The Mortgage Porter

Buying a $500,000 Seattle Home with 10% Down

I was recently contacted by a home buyer in Seattle who wanted to know what mortgage programs we have available for a sales price of $500,000 with a 10% down payment. With less than 20% down, the loan will probably have mortgage insurance unless they can find a Fannie Mae Homepath property.

Let's review some scenarios assuming the home buyers have excellent credit (scores over 740) and a 30 day closing with a loan amount of $450,000.  With a 10% down payment, the seller can pay up to 3% (Freddie Mac) or 6% (Fannie Mae) with a conforming high balance mortgage. Rates quotes are effective as of 5:00 pm on January 24, 2012.

Conventional 30 Year Fixed with Private Mortgage Insurance.

4.375% with a PIMI (principal, interest and private mortgage insurance) payment of $2543.03 and with closing cost of $3074 (apr 4.858).

4.125% has a PIMI of $2477.17 and will cost more in discount points with closing cost of $7988 (apr 4.686).

4.500% has a PIMI of $2422.58. The payment is lower due to the lower pmi rate since a portion of it is paid for "up front' as a "split premium" similar to FHA except at a much reduced cost. Net closing cost, after lender credit applied with rebate pricing is estimated at $5063, including the upfront pmi (apr 4.856).

For the above scenarios, it will take about 7 years for the private mortgage insurance to drop off of the mortgage payments, at which time, the home owner will benefit from having a reduced payment. When considering a second mortgage piggy back scenario, you may want to estimate how long you will have the second mortgage and what the cost will be over the life of the loan compared to private mortgage insurance.

Fannie Mae Homepath will require the buyers find a Fannie Mae REO property that is eligible for financing utilizing a Homepath mortgage. I just checked Homepath.com and found the most expensive home currently listed in Seattle is $449,000 (which you can actually purchase with as little as 3% down payment). Homepath Mortgages do not require an appraisal nor do they have private mortgage insurance. For the comparison purposes, the following quote is based on a $500,000 sales price with 10% down payment using Fannie Mae Homepath:

5.125% for a 30 year fixed with a principal and interest payment of $2450.19 and closing cost estimated at $2762 (apr 5.187).

FHA is an option for these buyers however I would only recommend it IF:

• buyers are considering allowing their mortgage to be assumed in the future;
• buyers are converting existing home into a rental since FHA requires less reserves than conventional financing;
• credit scores are lower

Here is how an FHA high balance loan would compare based on today's pricing:

3.750% for a 30 year fixed with a PIMI of $2513.91 with $2782.50 for closing cost assuming the upfront MIP is financed (apr 4.397).  

I am seeing sellers very open to paying for closing cost. I'm also hearing from my clients in the Seattle area that homes that are new on the market and not short sales have been moving fairly quickly.

If I can provide you with a rate quote or help you prepare for buying a home anywhere in Washington, please contact me.

The Risk of Extended Closings

With more short sales taking place, many home buyers are having to wait months before their closing date is here. The same may be true for those who are buying homes that are being constructed.  With a delayed closing, there are some additional risk involved that buyers should be aware of so they can take action, when possible, to protect themselves. Some risks, borrowers have more control over than others.

Credit Reports Expire. Credit scores change constantly and are intended to reflect your current credit scenario. Credit reports that lenders use are valid for 90 days - meaning from the date pulled from when the report is delivered to the lender (this shaves a few days off).  Should your credit need to be repulled due to an expired credit report, if your credit scores have dropped, this may impact qualifying for your mortgage program and your interest rate. Any new debts, including those that have "no payments" or "zero interest" will be factored into your debt-to-income ratios and may also impact qualifying for your new mortgage.

TIP: Do not make changes to your credit, unless advised by your mortgage originator. Closing good credit accounts may lower your scores and new credit will bring your scores down as well. Try to keep your credit balances below 50% of the total credit line (30% is even better).

Employment or income may change. Lenders will verify your employment and income prior to funding the new loan.  If you've had ANY changes to your employment or income, notify your mortgage originator as soon as possible. Some changes may not make an impact, however if your income is being restructured from a base salary to hourly or commission, you may have issues.

Underwriting guidelines and loan programs may change. Some times changes may be made to underwriting guidelines, or a loan program may change or no longer be available. Just last week, we were wondering what the conforming loan limits would be for the greater Seattle area (they're staying the same at $506,000, however it was hinted they could have been reduced). We also have seen changes with private mortgage insurance companies that may impact qualifying.

