Eastside Real Estate Working-for-you!

Basic FHA Questions and Answers

By Ryan Jensen

Q. Who qualifies for FHA loans? Aren’t the only for first time homebuyers and those with lower income levels?

A. Actually, FHA loans are open to all U.S citizens and permanent residents and there is no maximum income level a borrower can have to apply. It is also not a program strictly for first time home buyers (although it is very attractive to first timers). You need to be able to document your income however and cannot currently be in bankruptcy or foreclosure on another property.

Q. What is the maximum loan amount allowed on FHA loans?

A. The standard loan limit for the King County area had been $362,790. However, the federal government has temporarily increased that limit to $567,500 for the rest of 2008. After that it is slated to be reduced to the old limit, but that could change depending on economic circumstances. Expect a mild premium on interest rates for loans over the old limit and up to the current $567,500. Loan limits will vary by area.

Q. Can I buy a rental (investment) property with an FHA loan?

A. No. These loans are for primary residences only. No second homes either. However, you could buy a duplex, triplex, or four plex and rent out additional units as long as you live in one of them yourself and maintain that as your primary residence. 

Q. What is the minimum credit score required for an FHA loan?

A. This is one of the great things about FHA. In many cases their really isn’t a minimum credit score required. FHA approvals utilize an automated underwriting engine that approves files based on a number of factors (income, assets, loan to value, credit history, etc) to determine whether or not you are approved. If you are strong in some of these other areas, you could be approved with a lower credit score. I’ve seen scores as low as the mid 500’s get approved.

Q. How do FHA rates compare with those of conventional loans?

A. Surprisingly, FHA rates tend to be quite good. Often times, they can even be lower than the rates you will see published with standard lenders. You can also get FHA loans with 0 points and no closing costs if you are willing to have a slightly higher rate.

Q. Does FHA allow for 100% financing if I don’t have a down payment?

A. Yes and no. Technically, FHA loans cap out at 97% of the purchase price and they ask you put down that other 3%. However, that 3% down payment can be gifted to you. This has given rise to a number of down payment assistance programs like Nehemiah. Nehemiah gives the borrower a gift of the needed 3% down payment at closing. The seller of the home will then pay that money back to Nehemiah from their proceeds of the sale. Sellers will generally agree to this if the buyer agrees to increase the purchase price by that same amount or if the seller is very motivated to sell. I have done a number of deals with this program and it really does work out quite well. So yes, you can get into a home still with 0 down.

For more information on FHA Loans and other programs, please email me at rjensen@thejensengroup.net.

Real Estate Consumer Issues (Pt. 1 asbestos)

Every home has potential hazards.  This series describes potential hazards you could find in a home you are looking to buy, and how to deal with them.  In pt. 1 we look at asbestos.

One of the best-known environmental hazards is asbestos. The following is just some of the materials in the home that can contain asbestos:

• Some roofing and siding shingles are made of asbestos cement.
  
• Houses built between 1930 and 1950 may have asbestos as insulation.
  
• Asbestos may be present in textured paint and in patching compounds used on wall and ceiling joints. Their use was banned in 1977.
  
• Artificial ashes and embers sold for use in gas-fired fireplaces may contain asbestos.
  
• Older products such as stove-top pads may have some asbestos compounds.
  
• Walls and floors around woodburning stoves may be protected with asbestos paper, millboard, or cement sheets.
  
• Asbestos is found in some vinyl floor tiles and the backing on vinyl sheet flooring and adhesives.
  
• Hot water and steam pipes in older houses may be coated with an asbestos material or covered with an asbestos blanket or tape.
  
• Oil and coal furnaces and door gaskets may have asbestos insulation.

 As you can see, beginning in the 1970s and into the 1980s asbestos was banned in most products in the United States.  As long as it remains in its original state, it is believed to be harmless. However, asbestos dust can cause lung cancer.  Asbestos materials turn into dust when they age and begin to disintegrate, or when they are damaged or removed during remodeling projects.  Breathing this dust is what causes the potential risk.

If asbestos is present in a building, it can be dealt with in one of three ways by an experienced professional:

1. placing an airtight barrier between the asbestos and the rest of the space (this is called enclosure);
2. covering the asbestos with an adhesive that permanently seals in the asbestos fibers (this is called encapsulation); or
3. removing the asbestos material.

Asbestos Do's And Don'ts For The Homeowner

• Do keep activities to a minimum in any areas having damaged material that may contain asbestos.
  
• Do take every precaution to avoid damaging asbestos material.
  
• Do have removal and major repair done by people trained and qualified in handling asbestos. It is highly recommended that sampling and minor repair also be done by asbestos professionals.
  
• Don't dust, sweep, or vacuum debris that may contain asbestos.
  
• Don't saw, sand, scrape, or drill holes in asbestos materials.
  
