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The Federal Housing Finance Agency (FHFA) has recently announced the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2019.  We are accepting these new loan limits effective immediately: 

Here's the map for an entire country and you can zoom in to each county in Washington state or you can download either an excel spreadsheet or PDF version of the file. 

The conforming loan limit as established by the Housing and Economic Recovery Act (HERA) is reviewed each year and adjusted as necessary to reflect the change in the average U.S. home price. The new limit represents an increase of 6.9% over the $453,100 limit in 2018. Higher loan limits will vary by state and county. However, it cannot exceed the new ceiling limit of $726,525 for one-unit properties. 

The Federal Housing Administration (FHA) and the VA are expected to adopt the same loan limits for 2019. 

Posted by Sam Kader on December 5th, 2018 5:58 PM
This program has been available for single-family purchases and refinances since 2017 that gives eligible borrowers the ability to realize savings in cases where the Automated Collateral Evaluation (ACE) system determines that
a traditional appraisal isn't required. ACE uses data from multiple listing services and public records as well as a data base of historical home values to determine collateral values, analyzing the information using its proprietary models. An appraisal waiver means some borrowers can save as much as $750 on appraisal fees and close 7 to 10 days faster with a waiver. As of June 2018, Fannie Mae also expanded their Property Inspection Waiver (PIW) to condo's. To determine eligibility, we must submit files through Automated Underwriting System (AUS) and must receive an Approve/Eligible recommendation. Borrowers can still opt for a traditional appraisal even if a property is found eligible for a waiver.  

As a general guidelines, here are lists of eligible transactions on one-unit properties including condominiums: 

  • Rate an term refinance transactions: Principal residences and second homes up to 90% LTV/CLTV  or Investment properties up to 75% LTV/CLTV 
  • Cash-out refinance transactions: Principal residences up to 70% LTV/CLTV or Second homes and investment properties up to 60% LTV/CLTV 
  • Purchase transactions: Principal residences and second homes up to 80% LTV/CLTV 
Posted by Sam Kader on August 9th, 2018 8:03 PM
Buying a home is a big financial commitment for most people. It definitely pays to do it right the the first time. Here are some common missteps that homeowners make at every age group and a few tips on how to avoid them. 

20's something. Getting the wrong type of mortgage. 

People in this age group are just staring their careers and usually have less money and paying less for a mortgage is a necessity. They might get an Adjustable Rate Mortgage (ARM) thinking that they will earn more money down the road so when the ARM rate resets , they will have excess funds for
it. Adjustable Rate Mortgage seems attractive because the initial teaser rate is low compare to Fixed Rate.  However, if that promotion or salary increase does not happen and when the ARM resets, there is a chance that the borrower will no longer be able to afford their mortgage payment. Consider other alternatives to ARMs such as Fixed FHA loans, Fixed VA loans and GNND

30's: Not thinking about the future. 

Homebuyers in this age group may not think much about potential future family when buying a condo in a downtown Seattle with gorgeous views of the
Puget Sound. It's important to think that even if you are currently singe that you should ponder these questions: 
  • Who do I imagine living with in the future? 
  • Where do I imagine living? 
  • How do I imagine living? 
Those answers should be an integral part of what you look for in a home. For example, even if you think you might want kids or even a dog, you'll probably want to choose a home with a backyard instead of one near a great nightlife. 

40's - 50's: Overestimating your budget. 

People in these age groups are more financially stable and tend to have more money which can lead to overestimating your budget and buying a house you can't afford. Figuring out our budget is a critical step for buyers of all ages. Your budget should incorporate things that you aren't willing to give up and discretionary spending. Use this online home affordability calculator to determine how much you should spend. 

60's and up. 

Falling in love with that vacation home. Homeowners in their 60's are retired or getting ready to retire. While some choose to stay put, many plans on moving to warmer climates or even another country. 
Before buying a new home in your vacation paradise, be sure to visit the area in every climate. For example, Florida is great in the winter but may not be comfortable in the humid summer months. 

