Edgewood, WA Real Estate Blog

Mortgage rates continue to bounce all over the place during these volatile times in the market.  I thought it might be interesting to share a scenario that I’ve been pricing out this morning instead of just creating a rate sheet.

They are a couple who are looking at buying their first home.  They have saved up enough for 5% down payment and closing costs.  They have excellent credit (scores 740 or higher) and are just shy on savings as many first time home buyers are.   They orignally were seeking a “piggy back” type scenario where the first mortgage is at 80% of the sales price (to avoid private mortgage insurance) and the second mortgage at 15% (to make up the difference owing of their 5% down).   These types of programs have disappeared during the “mortgage meltdown” as no bank wants to be in second lien position in the event of a foreclosure.   There are still options for this buyer’s scenario. 

Conforming financing will still allow 5% down with private mortgage insurance.   This morning, I provided them with a Good Faith Estimate detailing how this would look based on their 740 low mid score (low mid score means that you take the two middle scores of both borrowers and use the lowest of the two):

They are looking at a home with a sales price of $390,000 with a loan amount of $370,500.

30 year fixed priced with 1 point:  5.75% (apr 6.694%) based on a 740 low-mid credit score.

Principal and interest = $2,162.14; plus private mortgage insurance of $240.83 and estimated taxes and insurance of $456.25 = a total mortgage payment of $2,859.21.

Down payment plus closing costs = $29,000.

I also included a Good Faith Estimate based on financing their home purchase utilizing an FHA insured mortgage loan.   Why?  Frankly mortgage and private mortgage insurance companies continue to tighten their guidelines with underwriting that overlays what is dictated by Fannie Mae and Freddie Mac (conventional lenders).  In this market, it’s good to have a back up plan just in case the bank or the pmi company decides that they don’t want to go up to a 95% loan to value anymore.

Here’s what the FHA scenario looked like this morning (I’m seeing that rates have improved slighlty as I write this post):

30 year fixed priced with 1 point: 6.000% (apr) with a base loan amount of $370,500 plus upfront mortgage insurance of 1.75%  ($6,483)  =  $376,983.  Credit scores with FHA may be as low as 620 without any adjustments to price or mortgage insurance (currently).

Principal and interest = $2,260.20; plus monthly mortgage insurance $169.81 and estimated taxes and insurance of $456.25 = total mortgage payment of $2,886.26.

Down payment* plus closing costs = $28,450.  *This down payment is based on 5% down.  With an FHA mortgage, they could elect to do as little as 3% down until the end of this year.  Effective January 1, 2009, the minimum required down payment for an FHA mortgage loans will be slightly increased to 3.5%.

You don’t have to have 20% down to buy a home and although we’re hearing a lot about how banks aren’t lending in the news due to the credit freeze, mortgages are still taking place.  I do advise meeting with a Mortgage Professional early on should you be considering buying or refinancing a home so that you can be in the best position possible with your credit.

Statistics for September 2008 for Edgewood and surrounding cities have just been updated.

Things appear to be changing a bit.  However, keep in mind the data is not seasonally adjusted (although you can see what was happening last year at this time).

Inventory seems to be coming down, at least for King County.  Prices continue to drift downward.  Some of this drift may be due to the disparity of rates between conforming and jumbo (conforming and non-conforming) loans.

I have not compiled pending data below.  The mainstream media is ballyhooing an increase in pending sales (an improving market) which generally reflects the most recent trends (0-30 days back versus actual solds which reflects what happened 30-60 days ago).  But keep in mind NWMLS changed the way pendings are tabulated.  Houses that were sold subject to inspection were categorized as actives.  Now they are classified as pendings subject to inspection.   So the method of classification has changed.  We’ll need to see how much effect this has by correlating pendings to solds in the future.

Never the less, it remains a buyer’s market.

• Number of Active listings: King & Pierce County WA
  
• Number of Active listings: Edgewood, Milton, Sumner, NE Tacoma, & Federal Way WA

• Number of Sold listings: King & Pierce County, WA
• Number of Sold listings: Edgewood, Milton, Sumner, NE Tacoma & Federal Way WA

• Average days on market: King & Pierce County WA
• Average days on market: Edgewood, Milton, Sumner, NE Tacoma & Federal Way WA

• Months of housing inventory: King & Pierce County WA
• Months of housing inventory: Edgewood, Milton, Sumner WA
• Months of housing inventory: NE Tacoma WA
• Months of housing inventory: Federal Way (100) WA
• Months of housing inventory: Federal Way (110) WA

