Edmonds, WA

Edmonds, WA Real Estate | December 2009 Edmonds Home Sales Report

Edmonds Real Estate | December 2009 Homes SOLD

There were 44 homes (houses & condos) sold in December 2009 for Edmonds, WA (actually recorded with the Snohomish County Recorder's Office). In this monthly Edmonds real estate update blog, I'll summarize the market and point out any highlights worth noting. Let me know if you have any questions or are thinking about buying or selling into Edmonds or the surrounding areas. If you want to learn more about how we transfer property in Washington State a really great site to visit is the Escrow Association of Washington site. There you can find definitions and explanations of the home buying process for Edmonds, Washington.

Taking into consideration the current thirty year fixed mortgage rates and the attractive tax credits the U.S. gov't is offering, and the extra buyer bonuses I am offering there has never been a better time to buy real estate in the Seattle metropolitan area. Interest rates have been as low as 4.75 recently, which is as low as they have been during the last fifty years. The following article from the Washington Post gives a prediction for interest rates during 2010.

Freddie sees mortgage rates hitting 6% in 2010

By Dina ElBoghdady
Washington Post Staff Writer
Saturday, December 26, 2009; A12

After hitting an all-time low in early December, the average rate on a 30-year, fixed-rate mortgage rose to 5.05 percent this week and could climb to 6 percent by the end of 2010, if not sooner, according to giant mortgage financier Freddie Mac.

The results are noteworthy because rates have not topped 5 percent since the last week of October, when they reached 5.03 percent, based on the results of this closely watched survey, which polls lenders during the first three days of every week.

Many firms regularly track interest rates and come up with slightly different numbers because they survey different lenders at different times of the day or week. But several have reported the upward trend in recent weeks. They attribute it in part to the effects of the holiday season, when demand for buying and refinancing homes dies down and financial markets coast through the end of the year.

"However, this is also a glimpse of what we're going to see in 2010," said Greg McBride, a senior financial analyst at Bankrate.com, a personal finance Web site.

The key catalyst for interest rates going forward will be the end of a Federal Reserve program that buys a sizable chunk of mortgage-backed securities issued by firms such as Fannie Mae and Freddie Mac. That program succeeded in immediately pushing mortgage rates well below the 6 percent mark when it was announced last year.

But the Fed has committed to winding down the program by March. The central bank is betting that by gradually tapering its purchases, private buyers of mortgage-backed securities, who have largely been absent from the market, will return and rates won't rise much.

But Amy Crews Cutts, deputy chief economist at Freddie Mac, said interest rates are bound to rise to 6 percent by the end of 2010 because private buyers will demand a higher rate of return on the securities than the Fed did. Lenders may have to raise the rates they charge to consumers in order to make that happen.

"Extraordinary resources have been put into keeping the rates down and supporting the mortgage markets and it's hard to imagine that the rates can go much lower than they are," Crews Cutts said. "Anything we get at or below 5 percent is a gift at this point."

This week's Freddie Mac survey found that the 5.05 percent average on 30-year fixed-rate loans (with an average 0.7 point) was up from 4.94 percent the previous week but down from 5.14 percent at the same time last year. The all-time weekly low since the firm started tracking the numbers in 1971 was in the first week of December, when rates fell to 4.71 percent.

Many borrowers have not been able to secure the best rates because they lack the stellar credit scores and hefty down payments that many lenders now demand. Some who have tried to refinance have not been able to qualify because their home prices have plummeted to the point where they now owe more on their mortgages than their homes are worth.

But anyone who can secure a loan should not wait much longer, especially if they are looking to refinance, McBride said. Homeowners are more sensitive to interest rates when they refinance than when they buy a home.

"The difference between 5 percent and 5.5 percent could mean the difference between refinancing or not," he said.

But the interest rate is less critical to people who want to buy a home, McBride said. In that case, price and affordability should trump interest rates.

The general rule of thumb is that your monthly mortgage payment (property taxes and insurance included) should not exceed 28 percent of gross pay. All your loans combined -- mortgage, car, credit card, student debt -- should not exceed 36 percent.

"Yes, a higher mortgage rate would steal some buying power, but it doesn't price buyers out of the market entirely because 6 percent is still pretty low," McBride said. "If you can't afford the house with rates at 6 percent, you can't afford the house."

