Map Your Community

Another cool interactive tool from the WP - a "Map Your Community" tool.

It allows you to enter an address or zip code, and has tabs you can click on to map recent sales, crime, and school info. Good stuff.

"Junk Fees"

The Washington Post had a good, though short, Q&A on "Junk Fees" from mortgage lenders. Many people know BoA has a big promotion running right now for their "no fee mortgage plus" which advertises $0 closing fees and $0 application fees, with no PMI. (Update July 2007: See the article about whether BoA's program really saves you money here.)

But what are these fees? And which ones are negotiable? Here are some excerpts from the WP, and you can read the full entry here.

The first category of charges listed are those items payable in connection with your loan. These may include an origination fee, points, appraisal fee, credit-report fee, mortgage-broker fee, underwriting fee, processing fee, courier fee and wire transfer fee. An origination fee and points are typically a set fee that you have agreed to pay to obtain your loan. It may be a percentage of the loan amount, say 1 percent.

An appraisal fee and a credit-report fee are typically not negotiable, as the lender or your mortgage broker will order these.

The mortgage-broker fee listed on the good-faith-estimate form is negotiable. The lender's inspection, underwriting and processing fees may be somewhat negotiable, but many lenders stay fairly firm on these fees.

Courier and wire-transfer fees are typically charged for transferring loan documents to the escrow closing company and wiring the loan proceeds to the closing officer. You may ask that these be reduced or waived.

Tysons Tunnel

I'm often asked whether buying in Tysons is a good deal, since values may go up with the coming metro line. I wish I had a crystal ball every time I asked what a "good deal" was, but in this case, the one thing I do know is that if you're buying for metro access, you better count on it being a medium- to long-term investment. Today's "Commuter" page in the Post had this update (paraphrased):

The project's first leg will go through Tysons Corner to Reston. Work will begin this summer and the initial phase is scheduled for completion in 2013, with the second phase expected by 2016.

A few things immediately come to mind: there's still quite a big of controversy over whether to build the rail above or below ground. I'm not sure whether those dates in the Post represent the original above ground option, or the much-lobbied for below ground. (See www.tysonstunnel.org for the lobby perspective.) I assume it's the former, and if so, it's reasonable to assume any change to the latter would delay. Even if they move forward above ground, when's the last time you heard of a major construction project finishing on time. NINE years from now?? If that happens, kudos to the planners on that project!

In related long-term construction news, the Springfield Interchange ("Mixing Bowl") project, which started 8 years ago, is scheduled to be completed this summer. I can't imagine all those years of commuting joy, dealing with heavy construction, detours, new traffic pattersn -- congrats, Springfield! Tysons, you may want to ask for some tips on how to survive the next 9 years.

Interest Rates Expected to Continue Rise

Excerpted from May 26 Washington Post: Rates on 30-year mortgages jumped to their highest level in seven months as prospects diminished for Federal Reserve rate cuts any time soon, reflecting concerns in financial markets that inflation worries will keep the Fed from cutting rates in coming months.

Frank Nothaft, Chief Economist at Freddie Mac, said he was looking for a gradual rise in mortgage rates the rest of the year...and looked for housing to stage a recovery beginning at the end of this year, with a modest increase in both sales and home construction in 2008.

**

30 year fixed rates now average 6.37% nationwide. Let's keep this in perspective though. Take a look at the long term average rates:

Source: Long & Foster

Information deemed reliable but not guaranteed.

So, in the big picture, rates are still extraordinarily low. Let's use a real life example: take a $500,000 loan (more than the average condo in Arlington, but we'll use it because it's a nice round number). A borrower with a 30 year fixed rate loan of 6.35% has a Principal & Interest (P&I) payment of $3,111/month. Let's say rates continue to go up--at 6.45% that same loan has a P&I of $3,144, a difference of $33. Of course $33/month adds up over time, but if that $33 is make-or-break in your budget, then you should NOT be buying a house in that price range anyway. If rates go all the way to 7%, then we're talking $215/month, so that gets to be a bit more significant in the monthly budgeting process. I guess what I'm saying is to not panic when you read rates are slowly going up...a small tick in prices should not impact your go/no-go decision in a home purchase, and if it does, then you need to be looking in a lower price range.

Sub Prime Meltdown: The Middle of the End?

Several weeks ago I posted about Fannie Mae and Freddie Mac programs to help borrowers who are in risk of defaulting, or have already defaulted, on their sub-prime loans. By now, everyone has read of the "melt down" fueled by 2/28 and 3/27 adjustable rate loans that offered very low teaser rates back i n 2004-2005, and are due to begin resetting this year. The issue is that lenders approved borrowers based on those low initial payments and now that the payment will be going up--often very dramatically--borrowers who either didn't understand the resets, or just aren't good at budgeting, are in serious trouble.

Now Congress may be stepping in as well, in the form of a "stealth bailout" via the FHA. The Federal Housing Authority has many loan programs aimed at helping first time buyers, but the loans came with some serious drawbacks: heightened inspection requirements, mortgage insurance, and most importantly in this area, a relatively low maximum borrowing cap. With prices so high in this area, FHA loans just weren't a good deal for most borrowers. Congress is currently considering an FHA overhaul package that would, among other things, raise the cap, and lower the down payment requirement, all while providing 30 year fixed rates that are about 3% below the going sub-prime rate. Obviously FHA is expecting to see a surge in applications. Of course there will be snags as this bill makes it through the convoluted process, but if it comes through relatively intact, this could be the "middle" of the end of the "meltdown."