• Median sold price: King & Pierce County WA
• Median sold price: Edgewood, Milton, Sumner WA
• Median sold price: NE Tacoma WA
• Median sold price: Federal Way (100) WA
• Median sold price: Federal Way (110) WA

Conventional mortgage rates are priced by the lowest mid-credit score of the borrowers on the loan application.    On October 1, 2008, Fannie Mae will be implenting another price adjustment for “adverse market conditions” on all loans delivered.  This means that lenders are all ready beginning to price rates factoring in the price adjustments as some loans locked today may not be delivered to Fannie until 10/1/2008.    As I priced these rates out, it was interesting to see which banks are all ready factoring and how dramatic the difference to rate is from lender to lender right now.   The gap will narrow as we near October.

These rates below are based on a sales price of $500,000 with a loan amount of $400,000 utilizing a 30 year fixed mortgage with a 30 day lock priced with zero origination/discount points.   (Remember, whether or not you have your mortgage priced with a point is up to you.  Typically 1% in origination/discount points = 0.25% to rate).

720 or better mid-credit score:   6.625% @ 0 pts (apr 6.690).  Principal & interest (based on $400k loan amt) = $2,561.24.

699 - 719 mid-credit score:  6.750% @ 0 pts (apr 6.816).  P&I = $2,594.39.

660 - 679 mid-credit score:  6.875% @ 0 pts (apr 6.942).  P&I = $2,627.72.

640 - 650 mid-credit score:  7.125% @ 0 pts (apr 7.194).  P&I = $2,694.87.

620 - 639 mid-credit score:  7.250% @ 0 pts (apr 7.320).  P&I = $2,728.71

FHA is becoming a gaining all the popularity it lost in recent years past during the subprime boom.  Home buyers and borrowers–please verify that your loan originator is legally able to provide FHA mortgages (many are not) by checking HUD’s site.

FHA  30 Year Fixed with mid-credit scores of 600 or higher and a loan amount of $362,790 for Pierce, King and Snohomish Counties:  6.500%  (apr 7.337).  Principal, interest and mortgage insurance (based on $362,790 and a 640-679 mid-credit score) = $2,493.75.

FHA-Jumbo 30 Year Fixed based on a sales price of $500,000 and a loan amount of $400,000 (to compare with the conventional scenarios above) with mid-credit scores of 600 or higher: 6.625% (apr 7.440).  P&I plus mortgage insurance = $2776.59.

Note: the FHA payments are also factoring in FHA’s upfront mortgage insurance which is typically financed into the mortgage.   The FHA Jumbo scenaro would have the same rate with as little as 3% down. 

Speaking of FHA, with the recent  passage of HR 3221, down payment assistance programs funded by the seller (such as Nehemiah) are slated for extinction as of October 1, 2008.  Lenders are all ready refusing to close loans with DPAs.   As of January 1, 2009, the minimum investment required by a buyer is being increased to 3.5%.   This 3.5% may still be a gift or may now actually be a loan from a family member assuming the borrower qualifies for both payments.   This should be a welcomed option for “the Bank of Mom and Dad” who might not really want to “gift” funds and would prefer loaning the money instead.  

Rates quoted by Rhonda Porter, CMPS and Licensed Loan Originator 510-LO-32047 with Mortgage Master Service Corporation.   To see live examples of rates I’m quoting, follow me on Twitter.  

Statistics for July 2008 for Edgewood and surrounding cities have just been updated.

More of the same - median prices drifting downward. Still looking for a trend of increasing sales which would portend a “bottom”. It just isn’t there. Lacking an increase in sales, months of inventory is “stuck” at a high level.

Keep in mind figures are not seasonally adjusted.

Pierce County appears to be doing somewhat worse than King county.

With Federal Way located right on the border of King and Pierce County, it will be interesting to see what effect Weyerhauser’s reduction of employees will have. It can’t be good.

