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Welcome

Beat the Rates with a Buydown Program

With the interest rates increasing, it’s important to find ways for buyers to continue to buy properties and have payments they can afford. A “Buydown” is a great way to do that.

Buydowns come in the form of 3-2-1, 2-1 and one-year buydowns.

How it works: funds from the seller pre-pay the buyer’s payment for 1, 2 or 3 years. For example, on a 2-1 Buydown, the interest rate is 2% lower than market in the first year, 1% lower the second year and market the third year.

WelcomeLet’s assume a home is being sold for $300,000 and the buyer is putting 5% down. To attract more buyers, the seller has agreed to pay $6,100 toward a 2-1 Buydown. If the current market rate is 5.5% then the buyer’s payment for the first 12 months would be at 3.5% or $1,279/month. For the second year, the payment would be based on a rate of 4.5% or $1,444/month. Starting in the third year, the buyer’s payment would be at 5.5% for the remaining 28 years or $1,618/month.

The cost is calculated by taking the difference between payments in year one and your 3×12 plus the difference between payments in the year two and year 3×12. In our example above the total cost would be $6,100. The monthly reduction in payment for the first year would be $339 and the $174 during the entire second year.

This may be a much more attractive option for a buyer than going into some sort of an adjustable rate (ARM) product that has more risk with it. Remember, an ARM will eventually adjust to the market rate and there is no guarantee that rates will be lower when that ARM starts to adjust.

The Buydown uses current market rates but allows the buyer to buy a home at a more affordable price with the risk of the ARM. Additionally, this a great way for buyers who are likely to make more money as they continue their career to ease into the payment.

But what is in this for the seller. Why would they do this? The answer is that the seller May be willing to concede $6,000 more readily than dropping their sale price by $10,000 or $15,000 when their house is not selling. Additionally, by offering this option to buyers they may get more interest from more buyers creating more competition.

We used to do 2-1 Buydowns years ago when rates were higher.  But for the last several years with rates at all-time lows, they were forgotten.  Now that rates are creeping up again, it may be good time to blow the dust off this product and help more buyers realize their dreams.

If you have questions about 2-1 Buydowns, give us a call! We’re happy to help in any way we can.

3 Tips to Buy a Vacation Home

Have you always dreamed of owning a cottage by the lake or a cabin in the woods? Buying a second or vacation home can make that a reality – but there are some things to know before you start shopping.

Maybe you love heading Up North every weekend and want your own place on the bay (which bay is up to you). Or perhaps you want to retire to a beach in Florida and want to buy your home now and rent it out to make some money until then. Either way, you’re thinking about buying a second home – and that’s a bit different than buying your first home or any other primary residence you’ve had. In this article, we’ll tell you why.

1.    Your Mortgage Might Be More Expensive

Your primary home (where you live most of the year) often carries less risk for mortgage lenders; a major reason is that it’s your only mortgage payment, so you’re less likely to strain your finances and default on it. Thus, primary residences usually get more favorable loan terms, with lower credit scores, higher debt-to-income ratios, and less money required for the down payment.

The flip side, of course, is that vacation homes come with stricter loan requirements and higher mortgage interest rates (to offset the greater risk).  You also won’t be eligible for some governmental loan assistance programs. So, while the monthly payment may not match that of your main residence, this may be a more expensive loan in terms of interest rates.

As a side note, look for a lender that provide second home loans regularly – some lenders even specialize in them. They’re likely to be able to help you find the best deal.

2.    Vacation Rental Homes Are Not the Same as Vacation Homes

No problem about the mortgage, right? You can always rent out your second home to cover the cost.

Except that vacation rentals are quite different from vacation homes in the mortgage world – and to many local authorities.

If you plan on renting out your vacation home on the regular and using this income to cover your mortgage costs, you’ve moved into the investment property zone. This comes with different requirements than a simple second home; depending on your mortgage terms, it might even violate your agreement with your lender if you rent the home out.

So if this is your plan, discuss it with your loan officer before you start the paperwork. You should also make sure that the location of your home allows vacation rentals; some popular vacation spots are putting restrictions on these “short-term” arrangements.

3.    Make Sure You Meet the Definition of a Vacation Home

There are some other requirements that come along with vacation homes. Obviously, you won’t be staying in it full-time, but you have to stay in it a stated number of days per year. And some lenders might stipulate that your vacation home is a certain distance from your main home; a vacation home in your neighborhood will look more like a rental property to most loan officers. Talk this over with your lender as well.

Before You Shop for a Vacation Home, Shop for a Mortgage

Your mortgage will impact how much vacation home you can afford, so talk with your mortgage lender before you start looking around. At Michigan Mortgage, we work hard to find the right loan for each individual customer.

Who’s responsible for paying closing costs?

More often than not, buyers and sellers are responsible for covering the costs of their respective closings.

Buyers can expect to pay 3 – 6% of the loan amount in closing costs. Sellers, on the other hand, typically pay 5 – 6% of the sale price to their Realtor.

But that’s not always the case. Here are a few ways buyers can get someone else to help pay their closing costs.

Seller Concessions

Buyers can sometimes avoid paying closing costs (or at least a portion of them) if they ask the sellers to pay them instead. This is called seller concessions.

Each loan program is different, as shown below.

  • Conventional: Up to 3% of the home’s value with a down payment of less than 10%. Up to 6% with a down payment of 10 – 25%.
  • FHA: Up to 6% of the home’s value.
  • VA: Up to 4% of the home’s value (there are some exceptions to this rule).
  • RD: Up to 6% of the home’s value.

In today’s competitive market, this may not be your best option, as sellers are hoping to net as much as possible when closing on the sale of their home. Your Loan Officer will explore all options and help guide you in the right direction.

Gift Funds

Financial gifts from loved ones can be used to fund your down payment and closing costs. In most cases, a “loved one” is defined as a family member, fiancé, or domestic partner.

Gift funds must be properly sourced and documented to avoid hiccups during the underwriting process. The gift must include a letter that states the funds don’t have to be repaid by the buyer.

For more information, reach out to your Michigan Mortgage Loan Officer.

Down Payment Assistance Programs

Are you familiar with the Michigan State Housing Development Authority, otherwise known as MSHDA?

MSHDA offers a variety of down payment assistance programs to help buyers purchase their forever homes. Each program is different, but here are a few general MSHDA guidelines.

Michigan Mortgage has been named the No. 1 MSHDA Lender in Michigan (and West Michigan) since 2016. There are many MSHDA misconceptions in our marketplace – it’s a hard program to master. But our knowledge and expertise has set us apart from our competition.

We recommend that you explore all options with your Loan Officer before writing an offer. Give us a call if you have questions! We’re here to help in any way we can.

Reverse Mortgage

What is a Reverse Mortgage?

A Reverse Mortgage is a home loan for seniors, age 62 or older, where they are able to use the equity in their home to get cash income and have the security of not having to pay monthly mortgage payments back.

Reverse MortgageIn the past, Reverse Mortgages were viewed in a negative light. That’s changing! There are many benefits to a Reverse Mortgage that consumers are unaware of.

How can a Reverse Mortgage help you achieve financial freedom?

  • Improve your monthly cash flow.
  • Payoff medical bills, auto loans and credit card debt.
  • Make home improvements (to modify the house to stay longer or for deferred maintenance).

Benefits of a Reverse Mortgage

  • Eliminates monthly mortgage payments.
  • Proceeds are not taxable.
  • Heirs get to keep the equity in the property and can never owe more than the house is worth.

Should you get a Reverse Mortgage? According to Forbes, “A reverse mortgage may be helpful but isn’t for everyone. There are a few factors that can make a reverse mortgage worth it:

  • Your home is increasing in value considerably. If you’re building up a lot of equity in your home, you may be able to take out a reverse mortgage and still have money left over for your estate.
  • You plan to stay in your home for a long time. Just like a regular mortgage, there are significant upfront costs associated with the loan. You’ll want to be sure you plan to live in that home long enough to make those costs worth it.
  • You can cover the costs of your home. Since staying current on property taxes, insurance, maintenance, etc. is required to keep your reverse mortgage current, it’s important that you have plenty of cash flow for these expenses.”

If you have considerable equity in your home and are looking for ways to use that equity as a form of income, a Reverse Mortgage may be for you! Reach out to your Michigan Mortgage Loan Officer for more information.

MSHDA

Do you need help making your monthly mortgage payments?

If you are struggling to make your monthly payments – mortgage, property taxes, homeowner’s insurance, utilities, internet and more – due to the COVID-19 Pandemic, the Michigan State Housing Development Authority (MSHDA) has a program to help.

According to MSHDA, “The Homeowner Assistance Fund was established under section 3206 of the American Rescue Plan Act of 2021 (the ARP) to mitigate hardships associated with the coronavirus pandemic by providing funds to prevent homeowner mortgage delinquencies, defaults, foreclosure, loss of utilities or home energy services and displacements of homeowners experiencing financial hardship on or after January 21, 2020 or for those homeowners who experience a coronavirus pandemic financial hardship that began before January 21, 2020 but continued after that date.

MSHDAThe U.S. Department of the Treasury notified MSHDA on April 14, 2021, that it will allocate $242,812,277 to the State of Michigan. This number was based on unemployed individuals and the number of mortgagors with delinquent mortgage payments.”

MSHDA opened the program to the public on February 14, 2022.

Who is eligible?

  • Homeowners with household incomes less than 150% of Area Median Income (AMI)
  • Homeowners who own and occupy the property as their primary residence
  • Homeowners must have and explain a financial hardship directly related to COVID-19 on or after January 21, 2020.

