Author Ivy Truong// Editor Karim Mourad, Family, Real Estate

5 MONEY-SAVING GREEN UPGRADES

As of the posting of this blog, nearly all states in this country have announced stay-at-home orders due to the novel coronavirus. The fact that humankind is battling one common enemy makes me think of things we can all do moving forward to make earth a better place to live in. So many thoughts go through my mind; first, going ‘green’ is great for the environment. We should all be striving to have more environmentally friendly mindset at all times. Perhaps considering more greenhouses is the next level of this kind of thoughtful life style. Even better, that’s not the only benefit. When you make green upgrades in your home, it can also lead to some major savings while being environmentally friendly.

  1. Solar panels: The upfront cost may be intimidating, but the long-term savings are huge. Solar panels will cost several thousand dollars to install, but ongoing maintenance costs are very low, and a typical system could save you hundreds of dollars per year. You can even sell your surplus electricity!Solar Panel

2. Wood furnace: Wood-burning furnaces are relatively inexpensive, and though the yearly savings aren’t as dramatic (about 10% on heating bills), it adds up over the long run.

Wood-Furnace

  1. Insulation: There’s a good chance your insulation isn’t very efficient, especially in older homes. Look into installing floor, cavity, wall, and loft insulation to reduce your heating bill.

Insulation

4. Rain barrels: Rain barrels are inexpensive, and provide gallons of free water to use when you wash your car or water your garden.

60 Gallon Rain Barrel. Wayfair Photo

5.Geothermal system: A geothermal heat pump (GHP) or ground source heat pump (GSHP) is a central heating and/or cooling system that transfers heat to or from the ground. It uses the earth all the time, without any intermittency, as a heat source (in the winter) or a heat sink (in the summer). A geothermal heat pump is the greenest, most efficient, and most cost effective heating & cooling system available because it uses only the free renewable solar energy stored in your backyard rather than burning fossil fuels. Okay, so the price tag is scary at first. A geothermal system uses the earth’s temperature to heat and cool your home, but can cost $30,000 to install. However, tax credits allow you to get a lot of that money back, and the energy savings average about $1,900 per year. If you plan to be in your home for a decade or longer, it’s a great investment.

Author Ivy Truong// Editor Karim Mourad, Family, Real Estate

Is Refinance Always A Smart Move?

In current market, some home buyers may get excited with the low interest rates; some may be hesitant by the uncertainty of future with so much happening overwhelmingly. On the other hand, refinance becomes undoubtedly attractive to homeowners when mortgage interest rates continue sliding. A refinance replaces your current loan with a new loan, typically at a lower rate. The extra monthly savings could give you wiggle room in your budget to pay down other debt or boost your savings. However, refinance is a complex process. Here are a few things you should know about this process.

Why should homeowners consider refinance?

In case you are completely foreign to this process, I’m going to briefly go over refinance’s benefits. There are many good reasons to refinance, here are five common ones.

  1. Scoring a lower interest rate. The number one reason homeowners decide to refinance is to secure a lower interest rate on their mortgage. Not only does this save you money in the long run and decrease your monthly payment, but you can start building equity in your home sooner.
  2. Using an improved credit score. Even if interest rates have not dropped in the market, if you’ve improved your credit score over the last few years, you may be able to reduce your mortgage rate.
  3. Shortening the loan’s term. If interest rates are decreasing, there is a chance you may be able to get a shorter loan term with little to no change in your monthly payment, allowing you to pay off your loan sooner.
  4. Switching from an adjustable rate to a fixed rate. If you chose an adjustable-rate mortgage with great introductory rates when you initially financed your home, that rate may increase significantly over the years. By switching to a fixed rate while interest rates are low, you can protect yourself from future increases.
  5. Cashing out home equity. If there is a big purchase or payment on the horizon, such as funding a wedding or going back to school, your best option may be to use the equity you’ve built in your home to borrow money at a lower cost.

Factors to consider for this process. 

1. Home Equity: First of all, you need to find out how much home equity you have. Refinancing with little or no equity is not always possible with conventional lenders. The easiest way to find out is to use some of the popular consumer sites Zillow.com, Redfin.com, or Realtor.com. The best and most accurate way to find out if you qualify for a specific program is to visit a lender and discuss your individual needs. Homeowners with at least 10-15% equity will have better chance.

2. Credit Score: Typically, lenders want to see a credit score of at least 720 or higher to qualify for better interest rates. Lenders have loosen their standards for loan approvals in the last few months, so some consumers may be surprised that even with just decent credit they may qualify for the lowest interest rates.

