If you’re building a team of champions, start with a Duck. As a U of O Duck Ken Maes has been building a champion mortgage team since 1983. Like the Oregon football team competing for a championship Skyline Home Loans Northwest is a national award winner, but more than that they are local. Skyline Home loans will personally work with you one on one, bring decades of experience, lightning fast closes, and best of all make your mortgage experience hassle free. Take it from Jerry Allen; …trust a Duck.
PORTLAND — Many say that 2013 was a good year for the residential real estate market in the metro area. The New Year promises to continue that momentum but with some important changes, especially if you’re looking at taking out a mortgage.
Portland Metro area real estate values increased between 11 and 13 percent last year. There were bidding wars on some properties. Predictions for 2014 are that appreciations will go up around 5 to 6 percent.
With inventory still in the three-and-a-half months range it s still a seller s market.
But interest rates are going up; maybe as high as 5 or 6 percent by years end. While still low, that would cut into how much home a first-time buyer could afford.
The biggest change will come this month when new mortgage rules kick in.
For anyone who applies for a new loan beginning Jan. 10, they are going to find the guidelines more restrictive, said Ken Maes of Skyline Home Loans. The underlying guidelines will be tighter, especially for people on the lower end of loans. It’s going to be tougher to pass all of the qualifications necessary with this new law.
That means people with a higher debt-to-income ratio will be hardest hit and securing an FHA, VA, or USDA loan will be tougher.
From BizJournals.com by Ken Maes
There’s a new four-letter word for today’s young adults and it’s spelled D-E-B-T.
After spending four years or more finishing their degrees, new graduates are suddenly realizing they’re in a financial mess—far worse than those penny pinching college days eating noodles seven days a week. (Many parents are also smarting over that realization.)
Student loans have now exceeded both car loan and credit card debt, and have moved in behind home mortgages as the second largest category of debt, according to a study by the Federal Reserve Bank of New York.
Car loan debt totals $789 billion, credit card debt has exceeded $679 billion and federal student loan debt has jumped 50 percent since 2007 to reach $1.2 billion.
As a father of five children, one still in college, here are some statistics that got my attention:
1. A report from the Institute for College Access & Success reveals that 71 percent of 2013 graduates nationally have an average of $29,000 dollars in student loan debt.
2. In Oregon, the numbers are a little better. The average graduate is $26,639 in debt with 60 percent of the graduates in debt, according to an article in Real Time Economics.
3. From 2008-2012, debt increased per student at an average rate of six percent a year, according to Chris Herbert, research director at Harvard University’s Joint Center for Housing Studies.
4. Federal Reserve figures suggest that the share of borrowers who owe more than $50,000 dollars in student loans has increased from five to 10 percent since 2004.
Is the housing recovery being slowed by this student debt explosion? Absolutely.
“A crucial factor slowing down the recovery has been limited demand for homeownership resulting in part from a slowdown in family formations,” Larry Summers, director of the White House United States National economic council, was quoted as saying in the Real Time Economics article. “That is driven by the overarching life shaping imperative of managing student debts for too many young people.”
So with all that depressing news, is there a way to purchase a home, even if you or someone you know has incurred debt from student loans? You bet.
Many lenders will not count the student loan debt until six months, after graduation. Also, the payments on these loans are much lower than credit card and auto loan payments. Your credit score will improve as well, assuming you pay them on time, which will give you better mortgage rates and lower fees. This will all help make the qualification process for a home purchase much easier.
What are some tips to move forward?
Try to stay debt free on everything else like cars and credit cards. It will be tempting but don’t give in.
Work as hard as possible to limit what you borrow. Debt is a devil to pay off.
Don’t stretch too far on that first home purchase. Smaller is better.
Practice. Before you buy that home, get pre-approved, determine your potential new payment, and set it aside each month with your student loan payments, to see how it “feels” from a cash flow standpoint.
I believe with all my heart that owning your own home is still a big part of the “American Dream As the father of those five wonderful children, and seven awesome grandchildren, I’ve seen first hand what achieving the goal of home ownership has done to enhance their lifestyle and pride. So, scrimp, struggle, and save; it will pay off in the future when you can say two four letter words: Debt free.
By: Ken Maes and originally posted on BizJournals.com
Have you seen the movie “Groundhog Day” with Bill Murray?
If so, you know where I’m going with this. In this column, we’re going to talk about the government insanity unfolding right before our eyes. Albert Einstein described insanity as “doing something over and over again, and expecting a different result.” To see how this applies to us, let’s journey back to the late 1990’s.
President Clinton presided over an economic boom, driven largely by falling interest rates. In January 1993, the average 30-year mortgage rate was 8.02 percent, according to the Federal Home Loan Mortgage Corporation By 1999, rates had fallen to 6.79 percent due to the rapid rise of home prices, the average homeowner could claim up to 45 percent equity.