TIP: If possible you may want to discuss having a "plan b" with your mortgage originator if you have any unique situations with your loan scenario.

Interest rates. I generally don't recommend locking beyond 60 days (depending on the current climate with rates).  Longer locks are available, however they cost the borrower more. When a closing date is uncertain, locking is a risk as you may be locking too long (paying too much) or not long enough which would create additional cost with extension fees.

If rates rise too high (which can happen quickly), some borrowers may no longer qualify using their desired program...it could cause another scenario where a "plan b" is required.  

Appraisals. The appraised value of your home is based on what other similar homes have sold and closed for near the home. The risk of what a home appraises for is present regardless of the length of closing, however if you're in a neighborhood where more short sales or foreclosures are present, it's possible the values may be trending lower. This may cause underwriting to call for additional sales comparables (comps). If the appraisal comes in lower than your sales price, you may be in position to renegotiate your contract with the seller.  Lenders base your scenario on the lower of your sales price or appraised value. If your appraisal comes in higher than your sales price, goody for you!

Documentation. Be sure to keep your bank statements, documentation of any large deposits, paystubs, etc.  This is not the time to be a "shredder"...after closing you can shred away!

Sometimes having some extra time on your side can be a benefit.  Here are some things to consider if you have a month or two before your closing date:

If your scores are lower than 739, ask your mortgage originator what you can do to improve your score, if needed (some loan programs, such as FHA, are not as credit score sensitive as conventional).

Ask your mortgage originator if you should be building your savings or paying down debt to improve your score.  Depending on your specific scenario, building reserves may be more important than your credit score or the reverse may be true.  Time allows you to do either (or possibly both).

Remember, your loan application is a reflection of you and your financial scenario when the first interview is taken and at closing. It is your responsibility to notify your mortgage originator of any changes from the original application. 

If you are considering buying a short sale anywhere in Washington State, where I'm licensed, I'm happy to help you with your mortgage needs. 

How Much Home Can I Buy in Seattle with $45,000

I'm working with a couple who have saved $45,000 to buy a home in the greater Seattle area. Since conforming and FHA loan limits have been reduced to $506,000 in King County for the remainder of 2011, it reduces what they could have purchased a month or two ago. 

FHA.  Using an FHA insured mortgage, the couple can buy a home with a sales price of up to $551,000 assuming the seller pays for their closing cost and prepaids or that rebate pricing is used to cover closing cost and prepaids (or a combo of both).  The buyer must pay for the down payment with their own funds and gift funds are allowed by family for the down payment.  This is a pretty straight forward $506,000 loan limit pluse the $45,000 down payment.  

Conventional. $462,000 is the highest sales price with conventional financing based on using a conforming mortgage of $417,000 which would have the loan to value just over 90%. This scenario would also have private mortgage insurance which could be paid monthly, in a one time lump sum or as a "split premium" (a combo of both). With a loan to value of just over 90% means that the rate of private mortgage insurance will be much higher than if the buyers stick to a 90% loan to value. With a loan to value just over 90%, sellers are limited to contributing 3% towards closing cost.

If the buyers go this route, the maximum sales price they would qualify for with 10% down payment is $450,000 and sellers can contribute up to 6% towards allowable closing cost.

Conforming High Balance:  Loan amounts from $417,001 to $506,000 in the Seattle area may go up to 90% loan to value with private mortgage insurance, however 10% of the funds (the down payment) must be the borrowers and gifts are allowed only after the borrower has met the 10% requirement. Conventional loan amounts over $417,000 don't appear to pencil out for this scenario.  

NOTE: With conventional mortgages, if the gift from family is 20% or more, then there are no minimum required investments for the borrower.

VA. If my clients had served in the military and qualified for a VA loan, the maximum sales price in King County with a $45,000 down payment would be $680,000 assuming the sellers pay for all closing cost and prepaids or rebate pricing is used to offset the cost.

Technically, home buyers do not qualify for a "sales price".  They qualify based on the total mortgage payment (income and debts) and based on what funds they have available for down payment will dictate how much "sales price" they can buy.

If you would like to see what sales price you qualify for or become preapproved to buy a home anywhere in Washington, please contact me.

Buying Your First Investment Property

With real estate becoming more affordable and mortgage interest rates at an historic low, it's easy to see why some people are considering buying their first investment property.  Financing an investment property has more requirements to it than buying an owner occupied property because it carries more risk to the lender. However if you have enough income, plenty of reserves set aside and good credit, you may be surprised how easy the process can be and what programs are available.  