3. Debt-to-income ratio: Don’t assume that you already have a mortgage loan; you can get a new one. While some factors such as a high income, stable job history or substantial savings may help you qualify for a loan, they are not the only things lenders look at. In general, lenders usually want to keep the monthly housing payments under a maximum of 28% to 31% of your gross monthly income. Overall debt-to-income should be 36% or less, although with some additional positive factors some lenders will go above 40%. Just like when you try to buy a house and get the first mortgage, you may want to be prepared and pay off some debt before refinancing in order to qualify. Again, these standards apply to our “normal” market, you may be surprised with the outcomes these days even if you don’t meet all of these criteria.

4. Refinancing cost: A home refinance usually costs between 3% and 5% of the loan amount. If you have enough equity, you can roll the costs into your new loan, increasing the principal. When you see offers like “no cost refinance”, remember, you pay for it one way or another. Usually that means you will pay a slightly higher interest rate to cover the fees. Negotiate and shop around before committing to a big loan is always a good idea. It is important to figure out whether the costs of refinancing will be covered by your monthly savings, which is the only way for refinancing makes sense for you. For example, if your refinance costs you $2,000 and you are saving $100 per month over your previous loan, it will take 20 months to recoup your costs. If you intend to move or sell your home within two years, a refinance under this scenario may not make sense.

5. Rates and Terms: Do you know you are looking for in a loan? Having a good understanding about rates and term will help determine which mortgage product meets your needs.

*If your goal is to reduce your monthly payments, you will want a loan with the lowest interest rate for the longest term.

*If you want to pay less interest over the length of the loan, look for the lowest interest rate at the shortest term.

*If you want to pay off your loan as fast as possible, you should look for a mortgage with the shortest term at payments you can afford.

6. Points: Points usually equal to 1% of loan amount, which is paid to lender to bring down interest rate. When you shop around for rates and term, don’t forget to put points in consideration. Be sure to calculate how much you will pay in points with each loan, since these will be paid at the closing or wrapped into the principal of your new loan.

Refinancing is a complex process. To be honest, when it comes to houses and mortgage, nothing is simple and easy. Once again, do your homework and consult experts. The good news is there are many resources at your fingertips when you are willing to learn and dig in nowadays. Beside the knowledge you will gain, the amount of saving over time well worth your time and effort.

Author Ivy Truong// Editor Karim Mourad, Real Estate

Interest Rates Are Rising. What Does That Mean To You As A Buyer?

If you are one of those buyers who are waiting for the house prices to come down more, this post is dedicated to you.  The purpose of this post is not to rush you to go out and buy a house as soon as possible, but rather to point out other aspects of a house purchase transaction that you may not be aware of.

The average Washington state mortgage interest rate in September 2017 for a 30-year-fixed was around 3.5% and 15-year-fixed was around 2.8%. In September 2018 those rates are, respectively, approximately 4.5% and 3.9%. Interest rates have been increasing everywhere. With the same credit score and same down payment, a homebuyer’s interest rate have gone up by approximately 1% by waiting for one year. What does that translate into dollar amount?

Let’s say you’ve been looking at $800,000 houses with 30- year-fixed term and 15% down payment in 9/2017. With interest rates increasing by 1%, you have not changed anything on your end, but you know can only be qualified for $720,000 in 9/2018. Your purchase power has decreased significantly, especially in this competitive market. Another way to look at it, to buy the same $800,000 house last year, now with 1% increase in interest, you will pay for the loan of $880,000.

 On the other hand, home appreciation in Seattle has been recorded at 12 to 15% year. It is something that you could be missing out on by waiting for price to come down. In our example, that number is about $80,000 to $96,000.  People believe that market is “cooling down” and house prices will come down with it. Please read my previous blog to see my point of view about that assumption. Houses are not sold as quickly as they used to be mainly because there is more availability, not because real estate in Seattle becomes less desirable for some proven economic reason. Real estate in Seattle is in a strong and healthy stage where buyers and sellers both have fair chance for getting what they look for in the transaction without one takes more risk than the other. Interest rates are expected to continue to rise approximately 5% by the end of this year and mid 5% around this time next year.

Ultimately, buying a house is a long-term investment. Trying to time is the same as timing stock market but also involves your lifestyle, your living environment and your loved ones. The right time is when you and your family financially and emotionally ready. Again, this blog is only intended to provide you with helpful information. It is not in any way a guideline or reference to your home purchase timing.  Make sure to keep in mind that the listed house price is not the only important fact in your home purchase.

