Michigan Mortgage Blog by Mortgage Matt of Icon Mortgage

Many of you may have read that the USDA will exhaust funds allocated for the Guaranteed Rural Housing Loan Program some time on Thursday May 12 th . In response, Icon Mortgage Lending is pleased to announce that we will continue to close all RD loans just as if it were "business as usual". This announcement comes after months of various unqualified sources disputing over when the USDA in fact would be exhausted of funding. Many had alleged that the Rural Housing Program had already closed its doors as of April 1st. Of course, those that follow the Icon Mortgage Lending blogs and news sourced knew that this was indeed an April Fool's Joke of the highest order. As promised, we have continued to close and table fund Guaranteed Rural Housing Loans over the past two months as other lenders dropped out of the program despite the massive needs of their local communities. In the future you can follow all of the most up to date and accurate Rural Housing News by subscribing to thi...

Michigan First Time Home Buyer: An Overall Guide For a first time buyer, there is so much to worry about and so many levels of details to address, that I just want to provide a good general guide to how to start the process. You can refer to my other blogs for more detail, but I think this is a great overview. Purchasing anything, will cost you money. A home is the biggest purchase you will ever make, but most people expect to spend less than when getting an apartment. Any decent complex will want first, last, and possibly a security deposit. That’s at the very least $1000. Have this much at the very least before you consider buying a home, otherwise you really are setting yourself up for failure. Now, Before you do anything else, find a loan officer. Before you contact a Realtor, before you look at homes, you have to qualify. In today’s market there are so many intricacies to qualifying that the first thing you need is to get approved. Approved, not pre-approved like so many tell you....

First Time Home Buyer: Conforming at a glance The following was a general overview of the Conforming loan programs such as those offered by Fannie Mae or Freddie Mac and a guide to figure out if this is the loan program for you. Availability: Available in all areas. Type of Homes they finance: Single Family Properties and Multi-Family Properties will qualify. Site Condos are viewed the same as Attached Condominium Properties and are acceptable if they are approved condominium projects. You can search approved projects here: ******. Manufactured properties, Modular, Stick-Built, or BOCA-code properties are acceptable in some circumstances but not likely to be accepted. Working Farms, unique properties, and dome-homes will not qualify. Down Payment Required: 10% or greater in conjunction with Private Mortgage Insurance. 20% to meet conforming loan standards. In general, funds for down payment can be a gift from family. Private Mortgage Insurance: Emphasis on the “Private” since it is obt...

First Time Home Buyer: FHA at a glance The following was a general overview of the FHA loan program and a guide to figure out if this is the loan program for you. Availability: Available in all areas. Type of Homes they finance: Most property types. Single Family Properties and Multi-Family Properties will qualify. Site Condos are viewed the same as Attached Condominium Properties and are acceptable if they are approved condominium projects. You can search approved projects here: ******. Manufactured properties are acceptable if they meet individual lender requirements. Modular, Stick-Built, or BOCA-code properties are acceptable. Working Farms, unique properties, and dome-homes will not qualify. Down Payment Required: 3.5%. Can be a gift from family, friend, or employer. Down payment assistance is only available from grant programs. Mortgage Insurance: 1.75% financed into your loan and and .55% is billed monthly. Interest Rates: Vary greatly because of the great variance between lende...

So, regardless all of the jibber-jabber out of Washington lending is continuing to tighten. I figured I would write just a general overview of some of the significant changes or non-changes here in my blog in case any of these issues may affect you. First Time Home Buyers: Most of the news for you is good. So much is aimed at finding you and inspiring you to help get the economy moving again, that your business is still in demand. The current change is that banks are looking for a little more investment on your part to ensure that they are making a good investment with you. This doesn’t necessarily mean a down payment, but do expect to be accountable for past credit discretions and to able to show paperwork on where you are getting the money to pay for your appraisal, down payment, or other requirements. This can still be a gift from family, but expect to show proof of where you are getting it. More emphasis if being put on the 620 FICO phenomenon on a daily basis. Those borrowers ove...

I will be adding to this list as I go along, but I wanted to start a nice comprehensive FAQ for homebuyers. I put “first time” in parenthesis because really this can apply to anyone buying a home, but this will apply mainly to the questions I get from first time homebuyers. Q: Why buy instead of rent? A: Well, pride of ownership and having something that is yours to do with what you want. A home is also a long-term investment for your future. Don’t let all of the exploding market talk scare you. Real Estate prices go up and down, but just like investing in stocks, you buy low and sell high based on when you enter the market. If you put yourself in a position where you have to sell within a very short period of time you had better make a sound investment or you will fail as many are now failing because they relied on an implied return without realizing preparing for a long-term goal. In addition to the equity investment, a home is also a valuable tax incentive. You can deduct your mortg...

