for a sales price of $625,000 and a $506,000 loan amount.  NOTE: loan limits for certain "high cost" areas have been returned to the 2008 higher limits.  

30 Year Fixed w/ 1 Pt: 4.750% (APR 4.879%) 

Jumbo/Non-Conforming. I now have jumbo loans available up to 1 million.  The quotes below are based on a loan amount of $650,000 with 80% loan to value and 740+ credit scores. 

30 Year Fixed w/ 1 Pt:  6.125% (APR 6.369%)

7/1 ARM w/ 1 Pt:  5.250% (APR 6.603%)

5/1 ARM w/ 1 Pt:  4.500% (APR 6.601%)

FHA.  Pricing based on credit score of 620 or better and loan amount of $417,000 for FHA in King, Snohomish and Pierce Counties.

30 Year Fixed @ 1 Pt:  4.875% (APR 5.698%) 

FHA 203(k) Rehab - Streamline.  Pricing based on credit score of 620 or better and loan amount of $417,000 for FHA in King, Snohomish and Pierce Counties.

30 Year Fixed @ 1 Pt:  5.000% (APR 5.826%)

FHA-High Balance. Pricing based on 1 discount/origination point and loan amounts from $417,001 - $567,500 for King, Snohomish and Pierce Counties.  NOTE: Revised 2009 FHA loan limits are posted here for Washington State.  FHA has implemented the higher limits.

30 Year Fixed @ 1 Pt: 5.000% (APR 5.663%).

USDA Rural Housing.  100% financing subject to income and location of home (generally available in towns of 10,000 or less in a rural area). 

30 Year Fixed @ 1 Pt:  5.000% (APR 5.316%)

VA. Pricing based on credit scores of 620 or better based on loan amount of $417,000.   For VA loan amounts over $417,000, please contact me.

30 Year Fixed @ 1 Pt:  5.000% (APR 5.107%) 

Non-owner/Investment Property.  Pricing based on credit scores 740 with a loan amount of $300,000 and a loan to value of 75% or lower.

30 Year Fixed @ 1 Pt:  5.375% (APR 5.511%).

Prime Rate (what HELOCs are based on):  3.250%. 

Rates are as of Friday, May 22, 2009 at 9:30 a.m. and may change at any time.  Available programs may change at anytime as well.   This is not a guarantee nor is it a commitment of interest rate. 

Stay tuned with what's going on in the market by subscribing to Mortgage Porter (upper left corner) and Mortgage Porter Twitter for live rate updates (click Follow).

Reminder: No Closings this Friday for King and Snohomish Counties

Due to budget restraints in King and Snohomish Counties, the recorders office will be closed this Friday and will not reopen until Tuesday (due to Memorial Day).  This means that if you are buying, selling or refinancing a home; the Deed or new mortgage (Deed of Trust) cannot be recorded on these dates.  Pierce County's recorders office will remain open Friday, May 22, 2009.

The Talon Group has calendars available with recording schedules for King, Pierce and Snohomish Counties--click here.   Each county is doing their own thing to their respective budgets.   Just last month, Snohomish County announced that they are closing early on Friday's (if they are not on furlough).

If you have a transaction scheduled to close on property located in King or Snohomish Counties this Friday, May 22, you may want to check with your real estate and mortgage professionals.

What I've Learned About Pugs

I have a 13 year old Pug, Orson.  Last month it seemed his hind legs were bothering him so I took him to the Vet who thought it was most likely old age and arthritis.  He recommended giving him treats with glucosamine to see if that worked.   A couple weeks later, his front legs began to give him trouble as well and he began walking with a sway (almost as if he was a little drunk).  Orson and I went back to the local Vet and this time the prognosis was not good: possible brain tumor.  They referred us to Dr. Sean Saunders of Seattle Veterinary Specialist in Kirkland who specializes in neurology.  An MRI revealed that Orson does not have a brain tumor; he has Hansen's Type II invertebral disk disease--as bad as this sounds, I'm relieved since this is probably can be managed with doggy drugs. 

What's the probable cause (or at least an aggregator)?

• Stairs.  His compact body is jarred going up and down stairs. 
• Being walked with a traditional collar.  Orson now sports a nice harness for his walks.
• Jumping can also cause injury to the disks in their spine.  Orson's not a jumper.

So this weekend, we're cleaning out our home office area.  Orson's "movin' on up" from the basement to a kennel in the office.  No more stairs for this fellow and I'm happy to share my home office with him. 

