HELOC

Say Goodbye to Your Landlord With Low Down Payment Home Loans

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Are you tired of dealing with your landlord? Do you dream of owning your own home? Well, you’re in luck because, with a low down payment, you can finally kiss renting goodbye and embrace the joys of homeownership!

Why Rent When You Can Own?

When you rent a home, you are essentially paying someone else’s mortgage. Plus, you’re virtually throwing money away every month without building any equity. So why not put that hard-earned cash towards something that’s truly yours?

With each mortgage payment you make, you’re not just securing a roof over your head; you’re steadily building equity in an asset that’s yours. You’re essentially paying yourself, investing in an asset that can provide long-term stability and the potential for financial growth. So why continue paying someone else’s mortgage when you could be building your own wealth through homeownership?

Disadvantages of Renting

Renting comes with its fair share of frustrations. You’re at the mercy of your landlord, who can increase your rent or terminate your lease at any time. Let’s explore various reasons many homeowners choose to buy rather than rent.

Limited Control and Flexibility

Renting a home often means you have limited control over the property. You may be subject to the rules and regulations the landlord or property management company sets. This lack of control can be frustrating, especially if you have specific preferences or wish to make changes to the property. Additionally, renting typically has restrictions on pets, renovations, and even décor choices.

No Ownership or Equity

One of the most significant disadvantages of renting is the lack of ownership and equity. When you rent, you are essentially paying for someone else’s investment. Unlike homeownership, where monthly mortgage payments contribute to building equity, renting offers no long-term financial benefit. Renting is essentially a temporary solution, leaving you with nothing to show for your payments once the lease is up.

Rising Rental Costs

Another disadvantage of renting a home is the potential for rising rental costs. Landlords can increase rent at the end of each lease term, leading to unpredictable expenses. This lack of stability can make financial planning challenging and strain your budget. On the other hand, owning a home gives you predictable mortgage payments, providing stability and peace of mind.

Limited Personalization

Renting can also limit your ability to personalize your living space. Most landlords have strict guidelines regarding modifications, leaving you unable to truly make the home your own. Whether painting the walls, changing fixtures, or even hanging artwork, renting often means sacrificing the freedom to express your personal style and create a space that truly reflects your personality.

The Low Down Payment Advantage

One of the most significant barriers to homeownership is the hefty down payment required. But guess what? Thanks to various loan programs and down payment assistance options, you can secure a mortgage with a low down payment. This means you can say goodbye to your landlord sooner than you think!

Low down payment options open the door to a world of possibilities. Here’s why it’s an opportunity worth seizing:

  • Affordability: Making a low down payment allows you to enter the real estate market sooner. This can be especially advantageous in areas with rapidly rising home prices, ensuring that you don’t get priced out of the market.
  • Less Financial Strain: A lower down payment requirement means you don’t have to deplete your savings or wait years to accumulate a significant sum of money. This can relieve financial stress and give you peace of mind.
  • Accelerated Equity Building: While a low down payment may mean a higher mortgage balance, the potential for your home’s value to appreciate over time can quickly offset this difference. As your property appreciates, you build equity, and your investment grows.
  • Tax Benefits: Homeownership comes with potential tax deductions, which can help offset the cost of your mortgage. Consult with a tax professional to understand how these deductions can work in your favor.
  • Freedom and Personalization: When you own your home, you can personalize it, make improvements, and create the living space you’ve always envisioned.

Exploring Low Down Payment Options at Michigan Mortgage

Buying a home doesn’t have to be overwhelming, especially when it comes to the down payment. Many potential homebuyers assume they need a large sum of money upfront, but that’s not necessarily the case. Several low-down payment options can help you start your homeownership journey without breaking the bank. Give us a call to learn more!

Don’t let down payment concerns hold you back.