Author Ivy Truong// Editor Karim Mourad, Real Estate

Best Season For House Shopping

Aside from wondering whether the market is buyers or sellers market, and what the current interest rates are, the next most frequently asked question is when is the best season for house hunting. Unfortunately, I can’t really give you a straightforward answer on the best season, but I will provide you information about real estate market characteristics of each season, which can help you decide the best approach for you.

Spring: The real estate market is most “exciting” in the spring. Many buyers start looking for houses, inventory increases quickly, and property days on market are shortest, thus prices are usually higher, and at the same time, competition is most fierce. If you are competitive and you must see as many houses as possible, spring would be a great time for your house hunting.

Summer: Inventory continues to rise, property days on market are still short, but prices however flatten out a little. During the summer buyers have the most options, but competition is still very high. By the end of summer, sellers are usually more motivated to sell, so if you are competitive, patient enough to wait, and willing to move in the fall, summer could be your best time to shop.

Fall: Most listings in fall are leftovers from the summer. In turn, this often means sellers are motivated to sell. Inventory shrinks quite a bit. If you are not picky and only look for deals, fall could be good time for you. However, I suggest home inspection for anything you are interested in during this time. Always be safe rather than sorry. You need to find out why the listing was stale. The worst case is you lose a few hundred dollars and walk away; the best case is you score the deal of your life.

Winter: Winter weather is not ideal for moving and people are not motivated to move during holidays. Even though inventory during winter is the lowest, it could be the best time to look for a deal. Listings during the winter are usually stale listings from fall or sellers need to move quickly for personal reasons. If you are not picky at all and don’t mind moving in when everyone else is inside their houses celebrating the holidays, winter could be your time. Again, it’s important to conduct a house inspection for anything you are interested during this season.

In summary, the best season is whichever is the best time for you. So many factors go into a home purchase, but the most important factor is always you and your family. Are you financially ready? When is your rent contract is over? Are you a patient shopper? Are you a picky shopper? No one can tell you exactly which season is the best season for your home purchase. I hope this information is in some way helpful for your decision making.

Author Ivy Truong// Editor Karim Mourad, Real Estate

Does Current Real Estate Market Shift Make You Pause?

Living and working within the Seattle area, perhaps the most common question asked by my clients, is “Should we wait for price to come down some more?”

A noticeable market shift occurred in the Seattle area during the past several months that has been significant enough to cause buyers and sellers to pause and rethink whether they should make the biggest purchase in their lives or sell their most valuable property.

It is important to consider several factors on this topic:

1.      From an economic standpoint, people may expect a dramatic fall in the real estate prices that have skyrocketed in recent year. However, typically there isn’t any pattern to economic trends. Yes, the economy goes through good times, bad times, or plateaus at certain times, but no one can be certain that it will suddenly go from good to bad. Thus, predicting the exact time for the market to go through certain phases is truly guessing game.

 2.      From an investing standpoint, there are obviously risks involved with any type of investment. Investing in real estate is typically on the lower end of the risk spectrum. You are more likely to make money investing in real estate compared to other more risky investing ventures.  According to Forbes, it’s common for real estate investors to see average annual returns between 7% and 10%, depending on the type of property and its area. However, some investors have been able to generate upwards of 20% annual returns in hot markets. 

3.      There is speculation that Amazon is planning to back out of Seattle at some point in the near future, which without a doubt would weaken Seattle economy. Amazon’s massive footprint in Seattle would be not only expensive to unwind, but also time consuming because of what they had built and leased within the city. As of June 2018, the company posted more than 1200 new opening jobs in Seattle, clearly indicating that a move from the city is not on the horizon. Still, what if that speculation is true? Aside from Amazon, Seattle is the home base to many big corporations such as Boeing, Microsoft, Starbucks, Nordstrom, and Alaska Airlines, just to name a few companies. The Seattle economy is strengthened by Amazon’s presence, but it’s not solely dependent on it. With the beautiful nature, mild weather, strong research and health care foundation, and the diversity of Seattle’s demographic, real estate in this city is as desirable as ever.

So, the question remains: “Is it good time in Seattle to sell or buy?”

For sellers, it remains a good time to sell. You still can get a great price for your property without too much of a hassle. Even though getting top dollar for your house is the main goal, it is not the only factor to consider. I have seen sellers who were overwhelmed with offers before being emotionally prepared to leave their homes before this shift in the real estate market. The same thing occurred on the buyers’ end. Buyers made bids before seeing the houses, waived all of the needed contingencies, took any risk in order to win houses. In my educated opinion, it is a healthy, fair market for both buyers to buy and sellers to sell right now. Nobody has to take more risk in the same transaction. On top of that, mortgage interest has been creeping up in the last few years, yet it is still in relatively low end now. So the answer to the, “Is it good time in Seattle to sell or buy?” question above is Yes! It is without question a good time. The only question for you is, “Are you ready?”