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. ...

I find that the first hurdle a First Time Buyer faces is getting their paperwork together. I am not sure why, but honestly this simple task dissuades many people when they start to apply. Perhaps following this list and having it ready at the outset will help the process seem smoother. Last two years of W-2s or Tax Returns. If you can’t find them, you can always contact your employer, your tax preparer, or the IRS for a copy. Most recent month of pay stubs. 1 month worth…the most recent available. Most recent 2 Months of bank statements. If you don’t get paper statements, you can print your online statements, but you will need to take them to your bank to get verified and stamped. Most recent 401k statement. (If you have one.) Copy of your driver’s license and social security card. The Patriot Act requires us to check these. Have these items ready to go before you look for a loan officer and DO NOT trust anyone that will try to quote you a payment or interest rate before they even see ...

“BORROWERS BILL OF RIGHTS” 1. You have the RIGHT to shop for the best loan for you and compare the charges of different mortgage brokers and lenders. 2. You have the RIGHT to be informed about the total cost of your loan including the interest rate, points, and other fees. 3. You have the RIGHT to obtain a “Good Faith Estimate” of all loan and settlement charges before you agree to the loan or pay any fees. 4. You have the RIGHT to know what fees are nonrefundable if you decide to withdraw your loan application. 5. You have the RIGHT to ask your mortgage broker to explain exactly what the mortgage broker will do for you. 6. You have the RIGHT to know how much the mortgage broker is getting paid by you and the lender for your loan. 7. You have the RIGHT to ask questions about charges and loan terms that you do not understand. 8. You have the RIGHT to a credit decision that is not based on your race, color, religion, national origin, sex, marital status, age, or whether any income is der...

Proceed with Caution: The weirdest part of talking to people about their loan experiences is that people usually are more particular about their Realtor than their Loan Officer. In reality, your Loan Officer is responsible for ten times more than your Realtor, especially in a foreclosure transaction. They will be digging through every aspect of your life; they are exposed to some of your most sensitive information. They are responsible for organizing the entire transaction from open until close. Most importantly, this is the person that represents you, and your application to the powers that be, so you need to believe in them to portray your strengths and represent you well. This is also a good time to realize that cheaper rarely means better. A good bit of advice I would give anyone…choose wisely, make sure your Loan Officer is making as much as your Realtor, and demand excellence. Interview with a Vampire. No, it’s not that bad. Actually the vast majority of bad loan officers and b...

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...

Call me a softy and a nerd. It’s hard to believe, but yes I was one of the few that sat and watched Steve Preston’s address to the National Press Club this past Wednesday. Many of you may not know who that is, but he is one of the most powerful people in the nation right now because he is the Secretary of the U.S Department of Housing and Urban Development (HUD) and he is trying to create hope for thousands of Americans that are currently facing foreclosure, or are soon to be facing foreclosure. Unfortunately, as powerful as he may be, he is still all but hog tied by private industry and private industry is not budging. How bad is it? It was said that in the first two weeks of October 42 people applied for the Hope for Homeowners and all 42 were denied. First of all…42? Nationwide 42??? That’s a joke. A joke that Steve Preston did not find funny. Why has it failed? Simple, the private markets are already strapped for cash and not looking to spend more. FHA’s flaw is that it cannot move...

I talk to hundreds of first time buyers year after year and there are hundreds that don’t qualify by just a bit. They are so close but can’t get it done. I explain to them how close they are and offer direct advice on how just a month or two of fixing their issues will get them where they want. I go through the trouble to give them the advice they need knowing full well that they will not follow up. Whether it is the lack of confidence to overcome or just plain laziness, so many of them give up and never come back. So if you are just dipping your feet in the water and thinking about buying in the near future, let this help you prepare now to never have to feel the sting of denial. Your Income: I know a lot of you work jobs where you get tips, or you are just now getting raises, or are new on the job. If you are in any type of training period you will not be able to get a mortgage, but don’t worry as soon are that’s done, you are qualified. If you have gotten tips and never claimed muc...