Buying a House

HELOC Made Simple | Home Equity Lines of Credit Explained

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Homeownership is a significant accomplishment that presents various opportunities. Besides the satisfaction that comes with owning a house, it can also be a valuable asset that helps you establish wealth. Homeowners can leverage the potential of their property using a Home Equity Line of Credit (HELOC).

For homeowners who require access to funds but are unwilling or uninterested in taking out a traditional loan, a HELOC can be a flexible and convenient financial option.

What is a HELOC?

A HELOC is a type of second mortgage that allows homeowners to borrow against the equity they have built up in their property. Equity is the difference between the current value of the property and the outstanding mortgage balance. With a HELOC, borrowers can access funds up to a specific limit, typically based on a percentage of their home’s appraised value minus any outstanding mortgage debt.

HELOC funds can be used for a variety of purposes. Homeowners can use the funds to cover various expenses, such as home renovations, education costs, consolidating high-interest debts, etc.

How Much Can You Borrow With a HELOC?

The amount of money you can borrow with a HELOC depends on several factors, including the appraised value of your home, the amount of equity you have, and the lender’s guidelines.

For example, let’s say your home is appraised at $300,000, your lender will give you a HELOC with 85% LTV, and you have an outstanding mortgage balance of $200,000. In this case, the maximum HELOC limit would be calculated as follows:

  • Appraised value: $300,000
  • Maximum loan-to-value ratio: 85%
  • Outstanding mortgage balance: $200,000

Calculation: $300,000 x 0.85 – $200,000 = $55,000

Based on these figures, you could potentially borrow up to $55,000 through a HELOC.

How Does a HELOC Work?

A HELOC has two phases: the draw period and the repayment period. The specific terms of a HELOC can vary between the two based on individual circumstances and lender requirements. For example, you may take out a 20-year HELOC with a 10-year draw period and a 10-year repayment period. During both periods, you will make payments on the loan.

Phase One: The HELOC Draw Period

During the draw period of a HELOC, homeowners can access the funds as needed. This phase typically lasts for a predetermined period, generally around ten years.

During the draw period, you can access funds from your line of credit as required, with the option to make minimum payments or even consider interest-only payments on the borrowed amount. However, it’s important to note that if you reach your available limit, you will be required to settle your outstanding balance before accessing additional funds.

Phase Two: The HELOC Repayment Period

After the draw period ends, the HELOC enters the repayment phase. During this period, homeowners can no longer withdraw funds and must start repaying the principal amount borrowed, along with any accumulated interest. The repayment period spans several years, typically 10-20 years.

It’s important to note that the interest rates during the repayment period may differ from those during the draw period. Homeowners should be aware of any changes in interest rates and adjust their financial planning accordingly.

Is a HELOC Right for You?

HELOCs are a popular financing option for homeowners for the many benefits they provide borrowers, including immediate access to funds. A HELOC could be an excellent option for you if:

  1. You want an interest-only payment option
  2. You have a fair credit score
  3. You don’t need all of the funds at once
  4. You can manage two house payments
  5. You want to be able to pay off and reuse funds as needed

Alternatives to HELOCs

If you’re considering tapping into your home’s equity, but a HELOC doesn’t seem like the right fit for you, don’t worry! There are alternative options that you can explore.

Home Equity Loans

A home equity loan is another way to access the equity in your home. A home equity loan may be a good option for you if:

  • You’re borrowing a small loan amount
  • You have a higher credit score
  • You want a fixed monthly second mortgage payment
  • You have the capability to handle two separate house payments.
  • You want to maintain the existing balance on your first mortgage.

Cash-Out Refinancing

Cash-out refinancing is another option to consider to access your home’s equity. A cash-out refinance may be a good option for you if:

  • You want the lowest possible payment
  • You have a lower credit score
  • You want a fixed monthly payment
  • You want one monthly mortgage payment
  • You can get a lower interest rate on the new mortgage than you currently have

HELOC Program at Michigan Mortgage

Michigan Mortgage helps you access the equity in your home quickly with our HELOC program. Within five days, you can pay off high-interest debt or carry out home improvement projects with our 100% online and speedy application process. Our flexible payment options enable you to withdraw funds as per your needs. Give us a call to learn more!

