Friday, September 22, 2017

Fall 2017 Homebuyer Guide


IT’S OFFICIAL, the Portland-metro homebuyer market has cooled off as the weather is changing and school kicks back into gear.  With homebuying, it tends to be a seasonal event where most buy or sell in spring and summer due to the better weather and school getting out.  This makes it easier and more appealing for many to shop for homes and move into their new home.    

For those who didn’t buy during the busy time, now is still a great time to get a home before prices/rates go up.  Here is why:

  • There will be less competition as families settle back in for the school year.
  • Sellers who are still in the market are typically motivated to sell sooner than later meaning it’s easier to negotiate a better deal.
  • Inventory of homes for sale has already kicked up over the last couple months.
  • There have been numerous price reductions on homes currently listed to attract buyers.
  • Mortgage rates are near a 2017 best right now.   

Needless to say, now is an awesome time to buy! 

Thursday, September 14, 2017

Equifax data breach - credit freezes - getting a mortgage

Below is a great article on Equifax’s data breach by Mortgage News Daily.  This is a very hot topic right now, especially in the lending industry, and Equifax won’t give you a definitive answer if your information was or wasn’t compromised.  Because of this, many are already taking steps to help secure their credit information by doing one of the following:

1.       Freezing access to credit reports (here is a great article about credit freezes and how to do so:  https://www.usatoday.com/story/money/2017/09/13/how-freeze-your-credit-protect-your-identity/657304001/)
2.       Ordering a free credit report from www.annualcreditreport.com  

Right now, there is so much traffic to these sites that many are unable to freeze or obtain a credit reports.  I just tried myself with no luck.  The path of least resistance, and more importantly most secure, is using the phone or snail mail to reach out to these credit bureaus/reporting agencies. 

The easiest way to check if your credit information has been compromised and under attack now is to get a free credit report by annualcreditreport.com.  If you haven’t used this site in the last year, you will be able to get a free copy from each credit bureau.  It’s most important to get a copy from Equifax since it was hacked but you should also check the other two bureaus since confidential information may have been compromised and used to gain access to the other two credit systems as well.

This ties into credit freezes.  It’s not enough just to freeze Equifax, to properly secure access to your credit reports, you need to freeze all three bureaus (that includes Transunion and Experian).  The issue here is that only Equifax has waived the fee to freeze credit, so Transunion and Experian will still charge a fee to do so.  Freezing credit is the most secure step to take, but it also can be annoying to unfreeze and refreeze when needed.  These bureaus are already poor at communicating, providing adequate customer service, and are notorious for errors.  Needless to say, there will likely be headaches involved with freezing and unfreezing your credit BUT… it’s the best step to avoid the long-lasting headache when your personal information has been used towards identity theft. 

The best long term solution is to freeze your credit profile with all three agencies OR signup for credit monitoring/identity theft services such as LifeLock.  This is something I am going to consider much more heavily to make sure my identity doesn’t get compromised in years to come. 

It’s important to note that a credit freeze does not stop a homebuyer from applying for a mortgage.  However, the homebuyer will need to lift the freeze for the lender to pull a credit report.  After doing so, the homebuyer can put his/her credit back on freeze.  One thing to keep in mind is that lenders have the right to pull credit again before funding the loan (doesn’t happen often).  Therefore, it may be wise for a homebuyer to unfreeze the credit until the loan has closed to avoid potential delays.  The other option is to unfreeze the credit again a week before closing, which will likely come at an additional cost.  After the loan has closed, the homebuyer can refreeze access to credit. 

For the latest updates from Equifax regarding this incident, you can visit their dedicated website about the cybersecurity hack here:  https://www.equifaxsecurity2017.com/Equifax has updated some policies which are identified in their link based on consumer feedback and backlash.  Therefore, some statements in the below Mortgage News Daily’s article are outdated such as “waiving the right to sue” and “continuing subscription” regarding the TrustedID website.   

The above information is my own personal opinion.  I highly suggest you do your own research and what you feel is in your best interest.  The below article is very informative and I highly suggest you read the whole thing. 

Mortgage News Daily – Equifax: Turning a Crisis into an Opportunity
http://www.mortgagenewsdaily.com/09092017_credit_reports_scores.asp

Friday, September 1, 2017

Conventional ARM down payments cut in half to 5%

The down payment requirement for Adjustable Rate Mortgages (ARMs) dropped today to 5% from the previous 10% requirement.  This is great news for many homebuyers.  ARMs currently make up 7% of loan applications.  This figure should increase now that Fannie Mae allows for 5% down with this product. 

Low down payment mortgages, classified as less than 10% down, currently account for nearly 40% of all purchase loan originations.  With this adjustment, conventional ARMs are now in play for “low down payment mortgages.” 

I think this will be a great option for many first-time homebuyers or repeat homebuyers.  When I bought my first house, it was with an FHA 5/1 ARM loan as I knew it wouldn’t be my “forever home.” After 3 years I refinanced to a fixed rate once I had enough equity to drop mortgage insurance. 

The average mortgage is only kept in place for 9 years, before it is either refinanced or the property is sold.  Therefore, a 10/1 ARM can be a great option for many homebuyers to cut interest rate cost.  A 10/1 ARM may save a 0.25% in interest rate for the first 10 years of the mortgage.  Assuming a $300K mortgage held for 9 years, this equates to nearly $6,500 in interest savings.