For the first time in 30 years, the U.S. Department of Housing and Urban Development (HUD) has revised its rules regarding disclosures that lenders and mortgage brokers must give to consumers who secure a home loan or refinance. These rule changes are meant to provide greater clarity to the actual cost of borrowing money. And, according to HUD, should save mortgage shoppers on average "$700 at the closing table."

Different people will disagree as to whether these changes are right. Certainly the intent is right. But nothing replaces a trusted Realtor to advise you on any home loan purchase or refinance. Good agents will always help you determine which loans are a good value and which are less of one.

Good Faith Estimate (GFE)
GFE's are intended to give mortgage shoppers an *estimate* of the cost of purchasing a mortgage from various lenders out there. The idea was to give them a ballpark figure (hence "Estimate") and consumers trusted that lenders were giving them relatively accurate figures (hence the "Good Faith"). Presently, a GFE is actually not required to be given to consumers. I always insist that my clients be given one however, since it's not only their right, but helps them understand the cost of home loans from the various lender options in the market today.

The new HUD rules for will now require that lenders and mortgage brokers provide consumers with a standard Good Faith Estimate that clearly discloses key loan terms and closing costs.

HUD-1 Settlement Statement
Upon closing a loan transaction (be it a new mortgage or a refinance of an existing one), lenders are required to produce a standard closing cost form commonly known as the "HUD-1" form. This form details the actual costs of the loan, as opposed to the estimated costs given in the GFE.

Because the time lapse between the GFE and HUD-1 statement is typically 30-45 days, many borrowers can forget what they were told at the beginning of the process. New HUD rules now stipulate a new HUD-1 form (3 pages long now) that requires lenders to show a side-by-side comparison of estimated costs (GFE) with actual costs (HUD-1). This is not a present requirement. This change can be found on the top half of page 3 of the new form.

What this means for you
These new HUD rules are meant to provide consumers with more information. Continue to shop as you have for a home loan and definitely continue to use the expertise of your trusted local real estate professional to help you understand what you're given. Good lenders and mortgage brokers are probably already providing you with the information you need to make sound financial decisions when it comes to home loans.

If in doubt, remember that the customer is always right. Never feel intimidated or stupid to ask questions or to questions what you're told. If you do, you might want to consider finding a new mortgage lender.

I got a flyer in the mail the other day, courtesy of the Edmonds Chamber of Commerce, with happenings in Edmonds, WA for December and January.

Here they are:

• December 8, 2009 - Edmonds Christmas Ship Sing-Along. 7pm - 7:30pm on the Edmonds Fishing Pier (425-771-0230).
• December 17, 2009 - Thursday Art Walk. 5pm - 8pm. Program downloadable at the Edmonds Chamber of Commerce website.
  
• January 21, 2010 - Thursday Art Walk. 5pm - 8pm. Program downloadable at the Edmonds Chamber of Commerce website.

December 7, 2009 -- On Monday, the Federal Housing Administration started limiting the number of buyers in condo buildings that can get loans insured by the agency. The rules also put restrictions on buildings with poor finances, too many delinquent owners and a high number of rentals.

First, a little background for you...
The Federal Housing Administration (FHA) determines which condo complexes throughout the country are eligible for FHA financing. If you are looking to get an FHA-insured loan, you can only purchase a condo within a complex that is FHA-approved. It used to be that you just found an FHA-approved complex (with the use of a resourceful Realtor) and were good to go. But on Monday, FHA adds newer restrictions -- even beyond just finding approved complexes.

Why not just get "conventional" financing? Well, with a minimal requirement of just 3.5% down, FHA loans are a very attractive option for many home buyers. And with default rates on FHA-insured loans at about 18%, the FHA is looking for more security. I wrote more about lending restrictions on FHA loans in an earlier blog. For those complexes that are approved, there are new restrictions.

Here's a summary:

• Only half of all units wiithin a complex are allowed to be FHA financed (the others being conventional loans or other financing).
• In 2011, this number goes down to 30%.
• There has been talk that the minimum down payment threshold of 3.5% may go up. No word yet on how much but if they are as arbitrary as I think, it might be 5%.
• It's not all bad. The FHA has relaxed the numbere of pre-sold units that must have already closed before the lend money to anyone. It used to be that 50% of new buildings had to be sold; that number is now 30%.

So, if you're considering purchasing (or even selling) a condo in Edmonds, keep in mind that there are new guildelines that your lender should be aware of. Ask first; you'll save some time and heartache.

Now I'm off to educate my own condo clients....