"Traditional" Conventional Financing. 

Plan on at least 20% down payment and know that the more you are able to use as a down payment, the better your interest rate may be. With your down payment, the funds must only be your "seasoned" funds, they cannot be a gift.  The seller may contribute up to 2% towards closing cost and prepaids.  You *might* be able to have a second mortgage (seller financing, for example) up to 85% combined loan to value however, be prepared for a round of extra scrutiny from underwriting.

Just like buying your primary residence, your credit score will impact your mortgage rate. You don't have to have 740+ scores, some lenders will go down to a 620 score however be prepared to be scrutinized.  There are price breaks with interest rates based on a 75% and 70% or lower loan to value.  

In addition to the down payment and closing cost, conventional guidelines on investment properties requires six months reserves (your total proposed mortgage payment including any home owners association dues x 6) in savings at the end of the transaction.  If those reserves are your retirement or stock, lenders will discount them to 60 or 70% of the ending balance shown on your statement.  Additional properties owned will require additional reserves, for example, if you own a vacation home, an additional 2 months reserves will be required.

A typical debt to income ratio is 45% and as a first time landlord, you will need to qualify with both mortgage payments (no credit for rent).

Special programs.

Fannie Mae Homepath.  Fannie Mae Homepath Mortgage will allow for as little as 10% down payment on designated Homepath properties (owned by Fannie Mae) with credit scores of at least 660.  There is no appraisal required and no mortgage insurance with credit scores of 660 or higher.  I've written more the Fannie Mae Homepath program for investment properties here.

FHA. If you are getting ready to buy your first home, did you know that you can buy a 2-4 unit property (duplex - fourplex) using an FHA insured mortgage with owner occupied rates?  You DO have to occupy one of the units. Financing a duplex is very similar to buying a 1-unit home as far as underwriting requirements are concerned. When you step up to a 3-4 plex, the reserves requirements are increased to three months.  When buying a 2-4 plex home that you're going to occupy using FHA for your financing, you receive competitive rates (owner occupied because you are occupying one of the units) with minimum down payment.  Plus projected rents may be used for qualifying!  As with buying a single unit home with an FHA mortgage, upfront mortgage insurance (can be paid as a closing cost or financed) and monthly mortgage insurance do apply.

Click here for more articles I've written about financing residental investment property.

If you're interested in buying your first rental on a home located anywhere in Washington, including Renton, Redmond, Seattle or Snoqualmie, please contact me. I've been originating mortgages since 2000 at Mortgage Master Service Corporation and have all the programs mentioned above.

Risk and Reward: the Trade-offs of Buying a Distressed Home

Many home buyers are interested in taking advantage of the lower prices offered on distressed homes.  Distressed homes are those that are short sales or foreclosures (REO) and in the Seattle area, the sales price of distressed homes were discounted about 37.4% in August over a "non-distressed" home.

Something to keep in mind before you buy a "discounted" distressed home is that these transactions are not as "easy" as a traditional, non-distressed sale.  For starters, you're most likely dealing with a bank (and/or one of their representatives) as one of the selling parties. As much as you would think they really want to sell the property to get it off their books, they can leave you wondering where their heads are at throughout the transaction.  

This may be especially true with a short-sale if there are two mortgages on the property.  Sometimes the second mortgage/lien holder will take their sweet time approving the transaction and just prior to closing, only to demand that "someone" pay them thousands of dollars to close.  By the way, this extortion money payment must be disclosed on the HUD-1 Settlement Statement or it's fraud.  Even if the first and second mortgage are with the same bank/lender, please do not assume they won't play games with you or each other...it happens.

Something else that I've recently seen happen with distressed property is vandalism...just days before closing, someone steals the appliances or even takes plants from the garden. Vandalism could happen to non-distressed home as well but since most of these properties are vacant, they seem to be getting targeted.

These transactions tend to take longer to close and may have more drama. Be prepared to have your rate lock extended, perhaps a few times!  If you're patient and can keep in mind that you're probably getting a discounted price, the rewards may be worth it if you can tolerate the risk and all that goes with it.

In my experience, I've found that Fannie Mae Homepath properties have had the least amount of issues especially when you factor in the attractive financing programs that are available for owner occupied and investment property.  

If you're considering buying a short sale or foreclosed home anywhere in Washington state, I'm happy to help you with the financing.