Posted by Sam Kader on July 23rd, 2018 12:50 PM
Rising home values and interest rates have many homeowners turning to home equity products to meet their personal financing needs. Because it's secured by property, taking a cash-out refinancing or a Home Equity Line Of Credit (HELOC) is typically one of the best options for consumers and cheaper than using a credit card or unsecured forms of borrowing.  Equity which is the difference between your home's value and mortgage balance accumulates from paying down your loan and from the increase in home prices over time. Recent tax law changed the rules about deducting interest paid on a home-equity loan or line of credit. You can only deduct the interest on a home-equity loan if you use the money to buy or improve your home. You can't deduct it if you use the money to consolidate debt or buy a boat or pay your kids college tuition. You can also deduct interest up to a combined mortgage balance of $1,000,000. 

HELOCs typically have an interest only initial period followed by payments of principal and interest. These lines of credit usually have a floating interest rate tied to an index such as the bank prime rate. Borrowers will see a big payment jump when the loan switches from interest-only to a fully amortized loan. Their interest rate will also rise when mortgage rates increase. A HELOC makes more sense if you plan to sell the property or move before the fully amortize payment period begins. Depending on how much you borrow and your FICO score, a HELOC interest rate is about 5.5% or 5.62%. 

Cash-out refinance is a good option if you have specific purpose for the funds such as home improvement or debt consolidation. You can choose a fixed rate of 4.25% or 4.5%. If you currently are paying monthly mortgage insurance, cash-out refinancing is good way of having it removed and getting funds as well towards that home improvement that you've been planning.  

Today's home equity borrowers have far higher credit scores and borrow less and lenders are more responsible in their underwriting of home equity then they were Pre-Crisis of 2016. In 2017, homeowners borrowed only $262 billion with cash-out refinances which represents only a paltry 1.25% of available equity. Here are 7 most popular uses of  cash-out and HELOC: 

  1. Home improvements accounts for 42.9% with Average Property Value of $206,824, Average Loan Amount of $38,662 and Average Loan-To-Value of 67%. 
  2. Debt Consolidation accounts for 38.2%. Average property value of $206,435, Average Loan Amount of $37,000 and Average Loan-To-Value of 74%. 
  3. Emergency expenses account for 0.2%: Average Property Value of $212,213, Average Loan Amount of $35,747 and Average Loan-To-Value of  58%. 
  4. Down payment on investment property accounts for 0.3%. Average Property Value of $301,025, Average Loan Amount of $103,625 and Average Loan-To-Value of 71%.
  5. Retirement income accounts for 1.3%: Average property value of $293,388, Average Loan Amount of $74,207 and Average Loan-To-Value of 56%. 
  6. Other Investment purposes accounts for 7.8%: Average Property Value of $252,992, Average Loan Amount of $80,241 and Average Loan-To-Value of 70%. 
The biggest danger of taking home equity is not being able to repay your loan or needing to sell you home in an emergency sale or losing it to foreclosure  Homes are our greatest asset, use it wisely and protect it as we are living longer and are more responsible of our own financial security. 
Posted by Sam Kader on June 27th, 2018 9:45 PM
In general, underwriting standard continues to be cautious. However, we have seen some of  underwriting standards are loosening slightly across most of the attributes of credit risk. 

First factor - Loan-To-Value/Down Payment. In December 2014, Fannie Mae upped the maximum financing by introducing HomePath with 3% down payment - Maximum Loan-To-Value (LTV) ratio of 97%.  Freddie Mac followed a few months later by introducing HomePossible and HomePossible Advantage with 5% and 3% down respectively.  

Second factor - Debt-To-Income ratio (DTI). In July 2016, Fannie Mae revised its maximum Debt-To-Income (DTI) ratio from 45% to 50%. 

The third factor - Credit Scores have not changed. Investors share for Conventional Conforming (CC) with a credit score of less than 640 as well as the low and no-doc share were both down simultaneously. In contrast, the shares of new loans with an LTV higher than 95% and with a DTI above 45% have increased by 50% and 20% higher respectively.  

In conclusion, we have seen some underwriting guidelines loosening in some areas but definitely not near the same level as pre-2006 crisis. 

Posted by Sam Kader on June 7th, 2018 11:45 AM



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