Buying a Home

Five Things to Avoid When Buying a Home

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When you are preparing to buy a home, whether it’s your first home or your fifth, the process may seem overwhelming.

This is the biggest purchase of your life, so it pays to be prepared. Here are five things to avoid when buying a home.

Don’t Rush Into a Decision

Buying a HomeBuying a home is a major investment and it’s important to take your time and make an informed decision. Don’t feel pressured to make an offer on a home without thoroughly researching the property and the area.

Don’t Ignore the Hidden Costs

The price of the home is not the only cost you need to consider. There may be hidden costs such as property taxes, homeowner association fees, and maintenance and repair expenses that can add up quickly.

Don’t Ignore the Home Inspection

A home inspection is a crucial step in the home buying process as it can reveal potential issues with the property that may not be visible to the naked eye. Don’t skip or ignore the inspection as it can help you make an informed decision and negotiate repairs or price adjustments with the seller.

Don’t Overextend Your Budget

It’s important to have a clear understanding of your financial situation and not overextend your budget when buying a home. Consider all of your expenses, including mortgage payments, utilities, and maintenance costs, and make sure you can comfortably afford them.

Don’t Forget About Resale Value

While it may not be on your mind when you’re buying a home, it’s important to consider the resale value of the property. Factors such as location, school district, and neighborhood can all impact the resale value of a home, so it’s important to keep this in mind when making your decision.

If you’re ready to start your journey to homeownership, give us a call! We’re here to guide you every step of the way.

Old Technology

Tips to Maintain a Good Credit Score

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If you’re in the market for a new home, your credit score will determine whether or not you’re eligible. Your score will determine the loan program you qualify for and your interest rate. Your credit score may be the single most important asset you have.

You spend years building your score – here are a few tips to help you maintain it.

  1. Make your payments on time. According to experts, a large portion of your credit score (35 percent, to be exact) is calculated based on payment history. Making your payments on time (within 30 days of the due date), every time can greatly impact your score. This includes credit card bills or any loans you may have, such as auto loans or student loans, your rent, utilities, phone bill and so on.

Consider setting up autopay when it’s available so you don’t run the risk of missing payments.

  1. Keep your balances low. 30%. That’s the magic number! As soon as your credit card balance exceeds 30% of your credit limit, your credit score will decrease. Your score will continue to decrease until you bring your balance below the threshold.

Experts recommend that you pay off your entire balance every month. We know that’s not always realistic, but you should always at least make the minimum payment.

  1. Be cautious when opening new accounts. According to Experian, “Each application can lead to a hard inquiry, which may hurt your scores a little, but inquiries can add up and have a compounding effect on your credit scores. Opening a new account will also decrease your average age of accounts, and that could also hurt your scores.”

There is one exception to this rule. If you’re shopping for a new car or home, it’s OK to shop around and have multiple lenders pull your credit. If these credit pulls occur during the same time frame, they are often ignored by credit bureaus.

  1. Check your credit score regularly. If you practice tips 1 – 3 but forget to do #4, you’re setting yourself up for possible risk. Mistakes are known to happen, and reporting errors can have a negative impact on your score. If someone steals your identity and opens a new line of credit in your name, how will you know if you don’t regularly monitor your score?

You are entitled to a free annual credit report from each of the three credit reporting agencies. Click here to order your free reports.

If you find a credit reporting error, dispute the mistakes with the appropriate credit reporting agency and your score may improve.

If you have additional questions about your credit score, give us a call! We’re happy to help in any way we can.

