Fannie Mae and Freddie Mac underwritten conventional, FHA and VA loans account for the vast majority of mortgages chosen by buyers to finance their home purchase. While buyers have the choice on which product to use, there are some considerable advantages to FHA.

1. More tolerant for credit challenges than conventional loans.
   
2. Lower down payments than conventional loans.
   
3. Broader qualifying ratios – total house payment with MIP can be up to 31% of borrower’s monthly gross income and total house payment with all recurring debt can be up to 43%.
   
4. Seller can contribute up to 6% of purchase price – this money must be specified in the contract and can be used to pay all or part of the buyer’s closing costs, pre-paid items and/or buy-down of the interest rate.
   
5. Self-employed may qualify with adequate documentation – two year’s tax returns and a current profit and loss statement would be required in addition to the normal qualifying and underwriting requirements.
   
6. Mortgage Insurance Premium can be released in five years when the balance is 78% of original sales price
   
7. Liberal use of gift monies – borrowers can receive a cash gift to assist in purchase from family members, buyer’s employer, close friend, labor union or charity. A gift letter will be required specifying that the gift does not have to be repaid.
   
8. Special 203(k) program for buying a home that needs capital improvements – requires a firm contractor’s bid attached to the contract specifying the work to be done. The home is appraised subject to the work being done. If approved, the home can close, the money for the improvements escrowed and paid when completed.
   
9. Loans are assumable at the existing interest rate – assumptions require buyer qualification but are actually easier than qualifying for a new mortgage. Closing costs are lower on assumptions than originating a new mortgage.
   
10. If the rate on the assumable mortgage is lower than current rates for new mortgages, it could add value to the property.

Uncertainty as to whether prices will continue to fall has to be one of the most common causes of buyer procrastination.  Paying too much wouldn’t be a smart thing but price isn’t the only factor to consider.  Interest rates have as much effect on housing costs as price.

A small increase in mortgage interest rates can offset a significant drop in home prices.  If the price of the home were to come down by 5% but the interest rates were to go up by .5%, the payments might be close to the same.

In the example below, if the price of $175,000 home went down 5% but the interest rate went from 4.75% to 5.25%, the payments would actually be $4.98 more at the cheaper price.  If while the buyer was waiting for the home to decrease 5% and the interest rate increased by 1%, the payments would actually go up by $55.30.

Then, of course, there is always the possiblility that the price of the home doesn’t go down but the rate does go up by 1%.  The payments would be $104.58 more per month, each and every month for as long as you have the mortgage on the home.

As a Residential Finance Consultant, I can provide solid information that will help you make better buying decisions.  A home is a place to feel safe and secure, to raise your family, share with your friends and an investment.  It’s an investment in your marriage, your family and your future.  You owe it to yourself to check out the real numbers in your market because every market is different.

Summertime is almost here and millions of Americans will be starting home improvement projects.  Whether they’re classified as maintenance, updating or energy saving, they should make homeownership more enjoyable.

Remodeling magazine’s 2010-11 Cost vs. Value Report suggests that some improvements are a better investment than others.  Front door and garage door replacements are two of the easiest and return the greatest percentage of cost on resale.

Kitchen and bathroom updates transform an older home and instantly give visitors and buyers a fresh impression. Countertops and appliances can be expensive but yield great results.  Painting the cabinets and replacing the hardware is much less expensive to change the look and feel of the rooms.

Energy efficiency enhancements can improve your enjoyment of the home and help save money on utility costs.

• Replace older appliances – refrigerators, ceiling fans, water heaters, air-conditioners
• Add insulation to keep your home cool in the summer and warm in the winter
• Seal air leaks around doors and windows; holes in attics and crawl spaces with caulk, spray foam or weather stripping – more information
• Seal all heating and cooling system ducts – more information

If you’re at risk of home foreclosure, I know it’s not an easy time. Economic stresses are difficult to face — but there are smart things you can do to avoid foreclosure. If you haven’t already, please see my Foreclosure Resource Page — it’s full of helpful information on foreclosures, short sales, and other options to avoid foreclosure. And, if you need a hand, please don’t hesitate to call my office at (360) 319-4939.

Tips for Avoiding Foreclosure — First, Don’t Wait to Act

Okay, let’s talk about what you can do right now. By reading these tips and taking immediate action you may be able to avoid the foreclosure of your Pacific NW home. Below are some tips to you should consider NOW!

1. First and foremost, do not ignore these letters from your lender. That’s a terrible mistake
2. Contact your lender TODAY
3. Next, I suggest you contact a HUD-approved Housing Counseling Agency Toll FREE at (800) 569-4287 or TTY (800) 877-8339

This can not be stated often enough, if you can not afford to make your house payment don’t ignore the problem. The further behind you become in your house payments, the more difficult it will be to reinstate your loan. By not delaying and not communicating you increase the possibility you will lose your Pacific NW house.

Lenders Don’t Want Your Pacific NW Home!

Contrary to what you may have read or heard, lenders do not want your Pacific NW home. There are options available to help Pacific NW homeowners through difficult financial times.

Open Your Mail & Respond to Your Pacific NW Lender!

Often homeowners ignore the initial notices you receive. What you may miss are attempts by your lender to provide good information about foreclosure prevention options. These options could help help you weather financial problems. If you fail to communicate with your lender, you will begin to receive correspondence that includes important notification of pending legal action. Ignoring these letters will not be a valid excuse when you are standing in front of a judge in foreclosure court.

Know Your Rights as a Homeowner!

Hopefully you have access to your loan documents. Find these documents and read them. That way you know what action your lender could take if you can’t make your house payments. By all means, learn about the foreclosure laws and time frames here in Oregon by contacting me or contacting the Oregon Government Housing Office.

Understand Your Foreclosure Prevention Options

HUD offers valuable information on foreclosure prevention (or loss mitigation), and it can be found here.

Contact a HUD-approved Housing Counselor Today!

One of the responsibilities of the U.S. Department of Housing and Urban Development (HUD) is to offer no cost/very low cost housing counseling to Pacific NW homeowners. Housing counselors will help you understand familiar with the law and your options. One of the very first items they recommend includes compiling and organizing your financial information. They will represent you in negotiations with your lender if you need this assistance. To find a HUD-approved housing counselor in the Pacific NW call (800) 569-4287 or TTY (800) 877-8339.

Check back in a few days for more tips on how you and your family can make smart decisions to avoid foreclosure on your Pacific Northwest home.

For a day of fun you won’t soon forget, bring the family out to Hovander Homestead Park in Ferndale, WA!

This 350-acre park, well loved by Whatcom County residents, preserves the rich history of pioneer farming in The Pacific Northwest. It’s filled with recreational activities for children, adults and seniors alike.

On your visit, you can tour the historic farmhouse and big red barn. Children will love visiting and even feeding the animals in the farmyard — cows, chickens, rabbits, pigs, goats and horses. Gardening aficionados will enjoy perusing the Master Gardeners Demonstration Garden or the award-winning Fragrance Garden.

View a video about Hovander Park and all that it offers Ferndale residents here: