There has been so much news about stricter lending requirements over the past few years. Many folks who could be first time home buyers think they are unable to buy right now. Some folks think you need 10% or 20% of the sales price to buy a home now. Some think there are no loans for first time home buyers.  Well I’m here to tell you that is just wrong information.

You too can take advantage of historic low interest rates and low prices for Portland real estate. 3.75%   is the current FHA loan interest rate for buying a home.  (Click here to get more complete information including APR.) Call me and I’ll show you the way to buy a home!

How much down payment do I need for buying a home in Portland? That depends on the type of loan you will use.

3.5% of the sales price for FHA loans

0%    of the sales price for Veterans loans or

0%     of the sales price for USDA (rural property) loans

Let’s talk about the FHA loans for buying a home in Portland.

I am not generally an advocate of zero down payment for my home buying clients. (Although  in some situations zero down payment makes sense.) Using an FHA loan to buy a home in Portland and the metro area can be the best route for first time home buyers  (and also for move up buyers who have little equity in their current house but are interested in buying a home).

If you want to use FHA to buy a home in Portland or the metro area,  your price range is <$418,750 for a single family home or <$536,050 for a duplex.  Those loan limits should make home buying easy. The current median home price in the Portland area is $225,000.  (Educate yourself before buying a home. Learn about the current Portland real estate market.)

Use the buttons to the right to search the Portland MLS and find homes for sale in your price and area.

FHA loans are made by banks and mortgage bankers and other financial institutions. The loans are guaranteed by the federal government against default. This means less risk to lenders. Less risk means lower down payment for the home buying public.

You may qualify for an FHA loan if you are:

• a lawful residents of the United States
• of legal age to sign
• able to show enough income to qualify
• going to use the home as a residence

Want to know the current FHA loan limits in Multnomah, Washington, Clackamas, Marion or Yamhill County?
Use the arrows on this widget to change county.

Home buying takes a bit of thought and preparation.

Call me if you’d like a copy of my home buying information packet.  It contains information I’ve compiled in my 25 years of guiding clients through the home buying process. There is information for first time home buyers and more experienced people buying a home in Portland.

Buying a home that needs repairs using an FHA loan

It can be done. Here’s what FHA has to say at http://www.fha.com/fha_article.cfm?id=191:

One question many newcomers to the FHA loan process ask: Is it possible to purchase a fixer-upper with an FHA home loan? This basic question makes all the difference for some applicants–those willing to put in time and effort to remodel or repair a property could find major savings on their initial home purchase. The FHA does allow borrowers to locate a fixer-upper; under what is known as HUD’s 203(k) program, a qualified borrower can not only purchase such a home but also include the cost of repairs or improvements into the loan.

Portland home sales this year are shaping up to be an improvement over 2010. According to the latest stats from RMLS, closed sales are up again compared with last year. For October 2011 closed sales are up 14.1% compared with October 2010. Pending sales are also up 15.1% compared with last year.

Thinking of buying a home in Portland? Last week the 30 year fixed rate for an FHA loan was  still 3.75%. Amazing!  Who knows how long these low rates will last.

Thinking of selling your home in Portland? For October the average market time was 136 days.

(This report is a snapshot in time. To compare October with previous months, see my other Market Conditions Reports.)

Portland Real Estate Market: Home Sales

Closed sales for October 2011 up 14.1% over the previous October 2010.  Pending sales also up 15.1% over October 2010.

Comparing October 2011 with the previous month (September 2011) closed sales are down 7.1% and pending sales are down slightly 0.9%

Portland Real Estate Market: Home Prices

The median sold price for Portland real estate is down  5.6%  over the previous month. For October 2011 the median sales price is $2,800 higher than the median sold price for January 2011.

BUYERS MARKET? OR SELLERS MARKET?

Is it a buyers market or a seller’s market? See the chart to the right.

It’s all based on the number of months of inventory. How many months would it take to sell all the homes currently on the market if no new property came up for sale? Less than 4 months inventory is a sellers market;  4-6 months is a neutral market; and more than 6 months inventory is a buyers market.

All information is courtesy of RMLS.

judging by the August 2011 numbers from our local MLS. Closed sales are up dramatically (30.7%  over the previous August) and pending sales are also up. Portland home buyers must really be taking advantage of the extremely low interest rates. Last week the 30 year fixed rate for an FHA loan was 3.8%. Amazing!

(This report is a snapshot in time. To compare August with previous months, see my other Market Conditions Reports.)

Portland Real Estate Market: Sales

Closed and pending sales are up for August 2011. Compared with the previous August (2010), closed home sales in the Portland metro area are up 30.7% and pending sales have increased 29.6%

Compared with the previous month (July 2011) closed sales are up 5.6% and pending sales are up 13.4%/ (The pending sales figure  is slightly skewed for August 2011 because of a change in the way RMLS reports pending short sales.)

Portland Real Estate Market: Prices

Sold prices for Portland real estate are down just a small amount over the previous month. That’s the first time in 2011 that the month to month sold price change has decreased.  Even so, the median sold price for August 2011 is $10,000 higher than the median sold price for January 2011.

BUYERS MARKET? OR SELLERS MARKET?

Is it a buyers market or a seller’s market? See the chart to the right.

It’s all based on the number of months of inventory. How many months would it take to sell all the homes currently on the market if no new property came up for sale? Less than 4 months inventory is a sellers market;  4-6 months is a neutral market; and more than 6 months inventory is a buyers market.

All information is courtesy of RMLS.

We’re talking buying a home in distressed condition (fixer-uppers) or distressed terms (short sale ). Frequently it’s both (cash only terms due to condition). Here’s more about buying Foreclosures. Here’s more about buying Short Sale Properties.

Maybe the home needs a new roof and electrical panel. The owner took the furnace with him when he was forced to leave. And the septic system is “iffy.” (I don’t have to make this stuff up. Reality is crazy enough.) Possibly the seller needs his lender to go “short” on what is owed, or the bank owns the home and just doesn’t get it that a major rehab is required.

If you can just figure out how to finance this piece of Portland real estate, you know you can increase its value and turn into a beautiful home.  You just need a lender who thinks like you do.

Traditional lenders must follow regulations that make it near impossible for owner occupied buyers and investors to get financing at all or on terms that makes sense for these kinds of properties.

That’s why I’m so glad I attended the class “Financing Tools for Difficult Times” presented by John DesCamp Sr. of The Legacy Group. His company operates two divisions: one is a traditional mortgage bank, and the other is a private institutional lender that has solutions to many of the challenges traditional lenders throw in the path of buying distressed property.

Some of those traditional lender challenges include:

• large down payment requirements;
• loan to value ratios (loan amounts) computed on the lower of purchase cost or market value;
• tight limits on the amount sellers can contribute on behalf of buyers;
• restrictions on gift funds and other forms of collateral buyers may use.

The end result is that traditional loans on distressed properties require so much cash down payment from buyers that most distressed properties just don’t make financial sense to purchase and most buyers don’t have enough resources to make the purchase.

Non-traditional loan structures (typically, loans from a capital company like Legacy Group Capital) don’t use one-size-fits-all federal rules. They look at each project individually to provide funding that makes sense. It may involve a short term construction loan while the property is being put back into shape and then a permanent loan on the rehabbed property. Or it may mean one loan based on the value of the property after it is improved, taking into account the completed value of the home rather than just the costs to make those improvements.

There is even an alternative to the rehab loan FHA 203(k) that can save the borrower thousands of dollars over the course of the loan.

If you think you want to reap the equity benefits of buying a home in Portland that needs fixing, call me. Or call John DesCamp. Mention my name and he’ll work extra hard for you.

Here’s how to contact Anne Kadin, Meadows Group, Inc., Realtors: 503 320-3163

Here’s how to contact John DesCamp Sr., The Legacy Group

Phone: 503.224.4033; Cell: 503.780-7743 Email johndsr@legacyg.com (MLO-114798)

Attention Portland home buyers. Here’s a great opportunity to make buying a home in Portland affordable. You’ll need to be a first time home buyer and you’ll need to act now to take advantage of the Oregon Bond Loan program. If you qualify and want to search for homes in Portland, use this link to see all the Portland homes for sale in the MLS.