MSHDA

MSHDA First-Time Home Buyer Assistance Programs

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If you’re a first-time home buyer, getting enough money for a down payment can seem like a major hurdle. But there’s good news! The Michigan State Housing Development Authority (MSHDA) has a program that helps home buyers afford their down payment by loaning them up to $10,000 towards it.

This is what you need to know.

WHAT IS MSHDA?

The Michigan State Housing Development Authority “provides financial and technical assistance through public and private partnerships to create and preserve safe and decent affordable housing, engage in community economic development activities, develop vibrant cities, towns, and villages, and address homeless issues.” Part of its mission is to make owning a home in Michigan an affordable and realistic goal for as many people as possible. In addition to buying a home, it also offers programs for improving existing properties and dealing with foreclosure.

WHAT ASSISTANCE DOES MSHDA OFFER FIRST-TIME HOME BUYERS?

The MI Home Loan and MI Home Loan Flex programs help first-time buyers with their down payment. In addition to homebuyer education classes, these MSHDA products provide loans of up to $7,500 statewide. In many areas throughout the state, this amount can be increased to $10,000. (See this ZIP code list or state map to see which areas qualify for larger MI Home Loan amounts.)

WHO QUALIFIES FOR FIRST-TIME MSHDA HOME BUYER ASSISTANCE?

If this is your first time buying a home, you should look into the MI Home Loan and MI Home Loan Flex programs. To qualify, you must meet the following requirements:

Additionally, only homes that are priced $224,500 or less are eligible for assistance with down payment.

IS MI HOME LOAN ONLY FOR FIRST-TIME HOME BUYERS?

No – MI Home Flex is available to all home buyers that meet its criteria. And in certain targeted areas, MI Home Loan is available to both new and repeat home buyers.

SHOULD FIRST-TIME HOME BUYERS CHOOSE MSHDA’S MI HOME OR MI HOME FLEX?

That depends on your financial and personal circumstances. MI Home Flex is a little more flexible and only requires one adult to apply (i.e. one partner out of a couple). Consult with a loan professional for more details – they will help you determine which best meets your needs.

As Michigan’s top MSHDA lender, Michigan Mortgage is ready to help you understand what Michigan loan programs are right for you. We’ve helped many first-time home buyers navigate MSHDA’s Mi Home and MI Home Flex programs, and we can help you find answers to all your home-buying questions.

Bluebird Cancer Retreats

Hometown Highlights: Bluebird Cancer Retreats

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“You have cancer.”

These three little words will turn the lives of you and your family upside down.

Bluebird HennaMore than 56,000 Michiganders are estimated to be diagnosed with cancer per year. A single diagnosis impacts every aspect of someone’s life, financially and emotionally, effecting not just the patient but everyone around them.

“We are proud to be a part of the solution at Bluebird Cancer Retreats. Our mission is simple: to enhance the lives of those around us experiencing cancer.”

Bluebird was started over 20 years ago by a man named Bill Timm with a cancer diagnosis. His diagnosis led to hope, and hope led to a dream – a dream of sharing inspiration and support with West Michigan. Together with Pete Thuene, Bills dream turned reality.

Today Bluebird Cancer Retreats serves hundreds of participants every year, by utilizing thousands of volunteer hours. Bluebird partners with Bucs Pride, Kathys Krew, Bras for a Cause and many other generous individual donors and business’ throughout Michigan.

“We continue to expand our programming to include community cares baskets for the recently diagnosed, lift of love reclining lift chairs, family camp retreats and the holiday happiness project bringing joy during the holiday season. Not to mention our weekend healing retreats for adults.”

Bluebird will continue to be safe haven and outreach for cancer patients, survivors, caregivers,
and their families for years to come.

“We look to the future to bring our mission to more individuals experiencing cancer, expanding our technology systems, and building a network of virtual support and wellness.”

For more information on how you can be involved or donate please visit our website.

FICO Score

FICO Score: What It Is & Why It Matters

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When you apply for a mortgage, your lender runs a credit report. A key component of the report is your credit score. One of the most commonly used credit scores in the mortgage industry is FICO.

