Buyer Beware: 'Tis the Season

Boy, you’re going to think I’m the Scrooge…and this article may not apply to most of you…but I want to reach out to those of us who rely on our credit cards to help finance the holidays.  You see, years past it was not uncommon for home owners to get into the spirit and purchase many gifts for our loved ones–going over the top (meaning beyond our budget).  Yes, it feels great to see the look of joy and surprise on little Johnny and Susie’s face when the open the gifts they’ve been longing for…but this year, you may not have the “fix” of meeting with your Mortgage Professional in January to “reorganize” your debt.   Just in time for the holidays, Fannie Mae is unrolling DU Version 7.1 which really puts a damper on cash out refinances.

This officially takes place over the weekend of December 13, 2008; however lenders will start implementing this soon (so that loans are in compliance for Fannie Mae once they are purchased).   A cash out refinance will be limited to 85% of appraised value of your single family residence.   By the way, if you’re refinancing a second mortgage/home equity loan that was not used for the purchase of your residence, this is classified as a “cash out” refinance–even if you have never received cash out and you only reduced the rate on your second mortgage on a previous refinance.  (A refinance including a “non-purchase” second mortgage is treated as “cash out” with pricing and underwriting–no exceptions).   This will force more home owners to FHA mortgages which allow higher cash out refinances at a cost (upfront and monthly mortgage insurance regardless of loan to value).  

Factor in home values and you can really see the challenge with doing a cash-out refinance.  Lenders count on appraisals to establish a value for your home.  This value is based on what other homes like yours have recently sold and closed for in your neighborhood.  No sales?  A short sale?  Ugh.  It doesn’t matter what’s listed down the street, what your assessed value is or what you feel the home is worth in the lenders and appraiser’s eyes.

Tis the Season for big sales, no interest or payment for X many months and credit card companies including blank checks in our statements with dreams of sugar plum fairies and hopes that we’ll indebt ourselves further.  Please don’t do it. 

  • Make a budget for your holiday shopping.
  • Pay cash.
  • Consider a gift exchange for your family.
  • Find alternatives to spending for celebrating the Season.

You may wind up trapped, like Ardell’s Six Pack Joe, once your interest rates kick in and your bills start piling up with no refinance in sight.   I’m here to say that YOU do have a choice and you need to be informed and responsible for your debts.   Mortgages are getting tougher (especially refinances) and chances are, your home equity is not here to rescue you.

I won’t go into how credit cards and home equity loans are being frozen or the credit lines are being reduced without notice (and how damaging it is to your credit scores when your borrowed amount is above 50% of the credit card limit).  

You have less than two months to plan for Christmas.  Don’t be stuck with extra debt and tanking credit scores…your home equity may not be there to save you (even if you have it, you may not have affordable access to it).

Christmas Neighborhood Round-up….

….December began with snow flurries and we had a (brief) White Christmas too!

Holiday parking woes in Ballard at Large  and it’s a Blue Christmas on Alki on Beach Drive Blog  

On Capitol Hill The Northwest Film forum and Santa partying it up, Mid Beacon Hill and The Year in Review photo story part II. 

A different kind of man in a different kind of red suit on Capitol Hill Triangle , another Red Suit (Mayor Rosemarie Ives) in Redmond Nieghborhood Blog.

Give One Get One program is touched upon in Cosmo Seattle , and a Holiday gift idea from Broadway Seattle.  

Christmas lights in Week 50 in Kirkland 52 , and the Christmas Star returning (?) on Beacon Hill Lights.

Kirkland dogs are dreaming of a Dog Park in Kirkland Weblog , and Winter Solstice at Miller Park Neighborhood Association

Christmas in Issaquah in Issaquah Undressed , World Peace and the Scary Santa in SammaMishmash.

Dreaming of a White Christmas came true in West Seattle Blog , and my Seattle’s Urban Villages Christmas Lights tour….

Getting in the holiday spirit yet?

[photopress:139.jpg,thumb,alignright]Can’t say that I am. I’m just finishing the Thanksgiving leftovers. But you can’t wait for the spirit to grab you, or all of the best shows will be over…or SOLD OUT! So here’s an early heads up on some of Seattle’s favorites:

Kirkland Performing Arts Center’s “The Nutcracker” is coming up and will be over before you know it. Everyone should see it at least once. Or Maybe The 5th Avenue Theatre’s performance of Irving Berlin’s “White Christmas”.

[photopress:NW_20Boychoir.jpg,thumb,alignleft]Not quite as expensive are the Northwest Choir presentations of “A festival of Lessons and Carols” that travels to various churches in the area. The big St. Mark’s Cathedral presentation on Capitol Hill on the 18th, is probably the one I’d shoot for.

I’ve always been a sucker for big Cathedrals, and not just at Christmas.

Here’s a whole string of events from Emmylou Harris, to “Billy Shakespeare’s Christmas Extravaganza and Traveling Freak Show”, for a bit of the non-traditional.

[photopress:c.jpg,thumb,alignright] Getting in the spirit doesn’t need to cost anything. The Spirit of Seattle “Christmas Ship” should be floating around spreading good cheer by now. Apparently the ship pulls up to some bonfire beaches so people can hear the music without having to be on the ship. Anyone know where these “bonfire beaches” are? Here’s the quote: “On shore, thousands of people, young and old alike, gather around roaring bonfires to share the joy of the season. On the water, other decorated boats join in the festivities by following the Christmas Ship™, forming the largest holiday flotilla in the world, cruising to over 45 waterfront communities.”

I’d rather be at the bonfire on the beach than on a boat, so if anyone knows where those bonfires are, and when the boats will be happening by the bonfire, let me know.