  

Source: 

 

Author Ivy Truong// Editor Karim Mourad, Family, Real Estate

Dispelling Financing Myth

“Refinancing” is a scary word for many people, but that shouldn’t be the case for you. For many homeowners, refinancing not only lowers your monthly payments and helps with your monthly budget, but it can also save you thousands of dollars in the long run.

You are not too late

For years now, we’ve been hearing that interest rates will be on the rise, and although there have been some small increases, you’re still in a great position to drastically lower your interest rate. The general rule is if your mortgage interest rate is more than one percent above the current market rate, you should consider refinancing.

It’s not too time-consuming

Don’t brush off refinancing just because it seems like a long and daunting process. An informational call with a lender to see how rates compare will only take a few minutes. There are also some programs for streamlining the application process. And besides, isn’t the amount of money you could save worth the time and effort?

ARMs can be refinanced, too

Seeing your Adjustable Rate Mortgage (ARM) increase after the introductory period can be incredibly stressful and place a squeeze on your budget. Many people assume they’re stuck, but ARMs can be refinanced, just like fixed-rate mortgages. You can even switch to a shorter-term fixed-rate mortgage, such as 15 or 23 years. The longer you’re planning to stay in the home, the more sense it makes to look into refinancing.

Factors to consider when refinancing

Home Equity: First of all, you need to find out how much home equity you have. Refinancing with little or no equity is not always possible with conventional lenders. The easiest way to find out is to use some of the popular consumer sites Zillow.com, Redfin.com, or Realtor.com. The best and most accurate way to find out if you qualify for a specific program is to visit a lender and discuss your individual needs. Homeowners with at least 10-15% equity will have better chance.

Credit Score: Lenders have tightened their standards for loan approvals in recent years, so some consumers may be surprised that even with good credit they will not always qualify for the lowest interest rates. Typically, lenders want to see a credit score of at least 720 or higher to qualify for better interest rates.

Debt-to-income ratio: Don’t assume that you already have a mortgage loan; you can get a new one. While some factors such as a high income, stable job history or substantial savings may help you qualify for a loan, they are not the only things lenders look at. In general, lenders usually want to keep the monthly housing payments under a maximum of 28% to 31% of your gross monthly income. Overall debt-to-income should be 36% or less, although with some additional positive factors some lenders will go above 40%. Just like when you try to buy a house and get the first mortgage, you may want to be prepared and pay off some debt before refinancing in order to qualify.

Refinancing cost: A home refinance usually costs between 3% and 5% of the loan amount. If you have enough equity, you can roll the costs into your new loan, increasing the principal. When you see offers like “no cost refinance”, remember, you pay for it one way or another. Usually that means you will pay a slightly higher interest rate to cover the fees. Negotiate and shop around before committing to a big loan is always a good idea.

It is important to figure out whether the costs of refinancing will be covered by your monthly savings, which is the only way for refinancing makes sense for you. For example, if your refinance costs you $2,000 and you are saving $100 per month over your previous loan, it will take 20 months to recoup your costs. If you intend to move or sell your home within two years, a refinance under this scenario may not make sense.

Rates and Terms: Do you know you are looking for in a loan? Having a good understanding about rates and term will help determine which mortgage product meets your needs.

*If your goal is to reduce your monthly payments, you will want a loan with the lowest interest rate for the longest term.

*If you want to pay less interest over the length of the loan, look for the lowest interest rate at the shortest term.

*If you want to pay off your loan as fast as possible, you should look for a mortgage with the shortest term at payments you can afford.

Points: Points usually equal to 1% of loan amount, which is paid to lender to bring down interest rate. When you shop around for rates and term, don’t forget to put points in consideration. Be sure to calculate how much you will pay in points with each loan, since these will be paid at the closing or wrapped into the principal of your new loan.

Refinancing is a complex process. To be honest, when it comes to houses and mortgage, nothing is simple and easy. Again, do your homework and consult experts. The good news is there are many resources at your fingertips when you are willing to learn and dig in nowadays. Beside the knowledge you will gain, the amount of saving over time well worth your time and effort.

Author Ivy Truong// Editor Karim Mourad, Family, Real Estate

Lunar New Year

Interesting Tradition During Lunar New Year

If you have read my previous posts, you know that I appreciate traditional and cultural values. As an Asian American in the Lunar New Year week whose focus has always been on houses, real estate, and interior design, I feel obliged to write about the Asian tradition that relating to houses.