If you are going to buy a home in Michigan, especially in this foreclosure driven market, nothing is more important than the team of professionals you choose to represent you. Consider these points in your search. Rome wasn’t built in a day. Do you not rush into any situation. Take at least a week to look around for reputable companies to deal with. Talk to friends and family, do some research on a few companies you target, and never consider only one source for information. Your loan officer is the first step and most important step. This person will be digging through all of your most personal documents, and trust is necessary. It should probably be an actual person that you actually meet and actually believe in. The biggest mistake is to judge just by numbers and promises, which are easily fabricated. Judge their willingness to provide written estimates of their services. Sit back, and listen…are they mentioning a Good Faith Estimate? If they don’t chances are they want to tell you...

I know, seems so simple. Pay your bills on time, don’t claim bankruptcy, but there is a lot more to it than that. So, what goes into a good credit score? Good Payment History: Obviously. Length of Payment History: One of the distinct disadvantages of a younger person. Balance to Limit Ratio: For your credit cards it is essential to keep the balance below 50 percent. If you really want to have great credit, 30% is even better. The dollar amount is not important, it’s the percentage. Diversity of Accounts: Mortages, car loans, installment loans, student loans, credit cards, and charge cards they all help to show the variety of debt that you can properly manage. Manageable Inquiries: No more than one per month. This will show that you are not trying to obtain new debt at a rate faster than you can handle. Solely Owned Debt: Fairly new to the credit factor, but it is essential to have debt you obtained on your own rather than cosigned accounts. Take all of these into consideration wh...

I have close a lot of foreclosure purchases over the last two years and have ran into some very odd demands from the selling banks. I would like to provide you with some of this information now on what these banks can and can not do that might help you in your own pursuit. They can demand that you provide them with a pre-approval letter. They can not demand that you obtain a pre-approval letter from any specific lender or broker. The doesn’t mean you won’t be told otherwise, but RESPA prohibits a seller, real estate agent, insurance agent, or anyone else from demanding an individual use any specific lender. They can demand that your lender’s pre-approval letter states that you are credit worthy. They can not demand to have your credit report or credit scores be provided to them. The Gramm-Leach-Bliley Act protects your privacy from any entity involved in the transaction that is not your financial service provider. You can give written permission for the selling bank to see these, b...

I know it is hard to understand exactly what your credit score is, how it is calculated, and especially how it affects you when you want to buy a home. Here is a general, and easy to understand guide to your score in reference to obtaining a mortgage. Below 500: Well I can’t sugar coat it, you are in pretty deep. This is where it may be a good option to seek consultation from a good attorney or a non-profit credit repair service (emphasis on non-profit). 501-560: You score is pretty low, but not beyond repair. You will not be able to qualify for a mortgage while your score is in this range. However, if you struggle through some high interest credit cards, maybe a secured card or two, you can bring it up. 561-619: You can probably obtain a mortgage, but it will be a very trying experience. You may be better served by simply waiting a month or two, trying to pay down some credit card balances, whatever you can do to optimize your score. 620-680: It may still seem just average, but in...

Bum Bum Buummm. Enter scary music and cold sweats, you just fell in love with a home that has a broken furnace and a big orange stain where a bathtub used to be. Chances are your financing is going to resemble that orange gunk on the tile right? There are options. With conventional financing, yes you will be sunk. The bank will only want a safe asset to secure. There are some programs that allow flexibility here like HomePossible, but it is very impractical. The good news is, that with the foreclosure boom, came the need to repair existing homes as production of new homes slowed to a crawl. Government financing fills the void of sensible repair financing. Actually it filled a long time ago before the housing boom started and home construction grew out of control. With FHA there is a possibility for a repair escrow; however the repairs must be minimal. The better option is the 203k loan that will allow a closing to take place like normal but provide you with money for all sorts of repa...

We all hate it…but few of us know what it is. First, the insurance I am talking about is different than what you would get from AAA, which is home owner's insurance. A lot of first time buyers get that confused. It is very similar though, except instead of you insuring your home, the lender is insuring its money. When you get a loan, if you put less than 20% as a down payment, the lender requires you to pay an insurance premium on this 20% that they are lending you. This is strictly for your lender and it is insurance for them in case you do not pay them back...the 20% would be covered on the insurance that you pay each month for them as a part of your mortgage payment. It is basically a penalty for not putting down the “standard” down payment amount. If you look at the bottom of the GFE your loan officer provides you, it breaks down the payment and what goes where. You will see “mtg. insurance” and the monthly affect on your payment. Unfortunately, if you are putting less than 20...