The Low Down: Comparing FHA to Fannie Mae Homepath Mortgages

If you're thinking about buying a home with minimum down payment requirements in the greater Seattle area, you may be considering a property that is owned by Fannie Mae and eligible for the Fannie Mae Homepath Mortgage or using an FHA insured loan which most properties qualify for.  When home buyers contact me about a Fannie Mae Homepath mortgage, they often ask how it compares to an FHA insured loan. Both are great programs and the benefits may vary depending on credit score, down payment and the type of property.   

Rates quoted are as of 8:45 am on September 13, 2011 and are subject to change and are based on mid-credit scores of 740 or higher and a sales price of $340,000.

Fannie Mae Homepath. Currently Fannie Mae is offering an incentive to buyers of 3.5% towards their closing cost and prepaids for transactions that close by October 31, 2011 on qualifed Homepath properties.  With this scenario, a 3.5% contribution towards closing cost is generous enough to buy down the mortgage rate with discount points.  Fannie Mae Homepath mortgages do not require appraisals.  Fannie Mae Homepath Mortgages are only avalable on homes designated by Fannie Mae.

• Rate: 4.500% for 30 year fixed rate priced with discount points of 0.817% paid by the seller's buyer incentive (apr 4.709%).
• Payment: $1,671 for principal and interest. There is no private mortgage insurance for credit scores over 660.
• Minimum down payment (3% of sales price): $10,200.

FHA. Sellers can contribute towards closing cost and prepaids with an FHA transaction as well as l1ong as it's agreed to in the purchase and sales agreement. FHA loans are available on most homes that do not exceed loan limits and HUD approved condos. Unlike the Homepath Mortgage, FHA mortgages DO require an appraisal.  FHA mortgages may be assumable to qualified buyers in the future and FHA mortgage insurance will drop off after 60 payments AND the loan reaches 78% loan to value.

• Rate: 3.750% for 30 year fixed priced with 1.107% rebate credit (apr 4.476%).
• Payment: $1,846.48 for principal interest ($1,534.68) and mortgage insurance ($311.80).
• Minimum down payment (3.5% of sales price): $11,900

Which scenario is best for you depends on your personal financial scenario and goals. I'm pleased that I able to offer both programs to you if you're considering a home that's located anywhere in Washington state.  

If you have questions about any of these programs or are interested in a mortgage, please contact me.

Seattle Homebuyers Surprised by Multiple Offers on "Ideal" Homes

Earlier this month, Aubrey Cohen of the Seattle PI wrote "Home buyers finding competition for nice homes in Seattle".  As a Mortgage Originator, I find that many of the home buyers that I'm working with are discovering it's taking a longer amount of time to find the "right home" due to lack of inventory and then, once they do find one they're interested in, they discover they're not alone.  David Billings of Redfin, says:

"When the ideal, cute, turn-key starter home comes on market at a price that a buyer feels is a decent value, they're shocked to find that there are lots (three, four, maybe six) of other buyers that feel just like they do," ..."After having patiently waited out the market and read every article about how terrible Seattle real estate is, they can't believe they'll need to pay full list price, let alone the possibility of paying more in order to beat out others. It takes some time for them to come to grips with this reality and get competitive with their offers, or adjust their search to a home that needs some work, or is in a slightly less prime location."

The article reports the "hottest" homes are priced under $500,000 "turn-key...staged, painted..." located in the neighborhoods of Northeast Seattle, Capitol Hill-Montlake and Ballard-Greenlake. "Multiple offers have jumped from between 30 and 35 percent to 40 and 50 percent, hitting 51.4 percent in Ballard".

What's a Ballard Home Buyer to Do?  Actually, I think this applies to any home buyer who's considering making an offer on a home, especially if it's one that is "ideal" and newly listed. 

• Meet with a local licensed Mortgage Originator to review your financial options and get preapproved. You really can't start this process too early - even if you're not planning on buying for a year, meeting with a mortgage originator and reviewing your credit and assets (funds for down payment) ahead of time may help put you in the best position possible for when your "ideal home" comes on the market.
• Have a plan and set your limits. Determine what mortgage payment you're comfortable paying and what down payment you're willing to part with (this may be a lower amount than what you're approved for).  
• Develop thick skin. Buying a home can be emotional - especially in a bidding situation. Be prepared that you may not win a bid and stick to your price range. 
• Work with a professional real estate agent. Get referrals and check out your real estate agent just as you would when selecting a mortgage professional. Some agents, especially in this market where their commissions may be down, may be more interested in making a sale than looking out for you. I'm happy share my recommendations with you.
• Be patient. Some of my clients have taken up to a year or more enduring several bidding wars before landing their home.