Americans celebrate their new year much differently from Asians. Whereas Americans celebrate just one day, Asians, and specifically Vietnamese, celebrate their new year for 7 to 10 days. All businesses close during the first week of Lunar New Year, and during this week there are beautiful decorations in each house and public place. There is so much food and deserts in homes, which are specifically for this special holiday, specific traditional gowns that many women wear, and most importantly, customs that everyone respects. Here are a few that relate to houses:

First person enters your house

People avoid visiting anyone’s house on the first day of Lunar New Year unless they are invited. Vietnamese people strongly believe that the “vibe” of the first person enters the house will influence how well their families do the rest of the year. In most cases, the home owners will invite that chosen person to come to their home early on the first of the year or even on New Year Eve to ensure that no uninvited person enters their house first. They will base that on the chosen person’s year of birth, their success in life, their success in marriage, and the success that the family hopes for in that New Year.  Remember, if you happen to come to an Asian family’s house on first day of Lunar Year Calendar, be sure that it is okay with them first.

No clean, sweeping, vacuuming on First day of the Lunar year

People clean their houses and hang decorations up to New Year Eve. Once the New Year starts, especially on the first day, nobody cleans, sweeps or vacuums their house. They believe doing so pushes away their luck, good vibes, or fortune. Some families practice this on just first day; some do for entire first week.

No garbage disposal on 1st day of Lunar year

This tradition has been explained by a myth. It says that long ago there was an entrepreneur who was gifted with a female servant. Ever since he had her in his house, his business grew and became very successful. On a first day of Lunar Year, she made a mistake and was beaten terribly by this entrepreneur. She hid in the garbage (no explanation of why she picked that spot). That entrepreneur didn’t know and got rid of his garbage on the same day. Since then he continuously lost in business to the point he was empty handed. Asians never got rid of their garbage on the first day of the year ever again. They will keep their garbage as long as they can in that first week. Remember, don’t offer to take someone garbage way when you are in an Asian family during that week.

No giving fire, water, and money away in the beginning of the year.

Water is usually a symbol of money and Fire is symbol of warmth, energy, and luck in Asian cultures. Giving fire and water away in beginning of the year equivalent to giving luck and fortune away the rest of the year. It is strictly avoided by Vietnamese as well as other Asians.

You may have heard of lucky money in red envelopes. The money is the symbol of luck and wisdom that older people voluntarily wish to share to younger people in their circles. With that said, Asians avoid loaning money in the beginning of the year. By doing that, they believe they’re giving away their fortune the rest of the year.  Remember, you mostly like to fail in borrowing money from Asians, especially early in Lunar New Year.

Broken things are signs of family separation

In everyday life, mistakes happen; we break dishes, glasses, and furniture, amongst other things. However, if this happens in the first few days of the New Year, it has a much more meaning to Asian families. Broken things in the house are sign of family separation. So be extra careful if you happen to be in an Asian household during this important period. You can really devastate a group of people just by breaking a plate.

Black and white are colors of death

Colors have different meaning in different cultures. In Asian cultures, black and white are colors of death. People often choose colorful and vibrant clothing for Lunar New Year holiday. Remember: Don’t wear black and white if you go to an Asian family’s home during this time, you may get dirty look from everyone.

At this point, you’re probably thinking to yourself you don’t want to be around Asians during Lunar New Year holiday because of these “do and not to do” lists. It is quite complicated; I found myself walking on eggshells with my mom when I was younger since I wasn’t sure what was the right thing to do or not to do. However, it could boil down to simple thing as holidays in most cultures are happy time, celebration time, vibrant colors and flowers time. Yes, it could be a bit sensitive and foreign to you, but if you can be respectful of the customs and blend in, you will find a group of extra happy people who are so friendly, kind, eager to share and easy do business with. You will find yourself surrounded with delicious foods, drinks, and snacks, and even more so, you will yourself immersed in such beautiful culture with so much respect and love.

Last note:

The point I am about to make has nothing to do with houses, but it touches many Asian’s pride. Most Americans address Lunar New Year as “Chinese New Year”. If you try to impress or be respectful/ considerate/ polite to non-Chinese Asians, please don’t do that! Vietnamese, Korean, Japanese, Thailand and all other Asian countries have their own cultures and customs for this holiday. They are all proud of their unique and beautiful cultures. By using the term “Chinese New Year” to the other Asian without know where they are originally from, in the best case you sound ignorant; in the worst case you sound rude and disrespectful them. To be on the safe side, stick with “Lunar New Year”. You want to impress a Vietnamese? Call it “Tet”

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This is the Vietnamese traditional gown (called Ao Dai) that most women wear on special occasions
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During Lunar New Year, Vietnamese women wear Ao Dai to visit friends & relatives and temples

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Wish for all of my readers health, happiness and prosperity

Author Ivy Truong// Editor Karim Mourad, Family, Real Estate

Short Sales And Disclosures. What the differences?