Rodd Miller of Pacific Residential Mortgage, LLC sent me the information about this state program. It’s only available for a little while, so call me or call Rod quickly to see if you qualify. Here’s what Rod has to say:

The Oregon Bond Loan helps consumers in Oregon buy their first home by providing two borrowing options. This Residential Loan Program, available for a limited time, helps eligible families increase their home purchasing power and lower their monthly house payments for greater affordability.

The Oregon Bond Loan offers eligible borrowers a choice between the following options:

Cash Advantage Home Loan option*

• Low, fixed interest rate

• Cash grant up to 3% of the borrowed amount

• Minimal cash-to-close

Rate Advantage Home Loan option*

• The state’s best fixed interest rate

• With Low down payment and closing cost option

*Qualifications are similar for either program option.

Qualifications

• Must be a first-time homebuyer (or not have owned a primary residence during the three-year period prior to the date the note and mortgage is signed).

• The first-time homebuyer requirement (above) may be waived if they are purchasing in a targeted geographical area.

• A qualified Homebuyer must be (or intend to be) an Oregon resident and must agree to occupy the home being purchased as their primary residence.

• Eligible income levels and other qualifying criteria for this program are available through your PRM Mortgage Banker.

For January 2011 Bank Owned or foreclosure properties were 11% of homes for sale in Portland yet they were 28% of  all transactions in escrow. Why? Buyers may perceive foreclosure properties as the best value without the hassles and uncertainty of buying short sales. Non-distressed sellers need to fight for attention in today’s housing market. They are 70% of the market and  58% of the sales. (See below for definitions of types of sellers.)

Why is this important to know? Sellers should know who their competition sellers are. Buyers should know which market segments have the most buyer competition. Let’s work together to devise your own personal home buying or home selling strategy. Go with the flow or be a Contrarian. It’s your choice. I can help.

This January 2011 data is courtesy of RMLS

These days there are 3 categories of home sellers:

1. Short Sale Sellers. These are folks whose home loans are higher than the market value of their homes. They need their lender(s) to agree to take less then owed on the property. Short sales can take a lot of time to close. Some never get lender approval, so they never close (Learn more about Short Sales here)

2.  Banked Owned. Homes lost to foreclosure are sold by banks. They are listed by Realtors and sold through the MLS.  These sales close in the normal 30 to 45 day escrow period.(Learn more about Foreclosures here.)

3.  Non-distressed Sellers. These are the regular sellers who have put their homes on the market. They need to be competitive with the prices of short sales and foreclosure properties. They also need to stress the advantages of buying a non-distressed property: ability to help buyers with closing costs and do minor repairs that may come up on inspection reports. Short sale and many bank owned properties can not or will not do this.   (Search the MLS here)

Answer: from Tim Vanderburg, Northwest Mortgage Group tvanderburg@nwmortgagegroup.com

Yes, there are new rules. They’ll make your monthly payment very slightly higher. But once you understand the numbers you’ll see that the changes are manageable and allow you to start out with more equity in your home as soon as you purchase.

Don’t let the changes in FHA keep you from making the best investment possible in your future!

To understand the recent changes let’s talk about what the Federal Housing Administration (FHA) does. It’s a federally sponsored agency that insures a lender against the possibility of a loan going into default. That’s a pretty big deal in the current mortgage environment where record numbers of home loans are delinquent and properties are being foreclosed upon in droves.

To finance the default insurance, FHA collects insurance premiums from the borrower –the home buyer– in two phases:

1. The up front mortgage insurance premium. This can be financed into the loan amount to keep your closing costs down.

Old Up Front Premium: 2.25% As of Oct 4, 2010:  1%

2.  The annual premium. It’s collected as part of the monthly payment. As the balance on the loan is reduced, the monthly premium can, with a good payment history be eliminated over time.

Old Annual Premium:  .55% As of Oct 4, 2010:  .90%

At first look, this change seem s to make it harder to buy a home in Portland but let’s look at this a little closer. Here’s an example of the old and new FHA loan costs of a loan amount of $200,000 using an interest rate of 4.5%.

Yes, your total monthly payment for that new home is $45.10 more per month. But  instantly, on the day of closing you owe $2,500 less than you would under the old rules. Or you could say your equity has increased by $2,500 because of this rule change. (It would take about 4.6 years at the lower payment to earn that equity position in your Portland real estate. In today’s market where property appreciation is no longer a given, that equity position can be really valuable.)