In a multiple offer situation, you're going to need to present yourself as a strong buyer, which includes having a well written preapproval letter. The Seller has probably heard plenty of horror stories of failed transactions due to tougher underwriting guidelines and they're going to want to select a strong buyer. Other factors may also include how quickly the transaction can close, especially if the home is vacant or if the seller has an offer pending on their next home.

In a possible bidding situation, I will often prepare several preapproval letters at various price points for my clients so they can determine just how high they want to go with the potential sales price.  

With home prices in Washington reaching "record affordability" combined with historically low mortgage rates, many home buyers are looking for their "ideal home" at a more reasonable price or a distressed property at a discounted price.

Bottom line, be as prepared as possible and start the preapproval process early. If you're considering buying a home located anywhere in Washington State, I'd love to work with you.

Piggyback Combo Mortgages are Back

I'm pleased to announce that we now have second mortgages and home equity loans available in combination with a first mortgage at Mortgage Master Service Corporation. I see this being very useful with keeping loan amounts under conforming limits (especially once they're scheduled to be reduced on October 1, 2011).  Here's some quick points on this program:

• maximum allowed total loan to value is 85% with a mid-credit score of 720 or higher for owner occupied.
• maximum allowed total loan to value is 70% with a mid-credit score of 700 - 719 for owner occupied.
• maximum allowed loan to value of 80% with a mid-credit score of 720 or higher for a second home.
• available for purchases or refinances.
• maximum allowed debt-to-income ratio of 45%.
• available as a HELOC (home equity line of credit) or fixed rates.  

Should you consider using a first and second mortgage combo for your home financing? That's up to you!  What's important is knowing and understanding what options are available to you so you can make an informed decision.  If you are buying or refinancing a home located anywhere in Washington state, I'm happy to help you with your mortgage needs. 

Fannie Mae Homepath Buyer Incentive Extended Once Again

Fannie Mae is extending their buyer incentives of 3.5% towards closing cost on qualified Fannie Mae homes through October 31, 2011.  In addition, they're also offering real estate agents a selling bonus of $1,200.   

Here are some details for qualifying for the Fannie's Homepath Mortgage special (from the Homepath website):

• Buyers and/or selling agents (the agent representing the buyer) must request the incentive upon submission of initial offer in order to be eligible.
• The initial offer must be submitted on or after June 14, 2011 and close by October 31, 2011. If an initial offer was made prior to the effective date, the offer is not eligible for the incentive.
• The sale must close on or before October 31, 2011. No exceptions will be made to this deadline.
• Only buyers purchasing a HomePath property as their primary residence may receive up to 3.5% in closing cost assistance. Second homes and investment properties are excluded from the incentive.
• Buyer must sign the Owner Occupant Certification Rider to the Real Estate Purchase Addendum.
• If a buyer's total closing costs are under 3.5%, the difference will not be available as a credit to the buyer.

Don't forget, the Fannie Mae Homepath Mortgage does not require an appraisal and there is no private mortgage insurance for credit scores over 660.   Fannie Mae will lend up to the high balance conforming loan limit, which is currently $567,500 in the greater Seattle area (this loan limit is set to be reduced October 1, 2011).  For more information about Fannie Mae's Homepath Mortgage, click here.

We are pleased to offer the Fannie Mae Homepath Mortgage for homes located anywhere in Washington.  Here's an example of rates effective as of June 16, 2011 at 9:45 am for this home located in the Crown Hill neighborhood in Seattle offered at $408,000 based on a credit score of 740 or higher and utilizing the 3.5% credit towards closing cost closing in 30 days.  With the closing cost credit, home buyers can purchase qualified Homepath properties with just their down payment.

With a 3% down payment of $12,240, the 30 year fixed rate is currently 5.00% (apr 5.232). The principal and interest payment is $2,124.53 - remember there is NO private mortgage insurance!  

With a little extra down payment of $20,400 (5% down), the rate improves to 4.750% (apr 4.978) with a principal and interest payment of $2,021.91.

A down payment of 10% currently provides a rate of 4.625% (apr 4.584) with a principal and interest payment of $1,887.92.

Adjustable rate mortgages are available with this program too.

If you would like a rate quote or are interested in getting preapproved for a Fannie Mae Homepath mortgage, please contact me! 

