What should I look for?

You’ve picked your property; the Seller has accepted your offer… now the lender wants you to sign documents quickly.  Here is the breakdown of the difference between a Loan Estimate vs a Closing Disclosure.

This is provided within 3 business days after the lender has received your accepted offer.  This document must be esigned within 48 hours of acceptance and appraisal cannot be ordered until it is signed.

What does it provide?

• Loan Amount
• Interest Rate
• Monthly payment
• Closing Costs
• Taxes and other costs
• Basic loan information

What’s important?

• A loan estimate isn’t an indication that your loan application has been approved or denied.
• You’re not obligated to pay an application fee
• An interest rate on your Loan Estimate is not a guarantee.  Some lenders may lock your rate as part of issuing a Loan Estimate, but others may not.
• If you choose to move forward with the loan and lender, you must convey your intent to proceed.

What does it provide?

• Loan amount
• Interest rate
• Monthly payment
• Closing costs
• Estimated taxes, insurance, and other costs
• Summary of transactions
• Additional information about your loan

What’s important?

• Compare your closing disclosure with your most recent Loan Estimate to ensure the terms and costs are what you expected.
• You have this 3-day window to thoroughly review your loan information and ask any final question of your lender
• It’s possible some of your costs may still change at Escrow.
• If you find an error, contact your lender to have it corrected.

Tips for Online Home Buyers . . . . .
By Shannon McCain

Here is a site to utilize when looking on your own.  WashingtonHomeHunt.com

Search for homes listed on the Multiple Listing Service (MLS) site for free . . . on your own. You can also set up a search to receive properties. Home buyers these days are pretty hands on.   Problem is Zillow, Redfin and other online companies pull data from MLS but I’ve noticed it takes about 3-5 days for that data to be updated.

What’s the problem with outdated info??? Home are in high demand and you could lose one to consumers getting the data sooner through an agent or on a local real estate professionals site (like this one). Also listings that are already under contract or worse yet . . SOLD : (
Which makes the process demotivating.

When searching on your own it’s important to keep in mind that realtors listing these homes are only human and sometimes don’t list information accurately. That is why when searching, less is more.

For example: I search for all sizes of land and found on a recent home search the home was listed with no land. When I drove by and explored it on my own, I found there is actually .38 acres. I could have easily not noticed this listing if I hadn’t spent the time looking at all the listings. You can also go to Bing.com, type in the property address, click on “Map” under the tool bar, then all the way to the right top corner click on the arrow next to road and select birds eye. Click on the “+” sign to zoom in on the property. It might be privacy you are looking for. Well maybe the parcel is only .10 acres but it backs up to a protected forest. Less is more
If those online sites send you a listing you are curious about, please utilize WashingtonHomeHunt.com to see if it’s real. I’ve recently went out to ForSaleByOwner properties that Zillow reported as for sale and they were not. They told me it was a mistake when contacting them but you have to wonder if it’s a bait and switch. All of the sudden agents are calling & emailing me to find me a home. Hmmmmm

PMI or Private Mortgage insurance

Private mortgage insurance provides protection to a lender in case you default on your home loan. Unless you make a 20% down payment on a house, you’ll most likely be required to purchase PMI. PMI premiums on a median priced home ($300,000 in 2020) can run between $175 and $300 per month, according to the Mortgage Insurance Companies of America.

PMI might be unavoidable, but it isn’t eternal. Knowing exactly when you’re entitled to cancel coverage can save you a bundle. If you own a median priced home, you’ll pocket between $2100 and $3600 for each year’s worth of premiums you can avoid. That extra cash can be used to pay down your principal instead.

When PMI Is Cancelled Automatically

Once you have paid down or your home has increased in equity by 22%, you can refinance out of your PMI or petition the lender to have it removed (conventional loans only).  Your lender may require a Broker Price Opinion (BPO) and charge you $100 for this.  They might want an appraisal that will cost you about $500.  It’s worth it! Look at your statement.  If you are paying $50 a month for PMI… you’ll pay yourself back in 2 months.

To calculate your LTV (Loan to Value), divide the outstanding loan amount by the original price of your home. If you have a $190,000 mortgage on a house you purchased for $200,000, the LTV is 95%. You’d need to get the mortgage balance down to $156,000—78% of the original value—to qualify for automatic cancellation of PMI.

When You Need to Request Cancellation
You don’t necessarily have to wait for automatic cancellation. When your LTV hits 80%, you can petition your lender to end its PMI requirement. The process can take several weeks. Your lender isn’t obligated to grant your request, but you’ll bolster your case if you have a good payment history.

