COM
spokesmanhomes spokesman homes.. In print. Online. In touch.
SECTION H INSIDE: RESALES – OPEN HOUSES – RENTALS AND MORE
Produced by the Advertising Department of
June 03, 2012
in conjunction with the Spokane Association of REALTORS®
10-, 15-, 20- … Rates on shorter-term loans are historically low, but they’re tougher to get and require higher monthly payments. Would they work for you?
By Madhusmita Bora CTW Features
B
uying a house requires a lot of research. And most of the digging involves mortgage rates.
The first step is figuring out which mortgage option would work best for you: Long term or short term? Fixed or adjustable? Historically, consumers are more acquainted with the 30-year fixed mortgages. They are easier to qualify for and require lower monthly payments. But short-term, adjustable-rate mortgages have always enticed buyers with low rates, despite the higher monthly payments that kick in after an introductory period. “They are very competitive,” says Keith Gumbunger, vice president of HSH.com, a mortgage resource website.
Qualifying for a Short-Term ARM In these tough times with stringent lending regulations, any loan or mortgage is a tough bet. To qualify for the ARMs, you have to meet about the same standards as for the long-term fixed rate loans. Among the required documentations are tax returns, W-2 forms, current pay stubs, driver’s license, social security card, bank statements, liquefiable assets and checking and savings account statements. The minimum credit score required for most conventional loans these days is 680, Dikit says. “Most short-term loans require borrowers to qualify at the higher or fully indexed rate on the ARM,” Dikit says. “So, if you have a note rate of 2 percent, then you would have to qualify at a 4 percent rate.”
The Down Payment
There’s a catch, though. They are unpredictable and can change. Most of these loans offer very lucrative introductory rates, but the rates get adjusted periodically. The changes are tied into indices such as London Interbank Offered Rate, or Libor. Fixed-rate mortgages, on the other hand, are a little more expensive over the life of the loan. But, they also are more reliable. With the economic and housing downturn, mortgage rates for both fixed and adjustable loans spiraled downhill. The longer-term fixed mortgages are offering rates that compete well with the short-term adjustable rate mortgages, which spread over 10, 15 and 20 years. There’s not much difference today between a 30-year fixed rate and a 20-year ARM, unlike in years past. And 10-year rates find only a few qualified buyers.
Since most of these short-term mortgages are targeted at refinancing, equity positions tend to come in fairly deep, with 20- to 30-percent equity pretty common, Gumbunger says. “A minimum of 10 percent down is the standard these days everywhere,” he says. According to Dikit, anything less than a 3.5 percent down payment requires a mortgage insurance, which is yet another layer of required qualification...
But 15-year mortgages are still tempting and popular. “They are almost 0.75 percent below the 30-year [fixed rate mortgages],” Gumbunger says. According to the Mortgage Bankers Association, the 30-year, fixedterm rates were at 3.96 percent in the second week of May. The 15year rates at the same period were at 3.26 percent, while the 5 year ARMs were at 2.80 percent – which means it’s worth looking into the short-term mortgages if you can afford it. So, can you?
The Short-Term Target Audience “Homeowners refinancing usually are the target (for these loans),” Gumbunger said. “For some, it is possible to chop off years off their loans at the same (or perhaps even lower) monthly payments.” Shorter-term mortgages work best for trade-up buyers who are coming into the deal with a sizeable equity stake or down payment, Gumbunger says. These loans also work better for consumers who are now in the market buying homes that have lost some value, says Joel Dikit, senior mortgage consultant at Mason-McDuffie Mortgage in Pleasanton, Calif. First-time buyers who don’t plan on owning or living in their home for more than a decade also should consider the short-term ARMs, Dikit says, to take advantage of the low introductory payments. You might be able to lock into rates that are in the low 2-percent range, if you shop around, he adds. “Ten years is a long time in the mortgage business,” Dikit says. “You could sell off the property by then or have it as a rental.”
ATTEND a HOME BUYING SEMINAR OPEN TO THE PUBLIC! NO COST! NO OBLIGATION! Sponsored by the Washington State Housing Finance Commission Presented by Guild Mortgage Company, Spokane Valley WHO SHOULD ATTEND: ✒ First Time Buyers ✒ New Spokane Residents ✒ Renters Ready to Invest in their OWN Dream ✒ Those ready to move up to a larger home or those ready to downsize ✒ YOU!
LEARN FROM THE EXPERTS ABOUT: ✒ Tax Benefits ✒ Home Inspection
✒ Saving and Planning ✒ Title Insurance ✒ Current Housing Market ✒ Types of Financing ✒ Down Payment Assistance Programs ✒ How to negotiate and buy a HUD home ✒ How to Buy and Rehab a home all in one loan with as little as 1% down ✒ Everything you need to know about obtaining a mortgage and buying a home! Laura Wells, CMPS NMLS #330328 Certified Mortgage Planner (509) 279-2320 Ext. 25 – Direct (509) 714-9411 – Cell (877) 290-1604 – Secure E-Fax www.guildmortgage.net/laurawells LWells@GuildMortgage.net
CONTACT US TODAY FOR A COMPLETE LIST OF CLASS SCHEDULES AND TO RESERVE YOUR SEAT! (509) 279-2320 EXT. 25 Laura Anne Wells-Svedberg WA/OR-MLO-330328 / ID-MLO-12775 / Guild Mortgage NMLS # 3274 / Branch NMLS # 341940 The material provided is for informational purposes only and should not be construed as investment and/or mortgage advice or a commitment to lend. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. Subject to change without notice, all loans are subject to underwriter approval. Terms and conditions apply. An Equal Housing Lender, Guild Mortgage Company, Spokane Valley Branch, 12209 E. Mission Ave., Suite 7, Spokane Valley, WA 99206, © Copyright 2011 Guild Mortgage Company. DISCLAIMER: The sponsorship by the Commission of a homebuyer education seminar does not endorse a person, businness practice, product or service other than those of the Commision.
Phase 3 Now Available! Open Saturdays & Sundays - Noon To 4 pm The River Run Development is located just 2 1/2 miles west of downtown Spokane & is nestled on the banks of the Spokane River & offers: • River frontage & secondary home sites available with views of the river & downtown. • Tree lined streets, 2 private community parks, & paved walking paths. • Every home site has easy access to the natural hiking trails that run along the river. • Desirable schools; Hutton, Sacajawea, & Lewis & Clark. • Close proximity to Riverside State Park, Centennial Trail & 3 of the areas best golf courses. • Prices begin in the low $300’s & top out at over $1 million. The exclusive builders for the development are two of the area’s best & most reputable: Ted Miller Construction & Dave Largent Homes. Currently there are 3 homes available & under construction priced from $339,900 to $589,900. All homes feature top of the line amenities; custom gourmet kitchens with granite counters & stainless steel appliances, great room concept with natural rocked gas fireplaces, finished daylight basement, covered decks & more. Three or four car garages included. Directions from downtown Spokane: Head west on 2nd Ave or Riverside Ave, turn right on Government Way & follow to the River Run entrance. Second entrance across/ south of SFCC campus.
For more information and custom building options contact:
Jim Powers Managing Broker
509-321-1100 For virtual tours visit riverrunliving.com
TED MILLER HOMES
DAVE LARGENT HOMES