For the average consumer, the concepts of ‘short sales’ and foreclosures are similar but nonetheless vague. The terms are often used interchangeably, but they’re quite different, with varying timelines and financial impact on the homeowner and buyer. In this week’s post, I’m writing an overview about the differences between these terms. If you ever consider pursuing a short sale or foreclosure, you will need to know what that means and what to expect.

As unfortunate as it can be when homeowners fall behind on mortgage payments and face the possibility of losing their homes, short sales and foreclosures provide them options for moving on financially.

SHORT SALES

Definition: A short sale comes into play when a homeowner needs to sell their home, but the home is worth less than the remaining balance that they owe. The lender can allow the homeowner to sell the home for less than the amount owed, freeing the homeowner from the financial predicament.

SELRES_1fae51d6-270a-47af-bcf7-f930a6042645GOOD: SELRES_1fae51d6-270a-47af-bcf7-f930a6042645Short sale properties usually in good condition because in most cases homeowners still live in the property

BAD:

  • Short sales typically take longer to complete (three to four months) and many of the closing and repair costs are shifted from the seller to the lender.
  • In short sales transactions, you deal with multiple parties (the bank holding first position in mortgage and possible other banks holding 2nd or 3rd mortgage).
  • You may deal with emotional homeowners who soon lose their home and money.
  • The biggest problem with short sales is potential liens. Homeowner may owe more than one mortgage, HOA due, unpaid utility fees. HOA liens can lead to a foreclosure before you ever close on a deal

The bottom line is that with short sales the property is likely in good condition, but you commit to a process that takes a lot of time without any assurance of results. You will need to do your homework by checking public records to find out all mortgages and liens that come with the house before title is clear and in your name.

FORECLOSURES

Definition: A foreclosure occurs when a homeowner can no longer make payments on their home, so the bank begins the process of repossessing it. A foreclosure typically moves much faster than a short sale and is more financially damaging to the homeowner. After foreclosure the bank can sell the home in a foreclosure auction.

GOOD

  • This is a less complex transaction; you only deal with just one party (often the bank selling the home).
  • Foreclosure transactions generally move faster compared to short sales because the bank is a motivated and unemotional seller.

BAD

  • This is a riskier proposition. Foreclosed homes are sold as-is and unseen without inspection or warranty.
  • The houses are in bad condition since most foreclosed homes have been vacant and neglected for a long time.

Generally, buying short sales and foreclosures are both risky, but could well worth the risk because it may be your golden opportunity to buy a property below market price. What do you need if you are considering this option?

  • Patience, patience, patience. The process will involve a lot of waiting.
  • Knowledge, by doing your homework through research and studying the property as well as the process.
  • Professional help is crucial. A good real estate agent who understands what you want, has great knowledge about short sales and foreclosures, and can negotiate for you.
Author Ivy Truong// Editor Karim Mourad, Family, Real Estate

Down Payments and Assistance Programs

You’ve most likely heard of the golden rule in house buying numerous times by now: Save up for a 20-percent down payment before you buy a home. The logic behind saving 20 percent is solid, as it shows that you have the financial discipline and stability to save for a long-term goal. It also helps you acquire favorable rates from lenders. However, there can actually be financial benefits to only putting down a small down payment—as low as three percent—rather than parting with so much cash up front, even if you have the money available.

THE UPSIDE
The national average for home appreciation is about five percent. The appreciation is independent from your home payment, so whether you put down 20 percent or three percent, the increase in equity is the same. If you’re looking at your home as an investment, putting down a smaller amount can lead to a higher return on investment, while also leaving more of your savings free for home repairs, upgrades, or other investment opportunities.

THE DOWNSIDE
The downsides of a small down payment are well known. You’ll have to pay “Private Mortgage Insurance” for years, and the lower your down payment the more you’ll pay, of course. You’ll also be offered a lesser loan amount than borrowers who have a 20-percent down payment, which will eliminate some homes from your search. To be honest, however, less than 20% today is not going to get you a home. With the competitiveness between homebuyers in the market today, it can be a deal breaker for many sellers.

DOWNPAYMENT ASSISTANCE PROGRAMS
What if you don’t have or can’t earn that big amount of money for down payment any time soon? Don’t be discouraged! Check out these down payment assistance programs in Washington State. You may qualify for some help with this predicament. The purpose of these programs is to make funds available to eligible applicants who are interested in purchasing a home but need financial help to pay the upfront costs, which include the down payment, as well as the closing costs and prepaid items required to obtain homeownership.

