What is PMI?

Today we’re going to talk about PMI or private mortgage insurance. When you as a home buyer make a down payment that is less than 20% you are going to be required to purchase private mortgage insurance if you are doing a conventional style loan. This private mortgage insurance or PMI protects the lender in case a foreclosure happens. The cost of PMI is usually between 0.3 and 1.5% of your original loan amount per year. That number does vary based on the size of your down payment and your credit score. On some loans, the PMI doesn’t stay around forever, as on some loans it will cancel so you don’t have to refi-out.

There are four types of mortgage insurance that I’ll go over really quickly.

The first is monthly, which most of you probably know about. It’s a premium that’s included in your monthly mortgage payment. Once you paid your mortgage down to 80% of the original sales price. With conventional financing, you can call to request that it be removed, but as 78% of the original loan amount and purchase price, the mortgage insurance will automatically cancel.

The next is single premium mortgage insurance, which is when you buy out the monthly premium with a flat fee. This is paid as a closing cost, eliminating the need for any kind of monthly mortgage insurance. Depending on your down payment, the premium may be able to be financed into your home loan as well instead of paid in cash at closing.

Then there’s split mortgage insurance, which is a little bit of monthly and a little bit of single premium. You can pay a certain percentage upfront and this will reduce your monthly mortgage insurance payment. So it’s a really great option if you can, uh, put this together this way.

The fourth option is lender paid mortgage insurance, which is when the mortgage insurance premium is paid by the lender and it’s built into an interest rate. And even though it sounds like your payment will be higher, it actually can produce a lower monthly payment because you’re not having this single amount of mortgage insurance included in the payment.

If you have questions, let me know.

Who Touches Your Mortgage Loan File

In today’s post, we’re covering who actually works with you on your loan file. This will vary from company to company and from originator to originator. At Movement and with Team Springer, this is how we work with you on your loan file during the process, so that way you always know who’s touching your file.

The first person who you work with is obviously going to be me, I’m your Loan Officer and I help guide you through the process of picking your loan product, your interest rate, your down payment, the structuring of your loan, and other aspects. I’ll go over the process with you from start to finish so you’re comfortable on how everything works and what is expected from you.

The next person who steps into the picture with me is Jill and she’s an Administrative Assistant here at the Vancouver office with me. Jill’s role is to:

  • Support you, the consumer, with your loan file.
  • Help you with making sure your documents are accurate and correct.
  • Order all the supporting documentation from verifications and title work appraisal and everything like that.
  • Work with Theresa on the file to get it to underwriting.

Once your loan file goes through underwriting, Brenda, who is my rock star Processor and has been in the business a long time, jumps into the picture. Brenda’s role is to:

  • Takes the file from underwriting to funding and closing. What that means is once the underwriter’s reviewed your file, they may add some conditions, or they may have some clarifications. Brenda takes that input from underwriting and contacts you to get the information and answers back to them.
  • When we’re clear to close, she works with the closing department to make sure the loan documents are issued, the closing disclosure has already been signed and we’re ready to go.

Because we actually use Easy Sign, you sign the vast majority of your loan documents in your closing package online and you are pretty much signing just a little teeny tiny stack at actual closing. Everything goes much more quickly.

So that’s the team and our process here at Movement, and I hope you look forward to working with them because I have some great support staff and Brenda and Jill are amazing. Not every loan company has teams like this to support their Loan Officers. Other loan officers and mortgage companies work very differently and may not want the contact directly with you, the consumer. I prefer it because I like to be involved throughout the process.

If you have questions, let me know.

Appraisals and the Value of the Home You’re Purchasing

An appraisal is basically an evaluation by an independent professional. It could an appraiser to determine an opinion of the value of the home. The appraiser will look at recent comparable sales and market conditions to determine the value of a home in order to help support the agreed upon sale price. So let’s say the house you were looking to buy is $250,000. If you’re lucky, it may appraise for higher than what you are going to pay for it and that just means you get instant equity on the day you close. Suppose however the value comes in lower than the sales price. Well, this does allow you to possibly renegotiate with the seller, which may reduce your loan amount and save you money on your monthly payments. Appraisers also look at the condition of the home. Some programs do have much more strict guidelines on condition than others.

If you have questions, let me know.

The Case-Shiller Home Price Index and Pending Home Sales

Let’s talk about the Case-Shiller Home Price Index and the Pending Home Sales Report. These are two major monthly home reports that have the best finger on the pulse of the housing economy.

