Michigan Mortgage Blog by Mortgage Matt of Icon Mortgage

There are so many ways for a loan officer to fool you and I have heard them all in my time in the business. Now I bring this knowledge to you in how to demand that your loan officer never fools you. I will also cite all of the documents that your loan officer is legally required to show you yet rarely will. I will make you as close to impenetrable as possible. Interest Rate: Ah the interest rate. As a consumer it is always the first thing on your mind, and always the first tool you use to shop for the best deal possible on a mortgage. Of course, us in the “know” realize that there the interest rate alone rarely dictates a good deal on a mortgage. So how do you decode what your interest rate will be and if it is in fact a good value when a loan officer is so well equipped to talk his or her way around this subject? Well the value part will be covered under the APR heading below, but first let’s talk about how to know what your interest rate is and what it will be at the time you close. ...

What is it? An escrow account is basically a mandatory savings account to pay your taxes and insurance from. Every month you will pay your mortgage payment and a portion of that payment will go to the mortgage and a portion will go to the escrow account. When your tax and insurance bills come due, they will be paid from your escrow account company automatically. You will never see a tax or insurance bill, yet they will get paid. Why do you need it? With almost all loans an escrow account is required by the lender you are getting your loan from. The same as with your mortgage payment, if you do not pay your taxes, you will face foreclosure. Instead of being foreclosed on by your lender, you will be foreclosed on by Uncle Same. The possibility of tax foreclosure threatens your lender’s ability to ensure you repay them. Hence, they require that you have an escrow account so that you can’t simply stop paying your taxes. How will this affect your closing? You will need to fund the escrow...

Pro-Rated Taxes: Oh, the agony! Nothing causes headaches the way pro-rated taxes do. What exactly are they? It’s your tax bill…and yes…it is YOUR tax bill. In most places in Michigan you get two bills for Property Taxes. One for winter and one for summer. In the vast majority of places, you pay these taxes in advance meaning you are paying in July for the tax bill between July of that year and July of next year; same for the winter bill Dec.-Dec. If you buy a house, let’s say in August, the seller has already paid for the taxes through July of next year. Even though they have paid through July, they will only own the home for one month covered under that bill and you will own it for the remainder of time covered by that bill. You will be required to reimburse them for the time that you will own the home- August through July for the summer bill and August through December for the winter bill. How to calculate what you will have to pay . It’s no secret; you can calculate this yourself t...

It’s so odd to me that so many people claim to have been mistreated by their mortgage lender. There is a litany of paperwork we are required to provide to you when you apply. I am sure there were plenty of less than reputable loan officers out there that didn’t care to go through the numbers, but an even slightly educated borrower can’t be taken advantage of. So, here’s how to become an educated borrower. The Good Faith Estimate. Make sure you get one, make sure you get one from several lenders, make sure you compare them row by row and not the bottom line. Some lenders may trick you by not providing certain numbers that will pop up later (read my other blogs), make sure you don’t use anyone that leaves numbers off. The Borrower’s Bill of Rights. Make sure you get one, make sure you understand it. You can get it right here: Borrower’s Bill of Rights, but don’t trust anyone that doesn’t give you one- you know since it’s required by law and all. They are easily understandable, just act...

First, why would you want concessions? Well if you refer to my other blogs about closing costs, you will see all the various closing costs and pre-paid items involved with obtaining a mortgage. All of these costs will need to be paid at the closing table. The financing you are obtaining will most likely not allow you to include these in your loan amount. Most mortgage programs will not allow your loan amount to go over the purchase price. In fact, there is only one viable mortgage program left that will allow you to roll your closing costs in without seller’s concession. Depending on your financial situation or your ability to leverage, you may not want to bring all of this money to the table to close. The concessions provide a way for the seller to pay them as a part of the transaction. Ultimately, you are still paying for them as a part of your purchase price, but with concessions you will be paying them over the course of 30 years instead of paying them upfront. Free money? Awesom...

We have all heard horror stories about good folks being buried in surprise fees, or fees being buried so deep in paperwork that nobody could tell who was getting what. Please use this as a common sense approach to making sure you are getting a good deal on your mortgage. I will start by listing the fees that all loans will be charged. These, no matter what someone tells you, will ALWAYS be charged to close a loan. 1. Title Charges: $350-450 for a closing fee . You pay this to the person that coordinates your closing and goes through the paperwork with you and tells you where to sign. If you have the choice in title company you may get a better price, but with a purchase (particularly a foreclosure purchase) expect $450. $350-$? For title insurance. This is charged based on your loan amount. In general if you take your loan amt. In Thousands multiplied by 3.5, you will get the answer. So for $100,000 loan amount you figure as (100x3.5=$350). Note: When purchasing a foreclosure, plan o...

I have written a few different blogs about closing costs and how to understand where your precious pennies go. This time I am focusing on one of the most misunderstood sections of the Good Faith Estimate (GFE)- The Pre-Paid Items. Don't worry "pre-paid" simply means paid at the closing, whether paid for by you or by the seller as a part of the seller's concessions, but nothing is due prior to closing. 1. Per Diem Interest: A good way to spot a phony loan officer is one that only uses a day or two of per diem on their GFE because it is an easy way to shave off a couple hundred bucks from your bottom line and easily explainable as a last minute change. So what's this for anyways? It's your first mortgage payment (but just the interest portion)- calculated from the day of your closing until the end of the month. You won't have a payment due for the next month. The interest collects through the month and your first principle and interest payment (P&I) is ...