• Number of Active listings: King & Pierce County WA
  
• Number of Active listings: Edgewood, Milton, Sumner, NE Tacoma, & Federal Way WA

• Number of Sold listings: King & Pierce County, WA
• Number of Sold listings: Edgewood, Milton, Sumner, NE Tacoma & Federal Way WA

• Average days on market: King & Pierce County WA
• Average days on market: Edgewood, Milton, Sumner, NE Tacoma & Federal Way WA

• Months of housing inventory: King & Pierce County WA
• Months of housing inventory: Edgewood, Milton, Sumner WA
• Months of housing inventory: NE Tacoma WA
• Months of housing inventory: Federal Way (100) WA
• Months of housing inventory: Federal Way (110) WA

• Median sold price: King & Pierce County WA
• Median sold price: Edgewood, Milton, Sumner WA
• Median sold price: NE Tacoma WA
• Median sold price: Federal Way (100) WA
• Median sold price: Federal Way (110) WA

Mortgage rates have improved since my last post.  In fact, the last time I posted rates this low was a month ago on June 6, 2008.   Mortgage rates continue to be very volatile and as always, I advice locking over floating your mortgage interest rate. 

If you are considering buying a home or refinancing in the next year, do meet with a Mortgage Professional as soon as possible to make sure you’re in the best position possible.  The difference between a 719 and 720 credit score for a conforming mortgage is a half point to fee with 20% down payment!  For example, using the rate below for 30 year fixed conforming, if a borrower has a 719 credit score, they will have to pay a half point (or $2000 based on a loan amount of $400,000) in order to have the same rate a 720 credit score borrower would have at zero points!  One digit with your credit score may cost you.  Here are some tips that may help you improve your credit scores.  

Here’s a quick look at where rates are as of 8:00 a.m. this morning.   All rate quotes below are based on a 30 day lock.   Please refer to my original rate quote for specific criteria I use to price rates.

Conforming 30 Year Fixed - loan amounts up to $417,000.   This scenario is based on a sales price of $500,000 with a loan amount $400,000 and minimum credit score of 720.    6.375% @ 0 Pts. (APR 6.433%).  

Conforming Jumbo 30 Year Fixed - loan amounts up to $567,500 for Pierce, King and Snohomish Counties.   This scenario is based on a sales price of $650,000 with a loan amount of $520,000 and a minimum credit score of 720.   6.375% @ 0 Pts. (APR 6.468%).

Jumbo (Non-Conforming) - loan amounts up to $1mil.  This scenario is based on a sales price of $850,000 with a loan amount of $680,000 and a miminum credit score of 720.   7.375% @ 1 Pt (APR 7.531%) or 7.750% @ 0 Pt (APR 7.811%).

*

FHA 30 Year Fixed - loan amounts up to $362,790 for Pierce, King and Snohomish Counties.   This scenario is based on a sales price of $375,000 and a loan amount of $362,790 with a minimum credit score of 620.   6.250% @ 1 Pt (APR 7.032%).

FHA Jumbo 30 Year Fixed - loan amounts up to $567,500 for Pierce, King and Snohomish Counties.   This scenario is based on a sales price of $585,000 and a loan amount of $567,450 with a minimum credit score of 620.  6.375% (APR 7.160%). 

*

Prime Rate:  5.00% -  what HELOCs are based on.

NOTE:  If you are considering a FHA mortgage loan, please seek out a Mortgage Professional who is experienced with FHA mortgages.  I recommend working with someone who has an on-site FHA underwriter and who is HUD direct endorsed lender.  Many brokers are not approved for FHA mortgages or have never provided one before.   Experience counts as does legally being able to provide a specific program.   I am having to move “conforming” borrowers to FHA mortgages due to the tightening in underwriting guidelines with Fannie Mae/Freddie Mac (conforming).   Do make sure your loan originator has the ability to offer FHA loans.

To see real-live rates that I’m quoting for clients, click here.    This is just a small sample of what programs are available.  For your personal rate quote, please contact a Mortgage Professional.

Rates quoted by Rhonda Porter, CMPS and Licensed Loan Originator 510-LO-32047 with Mortgage Master Service Corporation located in Kent, Washington.

Most areas show a marginal improvement in markets, at least from a seller’s perspective. Keep in mind closed sales are contracts that were written 45-60 days ago when the seasonal selling period typically peaks.

Federal Way (areas 100 and 110) and NE Tacoma (areas 94-95) are exceptions.

All areas ( based on inventory levels) remain decidedly a buyer’s market.