• Don't use abrasive pads or brushes on power strippers to strip wax from asbestos flooring. Never use a power stripper on a dry floor.
  
• Don't sand or try to level asbestos flooring or its backing. When asbestos flooring needs replacing, install new floorcovering over it, if possible.
  
• Don't track material that could contain asbestos through the house. If you cannot avoid walking through the area, have it cleaned with a wet mop. If the material is from a damaged area, or if a large area must be cleaned, call an asbestos professional.

For more information on Asbestos and removal, contact the Puget Sound Clean Air Agency.

Monday's Inspiration -- It's all about mom!

I was going to write a post about Mother's Day events around the Eastside for today's Monday's inspiration, but decided that our mothers are too inspirational to not have a Monday's Inspiration all their own.  Here is a poem I found that truly says all that my mother has been, and I see my wife being for my son.

  Motivational Poem -
Mother
By Author Unknown  

I appreciate the many prayers
you've whispered during
the worst moments in my life,
and the many hopes for my success
in all that I dreamed of.

I appreciate the kind wishes
that would make me so happy and fulfilled,
and the gentle words of encouragement
that were meant to strengthen my quests.

I appreciate the moments of sorrow
you experienced during my failures,
and the little gestures of kindness
that always made me feel better.

I appreciate your acceptance,
your ability to understand,
and the sincere friendship
that always gave me such security.

I appreciate the wisdom
of all the lessons you taught,
and the meaning behind the words
"unconditional love."

I appreciate all you've done -
every word and gesture.
I know you've been the best there is -
a mother beyond all compare.

For all you've done...
thank you, Mom.
For all that you are...
I love you.

Eastside Mother's Day Events

Looking for something special to do with mom in and around the Eastside this year?  There are plenty of Mother's day events happening from Seattle to Carnation!  Here is a select list of Mother's day events in Bellevue, Bothell, Kirkland, Redmond, Carnation, and Seattle.

Bellevue Botanical Gardens, Mother's Day Social -- BELLEVUE

Country Fair Family Fun Park, Remlinger Farms -- CARNATION
(Redmond MOMS Club will be holding two Make-A-Wish Foundation fundraising events during Opening Weekend at the farm.)

Kirkland Artist Studio Tour -- KIRKLAND

Mother's Day Flower and Garden Show -- BOTHELL

Mothers Day Mariners Game -- (mom gets a free T-shirt) May 10th -- SEATTLE

REDMOND MARRIOTT TOWN CENTER -- MOTHER'S DAY BRUNCH -- REDMOND

The rebirth of FHA loans

               

It’s being called the new subprime (in a good way), but these old government programs have been around for a long time. They have just been neglected by a mortgage industry that found subprime loans to be easier and quicker to do. If all the loan officers out there had been a bit more trained on the merits of FHA and how the program works, we probably we’d have a significantly smaller amount of subprime loans floating around out there and going into default. Now that the subprime market as almost completely deteriorated lenders are turning to FHA once again for their borrowers with less than perfect credit.

FHA can qualify all those borrowers out there with credit challenges and still can do the ever more elusive 100% financing. But as mentioned before, the trick is to get yourself a professional and competent lender to set up your FHA loan. Rates can be as low as the mid to lower 5.00% range. And the best part, NO PREPAYMENT PENALTIES.

Contact Ryan Jensen @ rjensen@thejensengroup.net

Monday's Inspiration -- The men and women who serve

By Greg Perry

    I am the proud father of a U.S. Marine who served a tour in Kuwait and Iraq.  Over the weekend, we celebrated Kevin's birthday. 

Kevin has always been the ultimate team player.  As a youth hockey player, he was always the inspirational leader of every team he played on.  Just as he was graduating from high school, Kevin decided to enlist in the Marine Corp.

Kevin had a problem, however.  He suffered a knee injury in his last year of hockey and he failed his physical.  Military doctors told him that surgery was his only option, and there was no guarantee he would pass the physical after rehab.

Kevin had his operation, and worked like a man possessed to rehab his knee.  His goal was to become a U.S. Marine.

It took him a year to earn his way into the Corp.  Kevin never took his eye off his goal.  He went through basic training with flying colors.  The day of his graduation was an emotional day for me.

Kevin was gung-ho when he got the call to serve in Kuwait, where he was at the time the war started in Iraq.  He was more than willing to go and serve and felt the importance of what he was doing in his every fiber.  Again, as a Marine, Kevin was the ultimate team player.  Thank God, he made it back.  I hated it when Kevin was in harm's way.

As a parent, we try to raise our children to beome contributers to society.  We want them to make independent decisions.  We teach them how to set goals and hope they become givers to others. 

It is not easy, however, when your child volunteers to put himself into harms way.  Kevin made a hard decision and he matured quickly in the Marine Corp.