Start by calling your lender, not the PMI provider. You’ll probably need to make a formal request in writing and pay out of pocket for an appraisal. The average cost of an appraisal is $800 depending on your area and available comps. Your lender will usually select the appraiser.

Although an appraisal is conducted primarily for the benefit of the lender to confirm that your property hasn’t declined from its original value, a high appraisal can work to your advantage. As your property value increases, whether due to a general uptick in real estate prices or specific home improvements, your LTV decreases.

A Way Around PMI Premiums
In search of a PMI loophole? Look for so-called piggyback loans, also known as 80/10/10 or 80/15/5 loans. Basically, the home lender finances 80% and immediately gives you a second loan for 10% to 15%. You put down 5% to 10%. No PMI is required.

This alternative has traditionally been available for home buyers with minimal capital but excellent credit. In tight lending environments, however, this arrangement is harder to come by. And even when piggyback loans are available, the extra interest you usually pay on the second mortgage may actually cost more than PMI premiums. Do the math.

If you would like professional local help on removing your PMI or refinance out of your PMI
Contact:

Chris Knox
Loan Advisor
Fairway Independent Mortgage
Serving: Lewis, Thurston, Pierce, etc
253.905.4810
Chris.Knox@fairwaymc.com

This article provides general information about tax laws and consequences, but is not intended to be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Readers should consult a tax professional for such advice, and are reminded that tax laws may vary by jurisdiction.

Article written by
RICHARD KORETO
is a freelance writer. He’s been editor of many financial magazines and is the author of “Run It Like a Business,” a practice management book for financial planners. He and his wife own a pre-Civil War house in New York.

Another great article I recently found on FHA- PMI Click here

• The owner might have paid in full
• Owner filed bankruptcy
• Bank decided it’s not a good time to foreclose (too much inventory, bad time of year, etc).
• There is a kink in the chain of title
• and more….

The reason I say “is it the best use of your time”

When a property finally does get auctioned… it’s usually on Friday’s at the courthouse steps.  It could get called on or it could not.  The auctioneer will typically start at the amount due and go up from there. Bidders are buying sight unseen.  The owners, tenants or others could be in the house at the time. There is no inspection of the property and there could be Title, City or county issues.  Did I mention it’s a CASH ONLY transaction that must be paid at the time of the winning bid? that’s right!

Why are some bank foreclosures listed online (in MLS)?

The minimum bid might have not been met or another bank purchased the debt.  It then becomes an REO (or owned by the Lender) property.

I’m commonly asked “what is a short sale?
Buyers sometimes assume the “short” means “quick”. It is the exact opposite of quick.

I have 9+ years of experience in purchasing a short sale personally and assisting buyers in purchasing a short sale. Even with experience in the process, it was still an emotional rollercoaster for my purchase. Nothing is what it seems, common sense goes out the window, the parties have little control over the lienholders.

Let’s go back to what is a short sale?
The short answer is: The Seller is short the funds to close on the property.
OR The Seller owes more than the property is worth and doesn’t have the money.

What is a lienholder?
A lienholder is a business that has put a lien on the house due to money owed on the house.
This could be a 1st or 2nd mortgage or more.
Sometimes a Contractor, HVAC Company, Window Company, and others.

Can any Seller sell their property for less than they owe?
No- they cannot. The Seller has to meet a means test to show they don’t have the means to pay off the difference in the house. It’s the same process qualifying for a short sale as it is a buyer qualifying for a home loan.

Can a buyer make a low ball offer on a Short Sale?
Yes and a Seller an accept but keeping in mind, the lienholder(s) still need to get involved. The best way a Real estate agent can help their Seller get approval is to list the home at market value and decrease over time. The bank in the first position is going to ask for an appraisal or Brokers Price Option on the property and if that comes in higher, the lienholder will counter. I’ve found this step typically takes place 2-3 months after the offer is accepted.

What is a short sale negotiator?
Short sale negotiators are key in getting things done quickly. Negotiators can be Realestate agents, Attorneys or a person licensed to negotiate a short sale. Touches have to be made with the primary lienholder daily. It’s important to make sure the negotiator has experience.

How long does it take to close on a short sale?
In my experience (and each short sale is different), it can take 6-9 months+. It helps if the short sale has been approved and price approved with the lienholder prior to listing or an offer is accepted.

Like to learn more about my experience with a short sale. Give me a call 253-380-1915

Shannon McCain
Blue Summit Realty
WashingtonHomeHunt@gmail.com

BUYING A HOME WITH A CONTINGENCY

There are 2 ways of doing this:

The market is at it’s highest since 2007.  Low inventory & low rates have made it hard to find a home.

Having a contingent offer accepted must be strategic

Option #1

Best Way and My Recommendation:  List your home, accept an offer and then make an offer contingent on the closing of your home.

