Washington Mortgage Planner-straight up mortgage advice and commentary

Good morning all: I wanted to take a moment to talk about jumbo loans. My company, The Legacy Group, has several jumbo lenders we work with.

First, a bit of clarification. There are two types of jumbo loans. The first is called a conforming jumbo loan and in the tri-county area here (King, Snohomish, Pierce), the limit is $567,500 through the end of the year. Interest rates for a 30 year fixed conforming jumbo loan are running in the low 5's O.A.C. This is about .25% higher than a conforming loan (loan amount to $417,000). Down payments will either be 3.5% if you do an FHA loan or 10% if you do a conventional loan. Keep in mind that any down payment less than 20% will incur mortgage insurance.

The second type of loan is called a "super jumbo". This loan is for any loan amount above $567,500 for all practical purposes. Rates and terms on super jumbo loans are entirely different. There are fewer lenders in this niche and most will require at least 20% down. Some lenders will go up to $3 million on the loan amount although you should expect to have either significant equity or a large down payment if you need to borrow this much.

Recently I've been encouraged by the gradual easing of underwriting in the super jumbo market. For a while there, things were really tight. Now, I'm seeing lenders allowing more loans. Interest rates have also gotten attractive. I've even heard of 30 year fixed rates under 6%. Your best option is to do an ARM that is fixed for a certain period of time. Rates are quite a bit lower. For example, I have a client who is going to do a 7/1 ARM at 4.75%. Obviously, their payment will be quite a bit lower than if they chose a 30 year fixed rate.

So what can you expect to provide in order to do a "jumbo loan?" You will need to provide all the normal documentation including last 2 years W-2's or tax returns, asset statements showing you have reserves in most cases, last 2 paystubs, along with at least a 720 credit score for your best pricing. The portfolio lenders who usually do these loans will ask for alot. It's important that you work with a loan officer who understands this market. Feel free to contact me if I can be of further service. I'm located in Bellevue, WA. at the best-kept secret in the mortgage world! Have a great day!

Good morning! I was just reading Jason Sardi's blog "Price Warfare in a Service Industry" and it made me think about the importance of defining our business.

A little background. I've been in the mortgage business for a little over 3 years now. It's been uphill all the way although it's smoothing out lately. When I started, things were white hot. The office I worked for was full of young people making several thousand dollars a month. Myself, I didn't know what I was doing and had little help as is often the case in the mortgage business.

What I did know how to do was build a business. While most of the other loan officers waited for their phone to ring or worked leads, I spent a lot of time out building relationships and adding to my database. Needless to say, almost all of the loan people I started with are gone from the business. I think it's because they didn't define their business.

What do I mean about the term above? Decide how you want to run your business. For me, that took almost a year. Personally, I decided I was the 1% guy (loan origination fee) and I would explain up front to all my clients how I was paid, etc. Let's face it. What we do is all about trust. In most cases, we're being chosen based on our client's trust.

The other part of the equation in defining your business is deciding how to consistently market yourself. For me, it's a couple emails/month on helpful information, making calls to my database every day, writing thank you notes, meeting for coffee, lunch, etc. with clients, reciprocal partners, and mailing to a targeted group who knows me quarterly. I know it sounds like a lot to do but think about it for a moment. What is our goal? It should be to become known as the mortgage person, realtor of choice.

Again, it's not been a fast climb for me but the future looks bright. Perhaps someone who is a quicker starter would be further along. I'm blessed to work for a fantastic company which I think is paramount. How about you? What's working for you? Have you defined your business lately?

I thought I'd reblog Jason's blog as I feel very strongly that a person gets what they pay for. Thanks Jason for summming up probably most of our feelings here. In this business, we can either be all about service above and beyond or price. Even though I encourage people to shop around, I'm looking for trust and loyalty from my client. I realize I need to be competitive but will draw the line. I know I have never won a deal where I matched or beat someone else's price. Knowing me, I occasionally will continue to try and win bids because I'm fallible. But I'm getting better. My advice to any of you is define your business and stick to it. Period! Thanks again Jason. Well said!

Hi all: I wanted to let you know about a great little Farmer's Market here in Bellevue. It's all organic which suits our region well and there are probably as many as 40 vendors peddling everything from fresh vegetables and fruit to grass fed beef.

A friend of mine helps with the Bellevue Farmer's Market and I was impressed with the new venue. It's located in the parking lot of the old Safeway store right downtown.

One of the great things about the Northwest is access to fresh produce, etc. Of course, we have the world famous Pike Place Market where they toss huge salmon. But we also have other great Farmer's Markets in the cities of Burien, Renton, Kent, Maple Valley and Olympia, for example.

If you haven't visited a Farmer's Market recently, I encourage you to go. They're really fun and you feel like you're not only paronizing the small independent grower but eating right at the same time. Do you have Farmer's Markets where you live? If so, you are a lucky person. Have a great day!

Good afternoon: I wanted to give you a quick snapshot of the Bellevue, WA. area. Today, mortgage interest rates at the Legacy Group were 5.125% ((5.237% APR) for a 30 year fixed mortgage O.A,C. Interestingly enough the 5 year ARM (fixed for 5 years then adjusts) is at 4.5% and alot of my clients are choosing this loan program if they know they probably won't be in their home in another 5 years.

