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Remember last December? Want to?

* The economy was teetering on the brink of collapse.

* Real estate values splattered.

* The banking industry took a $700 billion bailout.

* General Motors and Chrysler thought they wouldn't make it through the end of 2008.

* Manufacturing was in the tank.

* The workforce was losing 500,000 jobs a month.

Everything isn't coming up roses, by any means. But the panic, at least, is over.

Consumer confidence is returning, Seattle real estate values have been level for six or seven months now, which is a relief. WaMu and Safeco may be memories, but the banks are starting to repay TARP. The auto industry is struggling, as is Boeing, but they can sing, "I'm Still Here."

We're not exactly partyin' like it's 1999. But there's plenty of good reasons to hope that 2010 will be better than 2009. Here's to the New Year!

Mortgages insured by the Federal Housing Administration can be a lifeline for buyers in King County Washington.  These loans have tiny down-payment requirements, competitive rates and easy credit score hurdles.  In fact, terms are so attractive that some may ask why all home buyers don't use FHA mortgages.  Well, a lot more of them do.  Since the housing bust began, FHA lending has soared to account for 20% of the total dollar volume in home loans, up from just 3% in 2006.

There were 384,451 home puchase loans issued during the first two months of 2009, nearly four times the pace of 2008 when 631,649 were issued, and far more than the 278,393 issued for all of 2007.  The number of authorized FHA lenders skyrocketed 500% over the past two years.

FHA loans are especially attractive for home buyers with steady incomes who cannot scrape together a 20% down payment because FHA lenders will finance up to 96.5% of the home price.  Other attractions of FHA loans include:

A better loan moditification program.  The agency has a long history of helping borrowers who fall behind on the payments.  In two-thirds of default cases the agency figured out a plan to keep borrowers in their homes.

They are cheap to refinance.  FHA loans can be easily, and often cheaply, converted to similar FHA mortgages if interest rates drop.

Borrowers with weak or limited credit histories may still qualify.  Mortgage applicants can have very short credit histories or a late payment or two on their records and still get approved with low interest rates.  The FHA guidelines set the credit score minimum at 620, but exceptions may be made for people with even lower scores.

Low rates.  For months, interest rates on FHA loans have been lower than conventional loans. 

Although these loans target low and moderate income Americans, there are no income restrictions.  However, FHA does limit the amount that can be borrowed, based on area home values.  In King County, Washington, the most that can be borrowed is $567,500.  In addition, borrowers must pay an up-front insurance premium totaling 1.75% of the loan, which goes into FHA's fund for repaying lenders if borrowers default.

The one class of borrowers who may be slightly better off with conventional mortgages are the ones with very high credit scores who make substantial down payments.  Please email me if you would like a referral for an authorized FHA lender.  carolgabrielson@lakere.com

Note: This information has been extracted from an article on CNN Money.com, by Les Christie, staff writer, April 6, 2009

A full service buyer's agent should:

Be an advocate who acts in your best interest (and only your interest) at all times.

Listen to you!  Your agent should be able to hear what you are saying and understand how to assist you.  If the agent specializes in downtown condominiums and you are looking for a ranch in the country, they should be willing to refer you to a competent agent that will meet your needs, no hard feelings!

Understand your specific goals and act accordingly.  This means you should have an appointment with your agent where you do not look at any properties, just get to know each other and make sure you are a good professional match.

Be proficient with the latest technology.  We are in an electronic age.  A full service buyer's agent should be able to use the appropriate technology to your benefit.

Understand market trends, the changes to local and national real estate law, and be able to explain how these changes and trends might affect you.

Work with a company that has a full-time support staff (broker, office manager, transaction coordinator, etc.) You would be surprised how much the support of these people can enhance your buying experience.

Be an excellent communicator and keep you informed, in the way that works for you (e-mail, text, phone, ESP, whatever you like) throughout the entire process.  Communication is so important during this stressful time and it is better to know what is going on than to imagine the worst!  Find an agent that listens, speaks and acts in the way that works for you.

Be able to give constructive, professional (and even personal) advice during all stages of the buying process.  Listen, good agents have seen it all and should be eager to share their knowledge.

Understand the importance of previewing and knowing the houses on the market.  This ensures that you see the right properties without wasted effort.

Point out potential problems with a property and communicate them to you clearly.  Good inspectors are essential here and there is no substitute for a professional inspection, but an experienced agent should also be aware of any red flags and bring anything they notice to your attention for further inspection.