In this article, we describe what FICO is, how it is measured, how it is used when approving you for a mortgage, and steps you can take to maintain and improve your credit score.

What is FICO?

FICO is a credit score created by the Fair Isaac Corporation (FICO). The FICO company specializes in what is known as “predictive analytics,” which means they take information and analyze it to predict what might happen in the future.

In the case of your FICO score, the company looks at your past and current credit usage and assigns a score that predicts how likely you are to pay your bills. Mortgage lenders use the FICO score, along with other details on your credit report, to assess how risky it is to loan you tens or hundreds of thousands of dollars, as well as what interest rate you should pay.

Why is FICO Important?

FICO scores are used in more than 90% of the credit decisions made in the U.S. Having a low FICO score is a deal-breaker with many lenders. There are many different types of credit scores. FICO is the most commonly used score in the mortgage industry.

A lesser-known fact about FICO scores is that some people don’t have them at all. To generate a credit score, a consumer must have a certain amount of available information. To have a FICO score, borrowers should have at least one account that has been open for six or more months and at least one account that has been reported to the credit reporting agencies over the last six months.

FICO Score Ranges

FICO scores range between 300 and 850. A higher number is better. It means you are less risk to a lender.

Scores in the 670-739 range indicate “good” credit history and most lenders will consider this score favorable. Borrowers in the 580-669 range may find it difficult to obtain financing at attractive rates. Less than 580 and it is difficult to get a loan or you may be charged “loan shark” rates.

The best FICO score a consumer can have is 850. Fewer than 1% of consumers have a perfect score. More than two-thirds of consumers have scores that are good or better.

Here’s a breakdown of scoring ranges and what they mean:

  • Score: <580
    Rating: Poor
    What It Means: Well below average; Indicates to lenders that you’re a risky borrower
  • Score: 580-669
    Rating: Fair
    What It Means: Below average; many lenders will approve loans, but many will not
  • Score: 670-739
    Rating: Good
    What It Means: Average or slightly above average; most lenders will approve loans
  • Score: 740-799
    Rating: Very Good
    What It Means: Above average; shows lenders you are a dependable borrower; nearly all lenders will approve you
  • Score: 800+
    Rating: Exceptional
    What It Means: Well above average; shows lenders you are an exceptional borrower; virtually every lender will approve you

                               Source: Experian 

The 5 Components of a FICO Score

A FICO score take into account five areas to determine the creditworthiness of a borrower:

  • Payment History. Payment history identifies whether you pay your credit accounts on time. A credit reports shows when payments were submitted and if any were late. The report identifies late or missing payments, as well as any bankruptcies.
  • Current Indebtedness. This refers to the amount of money you currently owe. Having a lot of debt does not necessarily mean you will have a low credit score. FICO looks at the ratio of money owed to the amount of credit available. For example, if you owe $50,000 but are not close to reaching your overall credit limit, your score can be higher than someone who owes $10,000 but has their lines of credit fully extended.
  • Length of Credit History. The longer you have had credit, the better your score will be. FICO scores take into account how long the oldest account has been open, the age of the newest account, and the overall average.
  • Credit Mix. Credit mix identifies your variety of credit accounts — retail accounts, credit cards, installment loans, vehicle loans, mortgages, etc. More variety gives a higher score.
  • New Credit. New credit refers to recently opened accounts. If you have opened a lot of new accounts in a short period of time, that will lower your score.

How is FICO Calculated?