1.Home Advantage Down Payment Assistance Loan Program
The Washington State Housing Finance Commission offer homebuyers the Home Advantage Down Payment Assistance Loan Program, a second mortgage with a zero percent interest rate and payment deferred for 30 years that combines with the Home Advantage first mortgage.
Requirements:
• Homebuyers must not exceed the set income limits: statewide $97,000.
• Applicants must attend a Commission-sponsored homebuyer seminar

2.HomeChoice Down Payment Assistance Program
HomeChoice is a down payment assistance program offered by the Washington Housing and Finance Commission. It helps qualifiers by offering a payment-deferred, second mortgage, which provides up to $15,000 to be used for down payment and closing costs
Requirements:
• Homebuyers have a disability or have a family member with a disability living with them.
• Must be first-time homebuyers
• Income Limits (as of April 2017)
King/Snohomish: $96,000
Island: $77,300
Kitsap: $77,100
All Other Counties: $76,500

3. Seattle Down Payment Assistance Program
Qualified borrowers purchasing within the city limits of Seattle are allowed up to $45,000 in assistance with payments deferred for 30 years, at 3 % simple interest. Funds may be used for down payment and closing costs.
Requirements:
• There is Shared Appreciation requirement for the first 9 years.
• Borrowers must fall within income limits (1-person household: $48,550)
• Borrowers must be first-time homebuyers and the home being purchased must be their principal residence and owner-occupied.
• All borrowers must attend a free Homebuyer Education Seminar sponsored by the Washington State Housing Finance Commission and receive a certificate.

4. ARCH East King County Down payment Assistance Loan
Qualified borrowers purchasing a home or condominium within an ARCH member city are assisted with up to $30,000 in down payment assistance at 4 % simple interest.
Requirements:
• Applicants do not need to be first-time homebuyers.
• The home being purchased must be the principal residence and owner-occupied.
• Borrowers must fall within income limits

5. Bellingham Down payment Assistance
Residents of Bellingham may receive assistance with up to $40,000 in down payment and closing cost assistance. Payment can be deferred for 30 years at 3% simple interest.
Requirements
• Applicants must be first-time homebuyers
• The property being purchased must serve as the borrower’s principal residence and must be owner-occupied
• Applicants must attend a free Homebuyer Education Seminar sponsored by the Washington State Housing Finance Commission.
• Applicants must also attend a one-on-one pre-purchase counseling session just prior to closing.
• Borrowers must fall within income limits (1 person: $39,150; 2 persons: $44,750)

6. House Key Veterans Program
Washington State qualified veterans who have served our country may receive down payment assistance in the form of a second mortgage loan to. House Key Veterans combines with the Home Advantage first mortgage loan program to offer a second mortgage with a 3 % interest rate and a ten-year loan term. Eligible households may qualify for a maximum loan amount of up to $10,000.
Requirements:
• Any person who has received an honorable discharge or a discharge for medical reasons with an honorable record
• Members and honorably discharged former members of the Washington National Guard and Reserve
• Never remarried spouses and dependent children of deceased Veterans
• Borrowers must be first-time homebuyers or buying in a targeted area*
• Borrowers must qualify for the Home Advantage Program first mortgage loan program
• Borrowers must attend a Commission-sponsored homebuyer seminar Borrowers must fall within income limits
o King/Snohomish $96,000
o Island $77,300
o Kitsap $77,100
o All Other Counties $76,500

7. Opportunity Down payment Assistance Loan Program
This is a second mortgage loan program with a 1 % interest rate, with the payment deferred for 30 years.
Requirements:
• Borrowers must be first-time homebuyers or buying in a targeted area
• Applicants must qualify for the House Key Opportunity first mortgage loan program
• Borrowers must attend a Commission-sponsored homebuyer seminar
• Applicants must fall within the income limits

8. Pierce County Down payment Assistance Program
This program is for qualified borrowers purchasing within the Pierce County limits, outside of the Tacoma, Lakewood, Bonney Lake, Auburn, and Pacific city limits. The loan amount goes up to $24,900, with payments deferred for 30 years, at 4 % simple interest.
Requirements:
• All applicants must contribute a minimum down payment of is $1000
• Borrowers must be a first-time homebuyer.
• The property must serve as the borrower’s primary residence.
• Borrowers must attend a free Homebuyer Education Seminar sponsored by the Washington State Housing Finance Commission and receive a certificate.
• Applicants must fall within the income limits