Now at 26, Kevin is married to a beautiful woman, Sherry, and they own a lovely home.  He is doing well with his occupation and taking college classes in the evening. 

I am so proud of Kevin.  Happy Birthday, son.

Here's tribute to all the men and women who are serving in our armed forces.  I pray for them.....and their parents.

Kevin, you are an inspiration to me.

Friday's Did You Know?... Walking Your Way to Health!

I was watching T.V. the other night and saw a piece on Evening Magazine about one of the more unique trails in not only the Eastside, but All of North America! 

Did you Know, that Kenmore's Bastyr University has one of the only reflexology paths in North America?  It is a 64' winding trail of river rock through Bastyrs herb garden that is based on Chinese acupuncture techniques.  The theory is as you walk this unique trail, the stones put pressure on sections of the foot, connecting and energizing different parts of the body.  Sounds like a bit of fun and a few stubbed toes!

NWMLS AREA 530 East Bellevue -- Market Statistics PART 2

Yesterday we looked at a study of NWMLS Area 530, East Bellevue for all price ranges under $700,000.  Today we'll complete the study by taking a peek at the upper end SOLD inventory.  Again, these statistics are for residential sales (not condos).

Here's a review of the terminology: OLP = Original List Price, LP = List Price (at the time of sale), SP = SOLD price and CDOM = Continuous Days on Market.

Let's start with the price range of $701,000 - $900,000.

$701,000 - $900,000	2007	2008	Difference
OLP (Original List Price)	$806,187	$820,613	101.78%
LP    (List Price)	$811,153	$806,610	99.43%
SP   (SOLD PRICE)	$794,311	$787,067	99.09%
SP % LP	97.92%	97.58%
SP % OLP	98.52%	95.91%
Average Sq/Ft	2859	2936	77
Price Sq/Ft	$280.48	$273.50	($6.98)
CDOM	92	82	10
Units	15	15	0

The surprising statistic here is that market time in this price range dropped 10 days!  In this range, sellers in 2008 started close to 2% more than where sellers started in in 2007.  SOLD prices were down just a touch.

On average, sellers started about 4% too high and settled within 2.5% of the LP at the time of sale.

Conclusion:  The data here was surprising to me in a couple of ways.  Both 2007 and 2008 had 15 units close with 2008 beating the 2007 market time by 10 days.  On average, sellers found themselves over the market by 4% and needed to reduce their LP to get their sale.  2007 had 3 full price sales, 2008 had 2.  The best buyer negotiation in 2008 was 96% of LP.

$901,000-$1,500,000

$901,000 - $1,500,000	2007	2008	Difference
OLP (Original List Price)	$1,076,900	$1,178,625	109.44%
LP    (List Price)	$1,076,900	$1,105,125	102.62%
SP   (SOLD PRICE)	$1,063,800	$1,068,236	100.41%
SP % LP	98.78%	96.66%
SP % OLP	98.78%	90.63%
Average Sq/Ft	3139	3552	413
Price Sq/Ft	$358.77	$322.46	($36.31)
CDOM	52	171	-119
Units	5	4	1

In this highest price range for area 530, 2007 had 5 closed sales and 2008 had 4.  This year sellers started over 9% off the mark.

From the four sales in 2007 one settled at full price, the other settled for 97.5, 94.2 and 95.6 percent of LP. 

Conclusion:  As I would have expected, there was more negotiating in this highest price range.  The highest price sold (closed) during this period in 2008 was $1,242,000.

Overall conclusions:  In the 3 month period of this study, overall closed 2008 volume was very close to 2007 levels.  Sellers tried for more, but received about the same as 2007 sellers.  Again, I would have expected buyers in the upper prices to be able to negotiate better deals, however, the lowest price buyers did better.

This study confirms for me that sellers in 530 E Bellevue should not be expecting much in the way of appreciation in this current market.  They should consider pricing at early 2007 levels for their best opportunity for a quicker (and most profitable) sale.

It is important to understand that any market conclusions from this study be limited to only this study.  Data and conclusions are for East Bellevue NWMLS area 530.  All market areas are unique and may exhibit different sales trends.

As much as I would like to immediately break down every Eastside and Seattle area in a similair study, I simply don't have the time to do it.  I will do these studies from time to time using different areas as I make time.  However, if you would like information on your neighborhood / price range, just send me an emal!   

To see Part One of this study, click: http://www.workingforyou.typepad.com//realestate/2008/04/its-finally-cle.html

Information compiled, but not verified or published by the NWMLS.
By Greg Perry, Eastside Realtor
www.425Realty.com

NWMLS AREA 530 -- Are Sellers Asking Too Much?

It's finally clear.  Seller's are asking for more, but not getting it......at least in NWMLS AREA 530, East Bellevue.