If you would like more information on FHA or any other mortgage program, call Tim Vanderburg at Northwest Mortgage Group (503) 452-0001. With more than 20 years experience helping Portland home buyers, Tim is well qualified to help you navigate the changing mortgage environment.

My client has her home for sale in Portland at 2518 SE Belmont, Portland 97214. (Scroll down to see the flier.)

To download a flier of this great piece of Portland real estate Click Here.

This is a beautiful property at an awesome price ($285,000).

Here are the highlights:

The charm of a 100 year old building. It has leaded glass window, wood burning fireplace, and claw foot bathtub. The  formal dining room has pocket doors, a bay window and built-in cabinet.

The ease and efficiency of living in a remodeled building. In 2005 the kitchen and 2 full bathrooms were completely redone. A 90% efficient gas furnace was installed along with new electric service and new plumbing. A new roof was also put on in 2005.

It’s hard to find more space for the price. The main floor of the condo is about 1300 square feet with two bedrooms and two full baths.

There’s also a semi-finished basement. It’s about 490 square feet and includes the washer & dryer and furnace. The basement is accessed from the kitchen of the condo and has its own outside entrance too.

With a walk score of 85, the condo is close to everything, including Zupan’s, the Avalon Theater, Cricket Cafe, Theater Theater, Hawthorne shops, and much more.

Want to be part of a neighborhood? There are just four condos in the building. Going to a HOA meeting is like hanging out with your neighbors.

If you’re searching the MLS it is #10058750.

To see all the homes for sale in Portland (and the whole metro area) check out my Home Finder Service or use the Portland Quick Home Search box to the right.

To see inside, just give me a call 503 320-3163.

FIRST THE GOOD NEWS FOR HOME BUYERS

Interest rates are the lowest they have been since the 1950′s!  Home buyers take note: I know of several people who have locked in a spectacular rate of 4.375% for the next thirty years.

Locking in a rate this low makes better financial sense than waiting a few months for a lower purchase price but having higher interest rates. Even if home prices continue to slide a bit lower, as a home buyer you’ll still do better taking advantage of these great rates. But that’s another blog topic.

THE NOT GOOD NEWS–WILL YOU QUALIFY FOR A HOME LOAN?

1.  GOVERNMENT GUIDELINES ARE NOW VERY TIGHT

Background: Today 95% of all home buyers use government insured loans through FHA, Fannie Mae and Freddie Mac’s rigid guidelines. Lenders must follow these guidelines to sell newly made loans on the secondary market. This frees up money for lenders to make new loans. These guidelines continue to get tighter and tighter.

Here’s one example: Lenders are now running a second credit report on buyers 3 days before closing.

TIP: Wait until AFTER closing on your new home to buy a new refrigerator or furniture for that new family room. Buying large items on credit before your home closes could mean the loan (and the house) will not close. Increased borrowing may push your debt ratio out of the government guidelines.

2. CHANGES TO FHA REQUIREMENTS

At this time 25%-35% of home buyers use FHA. And stimulating home ownership stimulates the economy. So would you think that FHA would make it easier for buyers to use FHA loans? Nope.

REDUCTIONS TO SELLER PAID CLOSING COSTS FOR BUYERS: Home buyers will get less help from sellers on closing costs. Sellers have been allowed to help their home buyers by paying up to 6% of buyer closing costs. Early this summer FHA will cut that contribution to 3% of the loan amount. On a $200,000 loan, the additional $6000 a buyer will have to come up with may mean the difference between being a home owner and remaining a renter.

INCREASES TO MORTGAGE INSURANCE PREMIUM (MIP): This is not the “If I die the mortgage is paid off” kind of insurance. It insures the lender for losses if the buyer is unable to make loan payments. (Do you think mortgage insurance companies have seen their claims go up the last few years?) Each month the borrower pays MIP as part of their monthly mortgage payment. MIP for FHA loans has traditionally been .55% of the loan amount paid each month for about 5 years into the loan. There is a bill in Congress now to raise that rate to .9%. This will raise the monthly payment enough to keep many borrowers from qualifying for a loan.