My thoughts on NAR's Pending Home Sales for April: Mortgage Guidelines are NOT "Excessively Tight"

This morning NAR released the Pending Home Sales report which revealed that "contract signings, dropped 11.6 percent in April from a downwardly revised 92.6 in March. The index is 26.5 percent below a cyclical peak of 111.5 in April 2010 when buyers were rushing to beat the contract deadline for the home buyer tax credit." Pending home sales is a forward indicator since it's reporting on contracts that are signed but not yet closed.

Lawrence Yun, NAR's Chief Economist states that part of reason for the larger than expected drop is due to how difficult it has become to obtain a mortgage. 

“No doubt the continuing excessively tight mortgage underwriting process is making the housing market recovery unnecessarily slow...We simply have to get back to sound, common-sense lending standards to provide mortgages to creditworthy borrowers who are buying homes well within their means. Bank balance sheets show rising cash reserves and declining loan balances – it’s time to loosen the purse strings....” 

It's my experience that it's not that difficult to obtain a mortgage and underwriting guidelines are not "excessively tight".  The difference between qualifying for a mortgage now and pre-2007 is that borrowers must now prove (provide supporting documentation) that they meet program guidelines.  Stated income, low or no-doc loans are gone.  

• Every penny of your down payment and funds for closing must be documented with complete bank statements (all pages) or other asset accounts being used.
• Large deposits on your bank statements must be sourced (more documentation) to show where the funds came from.
• Employment must be steady.  Buyers are not required to have been on the same job for the past two years...heck, they can be out of college (may count as employment) and there may be some unemployment periods...it needs to make sense and be documented.
• Income must be steady.  If a potential borrower is not paid salary (hourly, commission, bonus, self-employed, etc.) they need to show they've received this type of income for the past two years.
• Borrowers must be able to afford their home based on their income and debts. Some debts where payments are deferred, like student loans, are factored into your debt-to-income ratios...one day, you are going to have to make payments on it!  
• Borrowers who take out new debts before funding (closing) of their loan, may find they no longer qualify for their mortgage.  Doesn't this make sense? Yes, home buyers may need new a washer and dryer...however if they're borderline with their credit or pushed with their qualifying ratios, they risk blowing up the purchase just before closing due to "LQI".  Home buyers need to make sure they honestly reflect the loan application from the start of the transaction to finish.

Okay, I'll admit that credit scoring has become tougher. Pre-2007, a person with 600 credit scores (or lower) could qualify for a mortgage.  Now you pretty much need a mid-credit score of 630 or higher for most loan programs.  And their are price hits (risked based pricing) that are factored into interest rates based on loan to value and credit scores.  Credit scores are reflective and borrowers can work on improving their credit scores (and should).  

Income is also scrutinized more than before with 4506Ts being required on every transaction. If your income is higher on your loan application than what you claim on your tax returns, be prepared...you'll be providing additional documentation (tax returns) even if you're paid a salary and your income may be adjusted lower.

Here's where Congress may really muck up the housing recovery, especially in light of this report:

• Lowering the conforming loan limits, which is scheduled to happen on October 1, 2011.  In the Seattle area, the current conforming loan limit is $567,500.  Effective October 1, 2011, it's set to roll back to $506,000 meaning that loan amounts of $506,001 or higher will be "jumbo" non-conforming.  Jumbo loans have much tougher guidelines and higher rates which does mean that fewer people will qualify for higher priced homes.  Loan limits are also set to be reduced for FHA and VA loans after September 30, 2011.  By the way, 2012 loan limits may be even lower!
• Increasing the minimum down payment for FHA loans from 3.5% to 5%. Congress is working on this right now and it's been tossed around by our government for quite a while.  Does having 1.5% more "skin" in the game really make a more responsible borrower?  I don't think so.  I would rather see that a borrower have that 1.5% in their savings than invested as down payment (where they do not have access to it should they have an emergency) in a home.

People can still get a mortgage today.  It bothers me that NAR and others are painting that mortgages are too tough to obtain...painting an inaccurate picture does not help the housing market either.  Today's buyer needs to be prepared to provide plenty of paperwork to support they actually qualify for the mortgage by showing they earn what they say, have the funds for closing and are employed.  What's wrong with that?

If you are considering buying a home, I do recommend meeting with a local licensed mortgage professional as early as possible to start on the prequalification process.  If your next home is located anywhere in Washington State, I'm happy to help you!  

PS: I still believe that it would tremendously help the housing markets recover IF home owners who want to refinance and who qualify based on credit, income and employment are allowed to without an appraisal...very similar to an FHA streamline refi. This would allow people who want to stay in their homes and who qualify, to be able to take advantage of today's lower rates and not cause them to be punished due to lower appraised values.