• Number of Active listings: King & Pierce County WA
  
• Number of Active listings: Edgewood, Milton, Sumner, NE Tacoma, & Federal Way WA

• Number of Sold listings: King & Pierce County, WA
• Number of Sold listings: Edgewood, Milton, Sumner, NE Tacoma & Federal Way WA

• Average days on market: King & Pierce County WA
• Average days on market: Edgewood, Milton, Sumner, NE Tacoma & Federal Way WA

• Months of housing inventory: King & Pierce County WA
• Months of housing inventory: Edgewood, Milton, Sumner WA
• Months of housing inventory: NE Tacoma WA
• Months of housing inventory: Federal Way (100) WA
• Months of housing inventory: Federal Way (110) WA

• Median sold price: King & Pierce County WA
• Median sold price: Edgewood, Milton, Sumner WA
• Median sold price: NE Tacoma WA
• Median sold price: Federal Way (100) WA
• Median sold price: Federal Way (110) WA

Mortgage rates continue to trend upward today after a stronger than expected Retail Sales Report.  Tomorrow we have the CPI (Consumer Price Index) which is report that indicates inflation and has a high impact on mortgage interest rates.   Inflation is the “arch enemy” to bonds and mortgage interest rates are based on mortgage backed securities (bonds).  If the CPI reports higher inflation, we will see mortgage rates increase.   Rates have increased 0.25% since this Monday–I strongly recommend locking your rate in this market.

Mortgage rates continue to be very volatile often times changing 3-4 times per day.   I post live rate quotes on Twitter and you’re welcome to “follow me” to see what scenarios are currently being quoted.   The rates below are based on the same criteria that I used for my first rate quote and are priced with zero origination fees or discount points unless otherwise noted.

Conforming Loan Amounts up to $417,000

30 Year Fixed:  6.625% @ 0 Pts (apr 6.685%)

30 Year Fixed with 10 Year Interest Only:  6.875% @ 0 Pts (apr 6.932%)

5/1 ARM @ 0 Pts:  6.25% (apr 7.228%)

5/1 ARM @ 1 Pt:  5.75% (apr 7.084%)

Conforming-Jumbo Loan Amounts up to $567,500 for Pierce, King and Snohomish Counties. 

30 Year Fixed:  6.625% @ 0 Pts (apr 6.681%)

30 Year Fixed with 10 Year Interest Only:  6.875% @ 0.5 Pts (apr 6.973%)

5/1 ARM:  6.00% @ 0.5 Pts (apr 7.142%)

FHA Loan Amounts up to $362,790 in Pierce, King and Snohomish Counties

30 Year: 6.375% @ 1 Pt (apr 7.147%)

FHA Jumbo Loan Amounts up to $567,500 in Pierce, King and Snohomish Counties

30 Year:  6.625% @ 1 Pt (apr 7.394%)

VA  30 Year Fixed:  6.500% @ 1 Pt (apr 6.828%)

Rates posted are as of 9:30 a.m. June 12, 2008 and may and will change at any time. 

The numbers are interesting this month. As you would expect for this time of year, the number of listings is increasing for both King and Pierce Counties. Yet the number of absolute sales is decreasing. Buyers are holding back. Interestingly days on market for King county are drifting downward while they are drifting upward for Pierce County.

Months of inventory are up for both counties. This is the number of months it would take to sell all the homes on the market at that months sales rate assuming no new homes came on the market. Of course we know additional homes are always coming on the market. A four to six month inventory is considered neutral - neither a buyer’s nor a seller’s market. As you can see, we definitely have a buyer’s market in both King and Pierce Counties.

Keep in mind that “Solds” generally represent activity 45-60 days ago whereas “Pendings” (sold but not closed) represent activity 0-30 days back.

Inventory levels for local areas (Edgewood, Milton, Fife, Sumner, Federal Way & NE Tacoma) really shot up in May as more people put their homes on the market and overall sales activity decreased.

Median sales prices, while all over the board month to month, are down from a year ago.

• Number of Active listings: King & Pierce County WA
• Number of Active listings: Edgewood, Milton, Sumner, NE Tacoma, & Federal Way WA

• Number of Sold listings: King & Pierce County, WA
• Number of Sold listings: Edgewood, Milton, Sumner, NE Tacoma & Federal Way WA

• Average days on market: King & Pierce County WA
• Average days on market: Edgewood, Milton, Sumner, NE Tacoma & Federal Way WA

• Months of housing inventory: King & Pierce County WA
• Months of housing inventory: Edgewood, Milton, Sumner WA
• Months of housing inventory: NE Tacoma WA
• Months of housing inventory: Federal Way (100) WA
• Months of housing inventory: Federal Way (110) WA

• Median sold price: King & Pierce County WA
• Median sold price: Edgewood, Milton, Sumner WA
• Median sold price: NE Tacoma WA
• Median sold price: Federal Way (100) WA
• Median sold price: Federal Way (110) WA