I work with a lot of contingent buyers and I’ve found the ones more likely to have their offer accepted on new listings asked for no closing costs coverage and offer at least $50k over list price with a $50k cash above appraised value contingency. That way, ff the property appraised for less, the buyer agrees to pay the difference.  I’ve found that properties that have been on the market longer are more likely to accept a full price contingent offer with no closing cost coverage from the Seller.  The best way to not have to overpay for your next home and the stress of when your home will be under contract and what price is to List it first!

 Option #2

Step 1: Find your future home and make an offer contingent on you selling your property.  You’re then only out the inspection fee if you’re not able to sell yours timely. The property you made an offer on will be listed online as “contingent”, that means the Seller is still willing to show and look at offers.

Step 2: After your offer is accepted, your home must be listed within 5 days.

That means, house ready, pictures done, flyer made, sign in the ground, contract to list all done, entered online, house ready for showings as a moment’s notice.

Step 3: Sell your home.

A contingent contract doesn’t have a set amount of days for you to be under contract on your home, BUT no listing agent or seller is going to accept more than 30 days.  I’ve had Sellers counter of 10 days or 12 days and/or ask for Earnest Money to be forfeited.

Step 4: Now you’re under contract on your home.   I notify the property you are purchasing, and the “Contingency” status online turns to “Pending”.

After that, it’s a normal transaction.  The contract date on your sale is the Sale date for your future property.  It’s common to close the same day if the properties are in the same town or county or title company.  You have until 9 pm the night of closing to be out of your home.  Some Sellers give themselves 2 days to move but some buyers don’t like that.  You should prepare yourself to be out the day of closing to get to your goal…. A new better house for your situation!

I’m asked that question at the end of every Listing appointment and the answer is always, yes.

There are more reasons for having it done than not.

The cost is generally about $400 depending on size and age and the benefits outweigh the cost.

You go through the trouble of staging your home, removing personal items, preparing for strangers to walk through your home.  You take time away from your home for showings (sometimes multiple), you wait for an offer and you accept one.  Don’t let an inspection kill the deal!

In my years as a Real Estate agent helping Sellers and Buyers, it’s the inspection that keeps me up at night.  How often do you visit your attic or crawlspace?  When is the last time you inspected your GFCI outlets or plumbing under the sink?  If it’s a Sellers’ market the Sellers think, well their offer was accepted over a multiple of others, they should have known what they are buying, or we will move onto the next buyer.  In my experience, I’ve found either the buyer has moved on or they wonder what went wrong in the inspection to cause the previous sale to fail.  The same thing happens when a house goes back on the market.  The first thing I’m asking from a buyer “why is it back on the market, what’s wrong with it?”.  It’s no longer about speed as it is… why?

The unknown  

Surprises I’ve experienced that make a buyer walk in Washington State…. Discoloration in the attic.  This could be sheathing that was installed when it was raining out and never was an issue.  It could be caused by a vent that no longer lined up with the vent hole.  It could be from a former leak. The inspector doesn’t know the cause but can only ID that there might be a cause.  You want to get ahead of that!  When your inspector brings it to your attention, you have time to investigate or resolve on your own without the Buyer telling you what they want to have done (mold remediation, new roof, concession just in case).

Another common issue is failing windows in the PNW.  Sellers think the buyer had to see that when the walked through and now it’s a problem, they just want a credit.  When a buyer walks through, they are typically only there for about 15 min and it’s emotional at the time.  By the time the inspection happens, the buyer might be in the home for 3 hours or worse yet, not there at all and they just get a 45-page document with only the issues with the house.

Repairs on your timeline

When an inspection response is presented to the Seller it will typically ask for a licensed electrician replace the electrical covers or a licensed mold remediation specialist evaluate the possible mold and invoices are required for the work to get done.  When you pay for your own inspection, you have the right to do some of the repairs yourself on your timeframe.  Did you know the Seller typically only has 3 days to respond to the Buyers inspection? It’s hard to get contractors out for bids in 3 days.

Benefits and Speed

You can really speed up the closing and illuminate surprises by providing your home inspection and Selling your home as is.  You own it! You can provide it to a Buyer with a counteroffer or lay it on the counter for Buyers walking through.

You might be thinking; I don’t have the money for an inspection right now.  I don’t have the ability to pay for something to get done if it comes up.  I know of inspectors, contractor, and roofers that will get paid at closing, sometimes for a minimum fee.  There is always a solution… just ask me! I work with great contractors and inspectors that are willing to help me and my Sellers!

What is Escrow and Why do I need it?

Sometimes video is simply better for explaining Title and Escrow. Compliments of Fidelity National Title.