3.  QUALIFYING CONDO FINANCING:

The percent of condo buyers using FHA loans is probably much higher than for detached homes. FHA has scrapped its previous list of approved condo associations (condo buildings it will loan on). Now each condo association must start a new approval process before any more FHA loans can be used.

Learn more about buying a condo here.

After lots of testing and lots of soul searching, we decided Home Quest offers the best search capabilities for our visitors. We hope you agree once you get to know it.

Yes, we know how hard change can be for you. And we’re sorry for any inconvenience. But we know you’ll grow to love Home Quest and its many features.

Please feel free to phone Anne Kadin (503 320-3163) if you need help adjusting to the new MLS search.

In the meantime, if you have saved searches you want to reference, this link to the old MLS search program will be available until approximately May 3rd for you to reach the old MLS program.

Thanks again for your understanding. And let us know when we may help you find the home of your dreams.

I would have to say that the information they used to do the ranking makes it one of the best cities for home sellers too.

Forbes looked at which cities in the country had the lowest mortgage rates. Then they added the 1/2008 to 1/2009 change in percent of homes in foreclosure and change in percent of homes that were delinquent for 90 days or more on the mortgage. Portland is number ten on the list ( The data for Portland is shown below.)

This news is good for sellers too because our foreclosure rate is low. Short sales and foreclosures lower the market value of homes. Sellers who are not in foreclosure must lower their prices to compete with bank owned and short sale properties.

The less foreclosures in Portland, the better for us all.

Here are the details for Portland:

Portland-Vancouver-Beaverton, OR.-WA.

Average Effective Home Mortgage Rate: 5.03%

Mortgages 90+ Days Delinquent, January 2009: 1.82%

Mortgages 90+ Days Delinquent, January 2010: 3.63%

Foreclosures, January 2009: 1%

Foreclosures, January 2010: 1.86%

(To see the other top ten cities check out this link )

But there’s a one year extension of the program for some members of the military and certain other federal employees. Service people qualify if they are:

• members of the uniformed services, Foreign Service and members of the intelligence community. They are eligible for this one year extension if they serve on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008, and ending before May 1, 2010.
• spouses qualify if the service member is married

For this special extension, military members must have their signed, binding contract to purchase their new home by April 30, 2011 and close on the property by June 30, 2011. The rest of first time home buyers must have a signed, binding contract for their new home by April 30th and close on the sale by June 30th, 2010.

Learn more details at the IRS website.

Here’s one for people wanting to buy a home in Portland or any other part of Oregon.

Oregonians looking to buy their first home may qualify for an assistance grant from the Home Sweet Home Program (HSHP). The Oregon Association of Realtors and the Oregon Bankers Association have partnered to create grants for buyers who earn less than or equal to the median income in their area. (The Oregon median income in 2008 was  $50,165. Link to Census Bureau info.)

HSHP funds will be disbursed to eligible first-time home buyers in the form of $2,000 grants.  To access funds, the home buyer must obtain their first mortgage loan through an Oregon Bankers Association member bank.  The bank will work directly with the Bankers Association which is administering the program.  The eligible home buyer must also be working with a REALTOR® on the home purchase.

Download the flier with more info on the program.

Please call me if you have questions: Anne Kadin 503 320-3163.

A: Anne, I’d tell your client to beware of so-called debt services as advertised on TV!

Here’s why:

Any promise of “Instant” debt relief is likely to be a scam, especially if the service charges an upfront fee of several hundred dollars. No one can make your debt disappear. But there are ways you can lower your monthly payments.

For relief, turn to a nonprofit credit counseling agency certified by the National Foundation for credit Counseling (nfcc.org/firststep/locator.cfn). It will act on your behalf to negotiate with credit card companies to lower or freeze interest rates and set up a manageable payment plan. (Some also offer budget counseling and debt management classes.) And unlike debt services, credit counseling services charge only administrative fees; expect to pay about $50 in set up costs and $25 for monthly maintenance.

Tim Vanderburg Mortgage Banker NW Mortgage Group, Inc. Ofc: 503.682.2880 Toll Free: 800.452.0038 tvanderburg@nwmortgagegroup.com www.Timvanderburg.com

Do you hear your real estate opportunity knocking?

Right now, as the Portland real estate market continues to stabilize, there are unique opportunities for home buyers and home sellers. It you’re trying to time your purchase for the bottom of the market, now is the time. And see below why you might want to time your sale for the bottom of the market too.