In 2000, during President Bush’s election, one of his major themes was to create an “ownership” society, where he said we could “put light where there’s darkness, and hope where there’s despondency in this country. And part of it is working together as a nation to encourage folks to own their own home.”
Congress stepped in, applying pressure on FNMA, FHMLC and FHA to lower credit standards to help the ownership dream become reality.
I think you know the rest of the story. What followed was a nightmare housing bubble and the “Great Recession,” as easy money allowed a rush of buyers with bad credit to apply for and get homes. Six years later, we’re still struggling to recover.
A snapshot of Portland’s housing market
Let’s take a quick status check of the Portland area housing market:
- The Portland area grew at an annual rate of more than 11 percent in 2013.
- Home equity loans are going up due to rising home values.
- The inventory is low, with Portland ranking eighth lowest in the nation.
- Rents are at the highest levels ever, triggering a bigger demand for homes.
The Obama administration says it has a great solution to those low inventories, and high home prices: It wants to lower credit standards.
What? That’s the “solution” that imploded the housing industry in 2008.
It’s important we all understand the real reasons behind the growing housing market: artificially low interest rates and low inventories of homes. There are fewer buyers because of the 2008 housing crash, and its devastating fallout.
Why we’re not in a true recovery
To clarify, this is not a true housing recovery because stable, full-time employment is not being created to drive a real housing recovery. I like to refer back to the era of big hair-big interest rates: the 1980’s. Back then, the U.S economy created 19 million jobs despite the fact the average interest rate over that 10 year period was 11.67 percent. In contrast, in the lost decade of the 2000s, there was net zero job creation, and the average interest rate was 6.29 percent.
For the past three years, the Obama administration has been pressuring the credit industry to loosen up standards to “help” borrowers with accounts that have turned into collections for unpaid medical debt. The result: borrowers will see their credit scores improve by up to 25 points, allowing them to qualify for mortgages, car loans and credit card debt—all of which they can’t afford.
The pressure appears to be working. The model that’s used as the standard bearer in the industry is the FICO score. FICO (Fair Isaac Corporation) is actually a private firm based in San Jose, California. It developed the model that gives people credit scores ranging from a low of 300, to a high of 850. The government has convinced this private firm to “improve” its tool, so that many borrowers with delinquent accounts will see their score increase up to an additional 25 points.
What, me worry?
How does this affect you, or to quote the vintage Mad Magazine phrase, “What, me worry?” Yes. Worry. All the factors are falling into place for yet another housing correction that can start a domino effect of bad news in our economy. We can all avoid that by remembering to:
- Buy a home today for your lifestyle, not a short term investment.
- Be patient; prices will fall.
- Look into remodeling, a fairly inexpensive way to get a bigger home.
My family has built a business on helping people realize the dream of home ownership — but only if they can afford the payments. When people buy goods and services they can’t afford, it not only further destabilizes their finances—but also our country’s. Lowering lending standards to include borrowers who have credit issues is nothing but insanity — again.
Mortgage Executive Magazine has issued it’s annual list of the Top 100 Mortgage Companies in America, and Skyline Home Loans has made it in the Top 50! We have been climbing up the list and made our way to number 37 for 2013. From its start in 1985, Skyline Home Loans has expanded and is now serving 12 states as a direct leader with several branches throughout the West Coast. We specialize in offering a comprehensive selection of lending programs and low rates for home purchase, refinancing, commercial, reverse mortgages and beyond. We take pride in offering “heroic customer service.” We take ALL inquiries very seriously and are commited to serving our customers’ needs. Skyline has also launched its new proprietary techonolgy, the Intelligent Mortgage Platform ™, which allows our customers to enjoy the easiest online mortgage process out there.
Skyline was in the ranking for Top Overall Lenders as well as Top Retail Volume. We would like to thank our wonderfully equipped Loan Officers, Operations team, and the entire Skyline family for making this possible.
Congratulations to Senior Loan Officer Fred Bachofner and Mortgage Consultant Wayne Wright! Both gentlemen were given the highest awards offered by The Rotary Club of North Clackamas Sunrise. Fred received “Rotarian of the Year” and Wayne “The Service Above Self” award. We at Skyline are honored to have them on our NW Division team!
Skyline Home Loans ranks in America’s top 50 independent mortgage companies, per Mortgage Executive Magazine’s annual list based on production volume. This is Skyline’s second year in a row in the top 50, and we have moved up in the rankings. Our deepest thanks to our customers, the reason we made the top 50-and our very reason for being! Congratulations to our dedicated, knowledgeable team spanning Seattle to San Diego. You are Skyline, and Skyline stands with the best of the best.