Let you know of any external factors that may not be obvious but may influence a property's value, either now or in the future. Yes, sometimes in the heat of the moment you may not notice that the home is near the freeway and across from the dump, but your agent should bring these issues to your attention. You may still purchase the home, but you will do it from a position of understanding the pitfalls as well as the benefits.

Advise you to walk away from a property if necessary.  Your agent should be talking to you all the time about what is truly important; if something is wrong they should speak up and counsel you to walk away if that is what is best for you. 

Understand common issues of homeownership and maintenance and relay that information to you as appropriate.  Hey, there is a lot to this stuff! Your agent should have a basic understanding of everything home related and be able to find answers to the things they do not know.

Be a strong negotiator. I cannot stress this enough!  Negotiation is one of the most important aspects of the entire process. This does not mean that they should be mean and spiteful, but they should know the intricacies of how to strongly negotiate AND get you the home of your dreams.

Understand and explain how to best position your offer in competitive situations.  There are many ways to make an offer stand out and your agent should be well versed in what will work for you.  Remember, the goal here is for you to be living in the home of your dreams, so make your offer shine!

Be able to provide competent and professional industry contacts including inspectors, lenders and home repair people.  Your agent is a professional.  Your agent should understand the importance of knowing other professionals, with great reputations, who can provide appropriate services to you. 

Attend all inspections and go over the results to you.  You should also attend the inspection, as that is your time to learn much more than just the specifics of this property.  You will also learn basic home maintenance tips and will then be able to understand in a more thorough way what you are getting into with this home buying thing!  Reviewing and understanding the results (and taking appropriate action) may save you a lot of heartache and money, in the future. 

Manage the closing process.  Many things happen from the time your offer is accepted to when you receive the keys. Your agent must be able to coordinate all of the steps necessary for each party, keep things moving and not allow anything minor to turn into a major issue.

Be able to counsel you about the myriad details of home ownership.  After the sale closes, you should feel comfortable asking questions and your full service agent should be a resource for you as long as you need them!

Did you notice that I did not say that your full service buyer's agent should FIND the house for you?  Hey, they are not hiding homes, they put them right out in the open where anyone can find them!  Go down the street!  Look around, they are everywhere!  Remember, we are in an electronic age and you may "find" the home before your agent, but as I hope I have made clear, there is a LOT more to a successful home buying experience. 

What do you think a buyer's agent should do?  Let me know!

Get out there, find the best agent for you and buy the home of your dreams.  I promise it will change your life!

Although loan modification for home mortgages may be complicated, it may help many of us get through this slowdown. Here are some key facts about the federal loan modification/refinancing program Making Home Affordable that can make the task of applying for modification or refinancing easier. These are the complete guidelines.

A new FICO Website helps borrowers with the federal government's Homeowner Affordability and Stability Plan focused on owners with mortgages backed by Fannie Mae and Freddie Mac. Other lenders may be offering assistance through this plan. www.nytimes.com  

The Washington Legislature took steps last week to help reduce foreclosures by setting aside $250,000 for a statewide program to help borrowers and lenders work out modifications, refinancing or other arrangements.

The Obama administration has updated the Making Home Affordable program this week by making 2^nd mortgages eligible. The Treasury Department also updated the Hope For Homeowners program offering new incentives to lenders.

All of these programs will have a positive effect on Seattle Real Estate as we make our way out of this sluggish market. 

The nation's recovery plan has dumped hundreds of millions of dollars into the economy. Right or wrong it's hard for me to imagine that the government will fail, that as a nation we've doomed ourselves into Third World status. So I have to assume that our financial system will recover and the national economy will see growth once again. And what will happen once the TARP and other stimulus monies trickle down to the masses?

A few people, who want an immediate fix, are screaming about deflation, but most experts predict inflation will be the result of this new money. Prices will go up and interest rates will go up. Incomes will lag as businesses will have a large pool of the unemployed to draw from.

Suppose you could buy a home now but are considering renting another year or two, just to make sure. You have good credit, 20% to put down and a job.

Interest rates right now are less than 5%. You offer $400,000 on a home, put $80,000 down and end up with a PITI mortgage payment of about $2,100.

When interest rates go up to 7%, the PITI will be just over $2,500.

There are lots of calculators online that figure in appreciation, tax implications, and so forth. But what will that $400,000 home cost in two years?