FOR BUYERS

• Low mortgage rates–Current low interest rates (around 5%) won’t last. This spring the Fed will wind down its subsidy of home loan rates. Interest rates are expected to rise. Many analysts expect to see 6% and above rates quite soon.
• Lower prices—Median home prices in the Portland Metro area are 14.8% lower than they were 2 years ago.
• $8,000 tax credit–First time home buyers must have a written, accepted sales agreement by 4/30/10 to qualify. Learn more about the tax credit.
• Rehab loans are still available—Check http://hownw.com/ for info on distressed property loans.

FOR SELLERS

• $6,500 tax credit—see if you qualify.
• Capitalize on current demand—currently there are more motivated buyers competing for fewer available properties.
• If your non-short sale home would be good for a first time home buyer, you’re in luck.  First time home buyers who want their $8,000 tax credit (and who wouldn’t?) cannot be assured a short sale purchase will close in time to qualify for the tax credit. They must choose from the available traditional owner sales and foreclosures.  Does that include yours?
• Expect a return to our traditional 3-4% appreciation.
• Most sellers are buyers too—It’s a terrific time to buy up at these “discounted” prices and lock in a low interest rate before the mortgage rates rise. Yes, your current home is worth less, but so is that dream home.

Please call if I can help you or anyone you know profit from our current real estate market.

Opportunity is Knocking

The federal government is giving away money to home buyers.

Do your part. Stimulate the economy. Receive what may be a once in a lifetime income tax credit when you buy your first home or as an existing home owner, buy another home.

If you need more info, please give me a call. I can help.

Here are the details for the Home Buyer Tax Credit of 2009/2010:

Who is eligible?

What are the eligible properties to purchase?

The tax credit is for a primary residence. It may be single family, a condo , townhouse or co-op.

What are the purchase deadlines?

The new residence must be purchased between 11/7/09 and 4/30/10. This means buyers must have a written, binding contract by 4/30/10 and close on that transaction before 7/1/10.

How much is the tax credit?

The credit is based on two factors: home price and buyer income

The price of the new home must be less than $800,000

The buyers’ income must be less than $125,000 for single purchasers and less than $225,000 for married buyers.

Purchasers with income over this level may still be eligible for a partial tax credit.

(NOTE: this is a change in income limits from the 2009 First Time home Buyer Tax Credit  for home purchases from 1/1/09  to 11/6/09.)

Does the credit need to be repaid?

Not if the buyer occupies the home for 3 years or more. If you sell the property before the 3 year period is up, you must repay the full tax credit at the time of sale.

Still have more questions? Check out http://www.federalhousingtaxcredit.com/

So many people have asked me how the federal $8,000 tax credit works. Basically it’s a once in a lifetime opportunity to buy your first home and get paid by the government.

Here are some highlights.

What is it? It’s a gift from the federal government to all you first time home buyers. It’s goal is  to help stimulate home sales and make first time home buying more affordable.

Who is a first time home buyer? If neither you nor your spouse have owned a residence in the last 3 years you qualify.

What kinds of properties are covered? As long as you buy a primary residence it can be a condo, townhome or detached single family home.

Are there time restrictions? Yes, you must close escrow on this residence before December 1, 2009. Most escrows take 30-60 days, so call me now. Let’s start looking at homes.

How much is the credit? The credit is for 10% of the purchase price up to $8,000.  So most any property you purchase in the Portland area would be for the maximum $8,000 credit.

Suppose I owe less than $8,000 in taxes, then what? The balance of the credit over what you owe in taxes is refunded to you…even if you owe no taxes and the full $8,000 is refunded to you. Sweet deal.

Is there an income limit to qualify? Yes. Buyers who are single can have income up to $75,000 and married people up to $150,000 can receive the maximum credit. If your income is higher you may still receive a portion of the credit.

Does the tax credit need to be repaid? Not if you live in the house for at least 3 years. Should you sell the house or stop living in it before 3 years is up, you’ll need to repay the credit.

Which is better, a tax credit or a tax deduction? The tax credit is better. It is subtracted from your tax owed. A tax deduction is an amount subtracted from your income before your tax is figured.