The first which is the Case-Shiller Home Price Index. It is considered the gold standard for appreciation and it was just released for this month. Case-Shiller does have a few indexes which can make it confusing but two are the most important: the National Index and the 20 city index. The US National Home Price Index covers all nine census divisions, reported a 3.2% annual gain in August. So, remember this is a three-month average of June, July and August prices. This in particular, was a slight increase from July, which covers May, June and July and was revised lower from 3.2 to 3.1. The other index which is important is the 20 City Index, and it was unchanged at 2% on a year over year basis with no change from the previous month. Remember on a $300,000 home with 3.2% gain and appreciation really translates to $9,600 bucks over the course of a year, and that’s still quite meaningful.

The second report, which is the Pending Home Sales Report from the National Association of Realtors, which measures assigned contracts on existing homes and it’s a really good leading indicator for existing home sales by a month or two. It was at 1.5% in September. This reading was actually much stronger than expectations of the 0.7% gain and the second best number in the last 12 months. The gains were fairly broad based, although the overall gains in the West and the Northeast are easing a bit and not coming in a strong. Year-over-year contract signings were up 3.9% annually, and today’s report continues to string of strong housing data, which is really good news for us as homeowners.

If you have questions, let me know.

What is a Rate Lock?

I’m kicking off a series of mortgage minutes detailing different parts of the loan or loan process. Today’s topic is rate locks. Rate locks are in reference to the interest rate on your mortgage. A rate lock, or locking your rate, uses the current day’s interest rate to secure your loan. That means your interest rate will not change based on market conditions. This protects you, the client from rising rates if the market shifts… and it has been shifting like crazy recently.

Rate locks can usually be done in increments of 15 days, running from 15 days to 360 days, depending on the loan type you are getting. Is it a purchase or refi construction, renovation and so on. The other thing here is at Movement we have a little bit of an unusual rate lock system. We allow clients to lock in smaller slices, so, instead of having a 15, 30, 45-day, so on, we do 37-day, 20-day, 17-day, etc. So you can take advantage of a better rate in a smaller slice.

One thing that happens when you lock your rate is, if rates go up, you are protected. And that’s actually great. You are not going to be subject to interest rate gyrations, as I said earlier. The other thing that happens is there are other instances that can change your interest rate and they are not market-related. If you do have questions on those, let me know.

Does it Make Sense to Take Time Off From Home Shopping?

If you are shopping for a home today, you know it’s really hard work. You may not find something right away and it’s super easy to get fatigued. Some buyers may get discouraged and say, “Let me take off a few months. Maybe I’ll come back in six months and see where everything’s at.” Well here’s the thing, while you can take some time off, the market isn’t and it is continuing to appreciate… and it’s hot right now in Clark County and in the Portland area.

The forecast appreciation is approximately 2% in just the next six months. Let’s quantify that. If you’re looking at homes priced at about $355,000 today, that home would be worth $7,100 more in six months. And if you were planning on putting the same amount down for percentage-wise, you would have to bring in more down payments since a home is now more expensive.

And what about those interest rates? Some folks think that rates aren’t as low as they could go. Well, while they’re at really attractive levels right now, does it make sense to wait for rates to go down further? They may not. They may go the other way. So, the monthly savings with a lower rate may be nice, but it is dwarfed by the missed appreciation and amortization. And it could take many years to recoup what you would have lost. Should rates drop significantly, we can always refinance you in the future. So stick with it, keep shopping, and you will find your home.

Now is a GREAT time to REFI!

Many of you have heard recently that it’s a really great time to Refi. Really true. We haven’t had rates this low in many years. For some of us who’ve been in the industry a long time, we haven’t seen these rates since the last three or four years, and well before that.

When we do a Refi, one of the questions we do get a lot, or at least I do, is, “Do I have to start my term all over again?” Well, no… if you have a conventional style loan and not a jumbo, or some other specialized loan in the conventional world, we can actually set your term the way you want it. For example, if I did your loan four years ago, and you have 26 years and two months left, then we can just do a 26 year and two-month loan. We do not have to automatically go to the 30-year fixed automatically.

If you want to shorten it yourself anyway to a 15 year, that’s fine too. But don’t feel that you are stuck with a 30-year term if that’s what you have originally. That’s great news on that side of things so you don’t have to end up making any more payments than you really do want to.

Doing a Refi has many added bonuses. You do get a skip at least one payment and possibly two and that’s actually some great money in your pocket there. If you think about your house payment. The other thing is if you currently have your property taxes and your homeowner’s insurance escrowed into your payment, when we close on the new loan, the old loan must give you that money back. So, you could potentially get a few thousand dollars in your pocket between skipping payments and the escrow account refund to you.