The home loan business at the Legacy Group has been strong this year. I think the cream is definitely rising to the top. I am seeing a definite pick up in activity and am happy for all my realtor friends. Bellevue prices have dropped where first-time homebuyers can now qualify in some cases. And selection is good, expecially above the $500,000 price point.

How about in your market? I'm not sure we ever got hit as hard as some of you. Still, it's a nice change to see activity and motivated buyers and sellers. Thanks for reading! I'll keep you posted if anything changes up here in the beautiful Northwest!

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Hi all: I'm increasingly inspired by people in my network who give and then give some more. It seems like I'm being attracted (and they to me) to people who are major givers.

What about you? I'm curious what you're experiencing. One of the reasons I love my company so much is the team concept where everyone helps. Granted, there are always a few who keep to themselves. But, generally, my company is doing great because it attracts good, giving people.

Tell me your stories. One of my friends started a "Pay it Forward" group locally. Needless to say, it has grown tremendously and it's exciting to watch. The mantra "How can I help you" is alive and well. I'm personally excited about so many many of us wanting to give. Have a great weekend!

Good morning! I hope you're enjoying your weekend. I was thinking this morning where my business comes from. It is local. Yes, I can loan in 14 different states and I know some loan officers can loan in more than that. My question is how effective is that? I'm sure I'll get some responses here.

If you're  a realtor, chances are you've kept your business local as it is such a hands-on business. For the rest of us, I would argue it's the same. In fact, I would challenge you to look at all the deals you've done this year and see where they came from. In my case, the only out-of-state loans I did were to people who lived in this area with second homes elsewhere.

Why do I like to keep it local? One, I can meet my borrower face-to-face. I like this. We all need to answer the question "how are you different?" I think by adding the personal touch, we can do this. Two, we know our local market better than some other market in timbuktu (I hope I spelled that right!).

So my question to you is your business local? Have you defined where and how your business operates? Let me know if you get a free moment. Thanks!

Good morning! I just finished a live segment on a local radio show and it got me to thinking about how important it is to self-promote. Understand this is coming from a guy who just took the Myers quiz on Facebook and was rates as an introvert!

But I self-promote because I know I need to. Could I be better at it? Absolutely. Since I'm shy and don't always ask, I'm hopeful that people will ask me instead. And it happens. All a person has to do is indicate a willingness to help.

Obviously, we want people to know and understand what we do. The best way to do that is to position ourselves as an expert in our field. I've been very lucky lately to be on the radio more than once. It's not only flattering to be asked but also allows a person to offer up their knowledge.

My advice to you? Don't be afraid to self-promote. This is our livelihood and we want to bring value to our customers. There are many ways to get started. the key is to get involved. I wish all of you well as you promote yourself! Have a great day!

Good morning: I as well as alot of you here may have noticed that Adjustable Rate Mortgages (ARM's) are suddenly back in vogue. Why is this?

Rates for ARM's have come down into the mid 4's or below for a 5/1 ARM and even less for a 3/1 ARM. Compare this to a 30 year fixed rate of closer to 5.25% and you can see why people might be interested in having a lower payment.

This wasn't always the case. In fact, as recently as a couple months ago, ARM's and 30 year fixed rates were virtually the same. The difference? ARM's adjust with an index (LIBOR in many cases) and that has floated down. Contrast that with 30 year fixed rates which are tied to the 10 year treasury which rose over the last couple months.

So is an ARM for you? Is this a good thing that they're back? It depends. The old rule of thumb was that you needed to ask yourself the question "how long do I intend to stay in my home?" If the answer was for 5 years or so, an ARM often made sense. You should ask yourself the question again. If you're o.k. with an ARM that may adjust up or down in 5 years or so, it might be a good loan for you.

How do I feel about this? I think it's a good sign that the lenders are offering these products again. Sixteen years ago we bought our house and got a 30 year fixed mortgage. We also had the option of an ARM. I believe its important for the customer to have choices. Right now I have two borrowers who will probably do ARM loans for 5 years. In both cases, they're refinances. They will be saving quite a bit of money by doing this.

On the purchase side, it may mean more borrowers qualify if the rate is lower. Is there a danger of returning to the fast and loose underwriting, etc. that got us in the mess we're in? Absolutely, although keep in mind that everything is fully doumented these days and lending guidelines, appraisals are more cumbersome than ever!

So I am personally excited about being able to offer more loan products to my customers. But I'm cautiously optimistic. I don't think anyone wants to return to the day where everyone was approved. Sure, it was good for our pocketbook but what a mess it created. I'm curious what you think of ARM's and their potential return. I realize I may have started a firestorm! Have a great day!

Hello all: I sit here typing and the thermometer is still above 100 degrees. It was Ethel Waters who stated it best in the song "We're havin' a heat wave". By the way, this is according to Google. I think Bing Crosby and Danny Kaye may have reprised the song in "White Christmas".

Today the thermometer hit 102 in Seattle, an all-time record since temperatures started being recorded. Seldom are we warmer than most parts of the nation but I'm sure we are now.

Today I was at 2 events in Seattle and they both closed early. One was at the library and the second at a cafe for lunch. And the trend is supposed to continue through tomorrow. We've had five consecutive days of 90 degree plus weather.

What's the weather like in your neck of the woods? Hopefully you're staying cool. Have a nice evening!