Darel Ansley

It looks like the pieces have fallen into place for home sales to start to pick back up in Wenatchee. The two main factors are lower financing rates and available affordable homes.

A year ago you couldn't find any homes under $200,000 in Wenatchee, but currently there are 70 homes on the Wenatchee/East Wenatchee area MLS for under $200,000. And these are just the Single Family Homes; this does not include condo conversions etc.

The recent Wall Street problems have had a positive impact on mortgage rates; we have seen FHA Mortgage rates in the mid 5% range, which makes these homes affordable. FHA allows for a 3% down payment which can come from family, and FHA allows the seller to contribute up to 6% for closing costs or interest rate buydowns.

The other great program is the HouseKey first time homebuyers program which allows for 100% financing at low rates.

These two new patterns of lower rates and affordable home prices should allow some renters to buy up these lower priced homes and create some move up buyers who can pick from 200 homes in the $200,000-$300,000 range.

The biggest thing holding back this turnaround is that the general public is so focused on the headlines, they don't know that they can buy a home with little or no money down.

While I'm at it, I'll throw in my two cents on the financial meltdown. Housing foreclosures did not cause the problem; slick Wall Street firms did Enron style financing for homes and alllowed people who couldn't afford them to buy homes. Wall Street's own bad investments are just coming back to bite them.

Just an update on the economy and mortgage rates- I had mentioned previously that rates are volatile because the inflation news raises rates and recession or slowdown news lowers rates. Mortgage rates have been moving up and down with every news headline.

Here is my best guess from what I read - most of the runup in prices in food and fuel have already happened, so I see inflation cooling off. Plus, because people have been shelling out all their money this year for gas, they don't have much left to buy other things; this is going to drop consumer spending and pull the stockmarket downward, and also bring down mortgage rates.

When it comes to home sales, you need to know about another factor- the rate we quote for a 30 year fixed no longer applies to everybody. The base rate may be going down, but Fannie Mae is now charging higher fees and/or adding to the rate for anything except a perfect loan. For example, beginning November 1st if you have a 719 FICO score and have a down payment of 20-25%, you will have two additional fees, totaling 1%. This means on a $300,000 loan, your customer needs to come up with an extra $3000 in closing costs or pay roughly 1/4% higher mortgage rate. The same loan with a 639 credit score has 3% in additional fees!!, they used to send loan officers to jail for charging fees like that. A year ago, a 639 with 20% down had no added fees. (These are all based on the middle of your three credit scores).

So, in short, not everyone who used to qualify will be able to, and I think Sellers ought to know that their pool of potential buyers is shrinking, because there are a lot of people who think they are potential buyers out there that haven't been in to talk to a lender yet, and may get some startling news that they qualify for less of a house than what they think.

One last item, as Fannie Mae is going to hang people with their credit scores, it is best for people to know theirs. www.annualcreditreport.com is the real 'free' service for Washington State that doesn't make you sign up for a credit monitoring service. Your clients will be able to see the items on their report, and can pay $7-10 to each of the credit bureaus to actually get the scores.

This weekend is the 5th Annual NCHBA Home Show in Wenatchee. NCHBA is the North Central Homebuilders Association; so the show is all about construction, remodeling ideas, doors, flooring, decks , windows etc. And of course I am there to help people finance their construction or remodel project. There are no pots and pans or ginsu knives. I have participated in all 5 and I like the fact that it is construction focused and that there is an admission charge. As a vendor, the price of admission keeps it from being overrun with people who are just bored on a weekend, so the people coming through are really serious. This allows us to engage in meaningful conversations with people at our booth as we are not distracted handing out flyers to people who don't want them.

The other nice thing about this show is that 99% of the vendors are from the local area and do business in the local area; these are not people who fly into town to sell a product and then leave. At the website you can get all the times, a list of vendors, and print a $1 off coupon. You'll also find a list of the practical Do-It -Yourself demos that will be presented. If you bring your kids along, they can build a wooden project in the KidZone manned by our local Lowes store.

So come on by, walk around slowly and talk; we are Eastern Washington folks, and were not in a hurry. Tell us about your project and well get you hooked up with the right people to help you out.

Lot and land sales at Lake Chelan seem to be brisk right now; as I am getting inquiries every week from people wanting to finance a building lot or some land. Most people have not financed land before so I hope to remove some confusion with a little explanation. This would also apply to people financing Leavenworth land or a building lot in Wenatchee.

The first thing you will find is most lenders don't want to finance land; especially now. Land is harder to liquidate if the bank ends up taking the property back, and the national lenders who are trying to improve their loan portfolios are dropping their land financing programs. So your first place to start would be a community bank that knows the area.

The next thing you will find is that the loan programs vary widely between lenders; one will want a 30% down payment and the loan will only last 12 months, and the next will take 10% down and give you a 30 year loan. Some offer interest-only programs. Some will only do subdivision lots with full utilities, others will let you do 20 acres or more. So if you are looking at property, you better check out your financing options before you start writing an offer.

One thing that is fairly consistent amongst lenders; because land is a little more risky, there are usually minimum credit score requirements, so you better know where you stand there. I check mine at annualcredit report.com, because you don't have to sign up for any monthly monitoring service. I suggest paying the small fee to each of the three agencies so you can get your actual score; it cost me maybe $7-9 each.

As the banks are usually lending out their own money, rather than selling the loans, the underwriter can sometimes be flexible; for example, we want to see a minimum Equifax score of 680 for a lot loan, but we approved a client in the 620's because he had a credible explanation for his credit, he had a low debt-to-income ratio,and high documented income; we call these things 'strong compensating factors'. Another exception was someone who wanted to finance a 20 acre parcel with 0 down. Of course his national bank turned him down; but we looked at his overall situation and saw an enormous income with millions of dollars in the bank (the one that turned him down), so we wrote the loan. Heck, we probably would have financed a toxic waste dump for this client; it was obvious we would be paid back. On other occasions, we will write the loan to cover the lot purchase and also use another property as extra collateral if the buyer is weak in a certain area (ratios,credit score, down payment).

Before you call a lender,its a good idea to have your overall plan in mind; what are you going to do with the land and when. I would say the most common thing I hear is that the customer wants to acquire the lot now, and plans to build a home on it in 2-3 years. So try to find a loan program that fits your needs, and check the terms. If they are offering an Adjustable Rate Mortgage (ARM), is it amortized over 20 years, or 30 years? What happens after the initial period, does it adjust and keep going, or does it re-set, or does it balloon? If it adjusts, how high can it go?

If you plan to start construction soon, you may be able to combine your land purchase with your construction loan. For more information on construction loans in Eastern Washington click the link.

With the government owning about 80% of Chelan County, and much of the rest in agriculture or on steep unbuildable slopes, supply and demand points to increasing values for your land purchases. Plus the sunshine and recreation continually attracts people from the Puget Sound region to Lake Chelan, the Wenatchee Valley and Leavenworth. All this is to say, if you want a piece of it for yourself, I don't think its going to get any cheaper.

Come and take a look, and then shop around for your financing, you will find 10% down lot loans, interest only lot loans, ARMS and fixed rate lot loans; whatever you need to meet your needs.