9. Tacoma Down Payment Assistance Program
Qualified borrowers within Tacoma city limits are allowed up to $20,000 in down payment and closing cost assistance with payments deferred for 30 years, at 4 % simple interest.
Requirements
• All applicants must contribute a minimum down payment of is $500
• Applicants must be first-time homebuyers.
• The home being purchased must be the principal residence and owner-occupied.
• Borrowers must attend and complete a free Homebuyer Education Seminar sponsored by the Washington State Housing Finance Commission. Borrowers must also attend a free one-on-one, pre-purchase counseling session.
• Borrowers must fall within the income limits
There is too much information from these programs to condense into one article, so this is only an overview of each program. If you are interested in learning more about these down payment assistant programs, please visit Washington State Housing Finance Commission and U.S. Department of Housing and Urban Development for more information by clicking on following links. Feel free to reach out to me as well. I may not know all of the answers, but I know the the right people to reach out to who do.

Sources:
https://www.fha.com/fha-grants?state=WA
http://www.wshfc.org/buyers/downpayment.htm
https://www.hud.gov/states/washington/homeownership/buyingprgms

 

Author Ivy Truong// Editor Karim Mourad, Family, Real Estate

Mercer Island

For me, Mercer Island is the ideal place to raise a family. I worked and lived there for about 5 years before moving to California. Along with the beautiful scenery, good school districts, convenient location, my time on Mercer Island was filled with friendly, kind people that make for a wonderful community. I have much to share about this island in my blog this week.

Mercer Island is a city in King county in Washington state. It is located in the Seattle Metropolitan area, with Seattle to its west and Bellevue to its east. The island was named after the Mercer family who first settled in the area between 1870 and 1880. The Mercer brothers, Thomas and Asa Mercer, often rowed between the island and Seattle to pick berries, hunt, and fish.

According to census data from 2016, Mercer Island’s population is 25,134, with approximately 9,820 households. The percentage of households living in the same house for more than a year is 82.9%. From the same data source, the median income per household from 2012 to 2016 was $129,348, making Mercer Island one of the 100 richest zip codes in the U.S. One reason why Mercer Island is one of the richest zip codes is that it is inhabited by many well known, wealthy people, such as Paul Allen (co-founder of Microsoft), Bill Gates, Howard Lincoln (former chairman of Nintendo), several former NBA players, including Bill Russell and Rashard Lewis, and Joel McHale (comedian) just to name a few.

Unsurprisingly, the seven public schools on Mercer Island, Lakeridge Elementary, Island Park Elementary, West Mercer Elementary, West Mercer Elementary, Northwood Elementary, Islander Middle school, and Mercer Island High school, are all top ranked schools. Also unsurprisingly, the price tag to be able to live on this beautiful island and have your kids be a part of the school district comes with a big price tag: the median value of owner-occupied housing units is $956,200. This data likely includes condominiums, townhouses and very old houses. I have been looking for a house for myself and the criteria couldn’t be simpler: 3 bedrooms and 1.5+ bathrooms; the lowest price house I could find is north of $1.2 million.

Let’s take a look at some charts with more current data comparing Mercer Island real estate with the rest of King county in the last 3 years.

Chart 1: Median Sale Price Mercer Island vs King county period January 2014 to January 2017 for  3-bedroom-houses

Blog_12 MI Median Sale priceJPG

In January 2014: Mercer Island $737,00 vs King county $366,000 

In January 2017: Mercer Island $1,109,000 vs King county $568,000

Chart 2: Days on market for listing properties on  Mercer Island vs King county period January 2014 to January 2017 for  3-bedroom-houses

Blogg_12 MI Days on Market JPGE

This chart reflects that each listing Mercer Island house is expected to be sold in less than 8 days.

Chart 3: Price per square feet for properties on Mercer Island vs King county period January 2014 to January 2017 for  3-bedroom-houses

Blogg_12 MI Price per sf jge

In 2014: Mercer Island at $346 per sf vs King county $205

In 2017: Mercer Island at $578 per sf vs King county $320

Mercer Island has everything one can ask for when it comes to house hunting: the charm of houses tastefully built and designed; the clean air, the beautiful view of Lake Washington from virtually any angle, the central location that gets you to two big cities in minutes yet it is quiet and peaceful, the great school district for you kids, a premier residential community that you will feel safer to raise your family in this crazy world. The reasons are nearly endless. Naturally it comes with a high price tag and an rat race to get any available house put on the market. If you are in this same race, let me know if there is anything I can do to help with the journey.

Source:

https://www.census.gov/quickfacts/fact/table/mercerislandcitywashington/PST045216

Feature Image by By Dllu – Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=42654839