To determine credit scores, FICO weighs each category differently:

  • Payment history is 35% of the score
  • Current indebtedness is 30%
  • Length of credit history is 15%
  • Credit mix is10%
  • New credit is 10%
Here are some things that FICO says it does not factor into its scores:
  • Participation in a credit counseling program
  • Employment information, including your salary, occupation, title, employer, date employed or employment history
  • Where you live
  • The interest rates on your credit accounts
  • “Soft” inquiries (requests for your credit report), which include requests you make to see your own credit reports or scores
  • Any information that has not been proven to be predictive of future credit performance

Tips for Improving Your FICO Score

Here are tips for maintaining and improving your FICO score. The time it takes to improve your credit score depends on the reason your score needs boosting in the first place.  If your score is low because you don’t have much credit history, your score can be boosted within months. If your score is low for other reasons, boosting it can take longer.

  • Keep Credit Balances Below Limits. Getting a high FICO score requires having a mix of credit accounts and maintaining an excellent payment history. You should keep your credit card balances well below their limits. Maxing out credit cards, paying late, and applying for new credit all the time will lower FICO scores.
  • Dispute Errors. It’s possible to improve your credit score in a matter of weeks. For example, you could successfully dispute errors on your credit report, pay down credit card debt, or pay off collections accounts. These actions could remove negative information from your credit report or add some positive info, either of which may benefit your credit score.
  • Pay Bills On Time. Realistically, here’s what you need to do: pay your monthly bills on time. A single on-time payment won’t do much to improve your score. Paying your bills regularly on-time will.

Here’s how different actions can negatively affect your credit score and for how long:

Action Avg. Recovery Time Credit Score Impact
Applying for Credit 3 months Minor
Closing an Account 3 months Minor
Maxing Out a Credit Card 3 months Moderate
Missed Payment / Default 18 months Significant
Bankruptcy 6+ years Significant
Source: VantageScore

Have questions about FICO or anything else mortgage-related? Give us a call!

This blog post was written by experts at Mortgage 1 and originally appeared on www.mortgageone.com. Michigan Mortgage is a DBA of Mortgage 1. 

Story Time with Grand Haven Area Public Schools

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Our friends at 92.1 WGHN are hosting Story Time and we are so excited to be involved!

We teamed up with the West Michigan Lakeshore Association of Realtors to sponsor the daily segment with Grand Haven Area Public Schools. Tune in at 8:40 a.m. Monday – Friday to hear some of our favorite stories.

Story Time’s first episode aired this morning. Press play below and enjoy a sweet story with your family.

Success Story: Rock and Jacki Stoltzfus

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2008 was a tough year. Our economy was in turmoil and homeowners struggled to stay afloat. Families across the U.S. – Michigan included – witnessed a housing crunch.

Success Story: Rock and Jacki Stoltzfus

Rock and Jacki Stoltzfus are no exception.

“We had a pretty tough experience with a home in 2008,” Rock said. “A home we had been in for only two years.”

“With the loss of a job that I had since 1995 and an extended illness for my wife Jacki, we eventually lost that home in 2011. Since then, we’ve rented. We didn’t want to try and purchase a home again and we weren’t even sure if we’d qualify.”

That all changed in 2019.

“I contacted our friend and realtor who quickly put us in contact with Dave and the team,” Rock said. “In just a matter of a day or two we found out we were good to go and we immediately began the process of getting pre-approved and looking for a home.”

Rock and Jacki worked with Licia Ackerberg. Things moved fast and efficiently.

“We have known Licia for years and she quickly got us on the right track,” Jacki said. “We found our new home the first weekend we looked.”

According to the couple, Dave and his team at Michigan Mortgage exceeded all expectations. They explained the process clearly and handled their unique situation with great expertise.

“Our experience with Dave and the team was fantastic,” they said. “Just the right mix of encouragement and letting us know what documents and other information was needed from us. They kept us informed every step of the way.”

“We never felt pressured and felt like their goal was to help us get what we wanted,” Rock said. “We were told ahead of time what to expect and so there were no surprises.”

The couple moved into their new home the weekend before Christmas with the help of their grown children. They celebrated Christmas together that same weekend.

“All around, this has been a great experience,” Rock and Jacki said.

We wish them a happy and healthy 2020 in their new home!