If you want to pull some of the money out when you Refi, you can do some things around the house that you’ve been wanting to do. If you want to spruce up your kitchen, maybe you want new cabinets or new countertops, or you want new floors in the house. Or maybe you’ve wanted an outbuilding to put that great tractor in that you have that sitting in your garage while you’ve been parking outside. The other thing you can do is if you bought your house with a first and second combo to avoid mortgage insurance or you had some kind of down payment assistance, we can actually put those two loans together. This will give you one loan and your rates will probably be lower than what you were originally paying. You can buy a vacation home to go hang out at the beach or over in Bend, or wherever you want to go. You could buy a rental property and if your debt service is high right now you can consolidate some of your debt. That could be a lift off your shoulders and make your life a little easier.

Of course, you don’t have to take cash out. You can just do a straight rate and term refinance and not take any money and that actually is a great way to go to because that’s where you’re going to realize the most savings.

If you have any questions or you just want to get started, click HERE or on the big yellow Get Started button at the top of this page, which will begin take you through the application. It’s a smart application and it’ll know what to ask you for in terms of documentation as you go through it. Once that’s done, I will personally review your application and call you.

If you’re not sure you’re ready to start an application and just want to run the numbers first, give me a call and let’s chat to see if it makes sense.

How to Improve your Credit Score

Let’s talk about your credit score. It’s really important. It can determine whether you get that home or not. And it can determine whether you save money on the rate you’re going to pay based on your credit score. So, of course, you want to always make your payments on time, but how can you actually improve your score? What can you do?

So here are a few little known facts that have changed since Trended Credit that came into being a few years ago.

  • First, always keep your balances to 30% of the limit. If you have $1,000 limit, don’t ever go over $300. Better yet, pay off that credit card every single month. Don’t carry a balance if you can help it.
  • Second, if you can’t pay off balances right away, go to that credit card issuer and ask them if they’d be willing to give you a higher limit. The amount you owe then becomes a smaller percentage and that can help your score.
  • Third, and this is one of the most important points, do not close any credit lines that you have from the past. That is credit history that you’ve built up. You want to keep that good history. It’s like getting straight A’s in school and then not wanting to share your report card. Keeping good history will help your credit score. The longer you have a good history, the better it reflects in your scoring system.
  • Fourth, let’s talk about some of those collection accounts you may have. If you have them and they popped up, just paying them off may not be the right thing to do. Just wait and see on those because by paying them off and bringing them current right now, you may actually hurt your credit score significantly by bringing them to the front of your credit history. That’s not what you want to do.

So those were just a few quick tips for you and I hope they help. If you need any more information, give me a call or text me and I’ll help you improve your credit and get into the home you’ve been dreaming about.

Blue Water Navy Vietnam Veterans Act

Here’s a really quick update on something significant that has hit the lending world. The President just signed into law the Blue Water Navy Vietnam Veterans Act, and this is going to allow home buyers to borrow above the 2019 limit of $484,350 without a down payment currently.

If you do a lot of VA purchases, you know, it’s always been a split. There’s the conventional Conforming VA and then there’s the Jumbo VA, which requires 25% down of the difference between the two. So that’s actually a pretty much gone and you can now have the veterans financing above the $484,350 and not have to bring any money down.

Additionally, just so you know, NAR along with other veterans benefits groups who really fought hard to keep from having the VA funding fee increased to offset this. So that’s actually super important because it looks like many folks in Congress wanted to do that and they were pushed back on that. So anyway, some really good news here in the VA lending world, and if you have any questions, give me a shout or shoot me an email.

Understanding Your Home Inspection

If you’re going to spend this much money on something, you want to know exactly what you’re getting. A home inspection is a great way to ensure the largest investment of your life, your home, is worth buying. From the roof to the foundation, a home inspector’s report should cover the overall condition of the home.

How to Get a Home Inspection

The home inspection usually comes after the purchase agreement is signed. Both parties want to make sure they have agreed on a price before anyone spends money on the inspection, which can range anywhere between $350-600 in Washington, depending on the size of the property.

Here are a few of the main areas a home inspector will be checking:

  • They should look for any cracks, dents, or leaks in the foundation, floors, walls, ceilings, siding, windows, doors, and the roof.
  • Inspectors are trained to check the condition of cables, conductors, and panels. They’ll also note the number of installed light fixtures, switches, and outlets.
  • The inspector should check out all the faucets, drains, and pumps. They’ll document things like poor water pressure and corrosion, as well as the age and condition of the water heater.
  • Inspectors will usually note the age and energy rating of furnaces and air conditioners. However, not all inspectors will check solar heating and air conditioning systems.

What to do with the results

It’s unlikely that the home inspector’s report will come back with a perfect score. If you find the damages to be too bad, you still have time to back out of the deal. If not, you can ask the seller to fix it before closing or negotiate a lower purchase price.

Either way, a home inspection is going to give you a better idea of the condition of a home, allowing you to make a better-informed decision to either move in or continue your search for the perfect Washington home.

If you are looking for a home in Washington, give me a call at 360.798.4161 to find out how you can get pre-qualified for a mortgage!