I assembled a complete study of SOLD residential (not condos) properties for Area 530 by price ranges comparing the 3 month period between January 15 and April 15 for both 2007 and 2008.  Some of my findings confirmed what I was thinking.......and there were some surprises.

Why don't we clear up a little terminology.  OLP = Original List Pirce, LP = List Price (at the time of sale), SP = SOLD price and CDOM = Continuous Days on Market.

Let's see if we can make some sense out of NWMLS Area 530.The first chart is for SOLD inventory $500,000 and under:

< $500,000	2007	2008	Difference
OLP (Original) List Price)	$449,968	$472,345	104.97%
LP    (List Price)	$445,729	$458,738	102.91%
SP   (SOLD PRICE)	$443,559	$443,093	99.89%
SP % LP	99.51%	96.59%
SP % OLP	98.57%	93.80%
Average Sq/Ft	1547	1816	299
Price Sq/Ft	$298.07	$258.14	$39.93
CDOM	56	69	13
Units	51	40	-11

The first thing that we notice is that Sellers got almost the same money for their homes in this price range as they did last year, yet their starting price was about 5% more!  In 2007, the average Seller's starting price was $449,968.  This year they started out with an OLP of $472,345.  At their starting OLP, sellers found themselves  right at 6% away from their eventual sales price.   Buyer's still negotiated another 3.41% after the sellers dropped their prices from the LP at the time. 

In 2008, only one home (102.10%) sold for over list price and 4 homes sold for full price.  The best negotiation in this 2008 group was 86.40% of the LP.  In 2007, 13 homes sold for over LP, and another 11 homes sold right at  the LP.  The best negotiation in 2007 was 92.20% of LP, and one home sold for 114.30% of LP.

Here's another interesting tid bit.  Bigger homes were in the mix.  Sellers needed to throw in an additional 300 square feet to get their deal, and as we can clearly see, the price per square foot was quite a bit less in 2008.

There were 11 more homes closed last year during this period and they sold 13 days quicker on average in 2007.

Conclusions for this price range:  Buyers did the best job negotiating in this lowest price range than any other price range in area 530.  This was a surprise to me.  I expected to see buyers in higher priced home  achieve more in negotiations.  Clearly it took "more home" to get the money as the price per square foot dropped significantly in this price range.  Market times showed just a modest increase.

Price range $501,000-$700,000:

$501,000 - $700,000	2007	2008	Difference
OLP (Original List Price)	$601,033	$632,173	105.18%
LP    (List Price)	$595,167	$608,063	102.16%
SP   (SOLD PRICE)	$593,999	$594,931	100.15%
SP % LP	99.80%	97.84%
SP % OLP	98.82%	94.10%
Average Sq/Ft	2343	2,379	36
Price Sq/Ft	$259.66	$258.11	($1.55)
CDOM	62	123	61
Units	55	42	-13

In this price range, the sellers again tried asking 5% more for their homes than sellers in the same period last year.  Again their starting point was close to 6% away from their eventual sales price.  Buyers were able to negotiate an average of 2.16% from the LP at the time of sale.

Sellers received on average the same as they did last year.  The price per square foot was virtually the same, as well as the eventual average sales price.

13 more units sold in 2007, selling in about half the time.  In 2008, only 2 homes sold for over listing price and 10 homes at LP.  The best negotiation in 2008 was 84.80% of LP.  Last year in 2007, the majority of homes in this price range sold for at LP or higher (31 out of 55).

Conclusions for this price range:  It's fairly easy to see that Sellers were pushing for a 5% price increase, but did not get it.  I always expect the SP % to LP ratio under 3% and in fact it was in this price range.  This was an apples-to-apples price range comparison as the average square feet was virtually identical.  Market time doubled from 62 days to 123 days. 

Tomorrow, we'll look at the price ranges $701,000 to $900,000 and $901,000 to $1,500,000.

Information compliled from, but not verified or published by the NWMLS

By Greg Perry
Eastside Realtor 

Nobody blogs about the LIVING ROOM!

Kitchen yes, bathrooms yes -- but the living room often gets left out when it comes to writing about home improvements. 

In fact in some house designs these days, great rooms are replacing formal living rooms.

But what if your living room could use a face-lift?

Generally speaking, remodeling your living room means doing one or more of the following projects:

• Replacing or renovating the floor.
• Refinishing walls.
• Upgrading lighting and other electrical systems.
• Adding or changing features, such as a new fireplace or built in bookcase.
• Applying moldings, wainscot or a new mantel.
• New window coverings.
• Expanding the overall space.

Your living room is one of the most straightforward of rooms to remodel.  And, because it's your home's most public space, redoing the living room gives the whole house a new look.

Greg Perry, Kirkland Realtor