Friday Morning Mortgage Rates for Washington State

Conforming Mortgage Rates (loan amounts up to $417,000 for 1-unit properties).  The conforming rate quote below is based on owner occupied, "full doc" purchase with a sales price of $500,000 and a loan amount of $400,000.  Rates are priced based on a low-mid credit score 740 or higher unless otherwise noted.    This scenario includes reserves (taxes & insurance) not being waived.   Rates quoted are priced based on a 45 day lock with no prepayment penalties.  For your personal rate quote with or without points, please contact me.   Refi's are requiring a 60 day lock and therefore, a rate-term refi is approx. 0.125% higher in rate or higher in fee (points)...cash out refi's are a whole other story with Fannie/Freddie price hits.

30 Year Fixed Priced w/1 Pt:  4.500% (APR 4.638%) ~ priced with 0 points: 4.750% (APR 4.803%).   

15 Year Fixed Priced w/1 Pt:  4.250% (APR 4.489%) ~ priced with 0 points: 4.500% (APR 4.590%).

7/1 ARM LIBOR 5/2/5 CAPS w/1 Pt: 4.125% (APR 6.064%).

5/1 ARM LIBOR 5/2/5 CAPS w/0 Pt: 3.875% (APR 6.287%). 

Conforming High Balance. Pricing is based on the same criteria above (including zero points) except where the loan amount is $417,001 - $567,500 for properties in King, Snohomish or Pierce Counties; specifically priced for a sales price of $625,000 and a $506,000 loan amount.  

30 Year Fixed @ 1 Pt: 4.625% (APR 4.757%) 

FHA.  Pricing based on credit score of 620 or better and loan amount of $417,000 for FHA in King, Snohomish and Pierce Counties.

30 Year Fixed @ 1 Pt:  4.875% (APR 5.698%) 

FHA 203(k) Rehab - Streamline.  Pricing based on credit score of 620 or better and loan amount of $417,000 for FHA in King, Snohomish and Pierce Counties.

30 Year Fixed @ 1 Pt:  5.000% (APR 5.826%)

FHA-High Balance. Pricing based on 1 discount/origination point and loan amounts from $417,001 - $567,500 for King, Snohomish and Pierce Counties.  NOTE: Revised 2009 FHA loan limits are posted here for Washington State.  FHA has implemented the higher limits.

30 Year Fixed @ 1 Pt: 4.875% (APR 5.701%).

USDA Rural Housing.  100% financing subject to income and location of home (generally available in towns of 10,000 or less in a rural area). 

30 Year Fixed @ 1 Pt:  5.000% (APR 5.316%)

VA. Pricing based on credit scores of 620 or better based on loan amount of $417,000.   For VA loan amounts over $417,000, please contact me.

30 Year Fixed @ 1 Pt:  4.875% (APR 4.981%) 

Non-owner/Investment Property.  Pricing based on credit scores 740 with a loan amount of $300,000 and a loan to value of 75% or lower.

30 Year Fixed @ 1 Pt:  5.250% (APR 5.395%).

Prime Rate (what HELOCs are based on):  3.250%. 

1 Year LIBOR Index (what many ARMS are based on): 1.78 

Rates are as of Friday, May 15, 2009 at 9:00 a.m. and may change at any time.  Available programs may change at anytime as well.   This is not a guarantee nor is it a commitment of interest rate. 

Stay tuned with what's going on in the market by subscribing to Mortgage Porter (upper left corner) and Mortgage Porter Twitter for live rate updates (click Follow).

USDA Loans offer 100% Financing

EDITORS NOTE:  Please check out this updated post (May 2011) on USDA financing for homes located in Washington State.  Income limits and the guarantee fee have since changed since publishing this post.

USDA Rural Development loans offer financing of single family dwellings in rural areas to people who meet certain income limits.  In King County, the current four-person household adjusted limit is $88,400 maximum income.  

This program provides up to 100% financing with flexible underwriting guidelines. There is no mortgage insurance however, similar to a VA loan, there is an upfront fee of 2% of the loan amount (guarantee fee) that can be financed into the new mortgage.   Mortgage rates are attractive considering the higher loan to value, no credit score price hits and no monthly mortgage insurance--I've added rates for USDA loans to my rate post that I do on Friday's here at Mortgage Porter.

To see if you and a potential property are eligible, click here.

If you're interested in a USDA loan on property located in Washington State, please contact me.  Mortgage Master is an approved lender.