Up to $25,000 Grant Per Household to Pay:

  • Delinquent mortgage/housing expenses, including property tax and insurance escrow shortages
  • Delinquent land contract payments, mobile home consumer loan payments or mobile home park lot payments
  • Delinquent property taxes
  • Delinquent condominium/homeowners’ association fees
  • Delinquent homeowner’s insurance,
  • Delinquent utilities, gas, electric, water, sewer
  • Delinquent internet broadband services

For more information and to apply, click here. Due to backlog, it may take 6 – 8 weeks to review your application. If you have questions about the program, please call Customer Service 844-756-4423 or email MSHDA-HO-HAF-Program@michigan.gov.

Local Lender

5 Reasons to Choose a Local Mortgage Lender

Buying a home might be the single biggest purchase you make in your life. You want it to go right. That is why the mortgage lender you choose is critical to making sure your homeownership dreams come true and the experience is hassle-free.

Whether you are a first-time buyer needing assistance through the lending process or you are an existing homeowner seeking to refinance or purchase a vacation home, it pays to go with a local lender as opposed to a big-name national bank or brand.

Local LenderHere are 5 reasons to choose a local mortgage lender like Michigan Mortgage.

1. Personalized Service
A local mortgage lender gives you the chance to to work face-to-face with an expert, if need be. The growth of digital mortgages, like our Pro SNAP app, has eliminated the need for as much face-to-face meeting in the past, but as a home buyer it can be reassuring to know that your loan officer is right around the corner as opposed to across the country or overseas.

A local lender gets to know you. Your messages won’t sit in a voicemail box unanswered for weeks on end. With Michigan Mortgage, you’ll get a cell number for your loan officer and can call or text them at a moment’s notice to get your questions answered.

2. Local Expertise
Another advantage of local lenders is their familiarity with local market conditions. We know our local neighborhoods, so we know what’s going, what the trends are, and we use that knowledge when helping buyers obtain mortgages.

For example, a national lender with no roots in the local community may be reluctant to approve a mortgage for an atypical property, such as an original farmhouse on acreage that’s now covered by a subdivision. A local lender like Michigan Mortgage will know the history of the area and the changing demographics and economic trends and may be more comfortable underwriting such a loan.

Local lenders also have their finger on the pulse of the local or regional economy, and have a better sense of the lending risks in the area. What looks to a big lender like a dilapidated section of town might actually be an up-and-coming area where properties re increasing in value. Local lenders will know this.

Local lenders may also be more attractive to some home sellers and real estate agents who want an efficient and timely closing. Reputation matters. In situations where several offers are on the table, having a local, trusted lender could be the difference between closing or not closing.

3. Realtor Relationships
Local lenders invest a lot of time and effort building relationships with local Realtors. Realtors and lenders are the yin and yang of real estate. Michigan Mortgage loan officers are on a first-name basis with most of the real estate agents in their local areas.

Also, with everyone on your team – the Realtor, the lender, you– working in proximity, a closing can happen quickly and without hassle. The final stage of home buying is sometimes the most stressful. Having a unified team that is familiar and comfortable with each other can make the process quick and painless.

4. Varied and Specialized Products
Local lenders have a better understanding of property values and the local economy. When you work with Michigan Mortgage, you’re paired with a licensed loan officer and team of professionals who are experts in your region. Our loan officers help you choose the right type of loan for your circumstance and we keep you updated along the way. We have in-house tools and resources to expedite a loan, ensuring everything is taken care of in a timely manner.

Local lenders are where you’ll find the specialized loans the big lenders won’t bother with. Maybe you want an adjustable-rate mortgage with a 15-year lock? Or you want to buy a vacation property that lacks a furnace? Or you want to buy or refinance a home for less than $100,000, an amount too small to be of interest most lenders? Or you want a jumbo loan?

Local lenders are have more flexibility. Big banks need process large numbers of loan applications. To do that, they have rigid guidelines about who they will and won’t lend to. Big banks are more about volume than customer service.

At Michigan Mortgage, we have been Michigan’s leading MSHDA first-time buyer lender for 6 straight years. We are also a recognized USDA rural development leader.

5. Reliable, Responsive & Flexible
Local lenders are better at closing loans on a timely basis. If the closing of a loan has to be extended by a week, local lenders are more flexible than big banks who have corporate mandates to crank out the volume.

Local lenders, along with local real estate agents, have an incentive to provide you with excellent service because they want you to be a referral source for future business. They stake their reputation on each and every customer.

With a local lenders, you are much closer to the decision makers with the authority to approve your mortgage. You aren’t dealing with a corporate bureaucracy.

Michigan Mortgage loan officers are more likely to get personally involved in qualifying you for a mortgage, as opposed to big banks. Often, it’s a matter of the getting to know you. Perhaps you are self-employed with irregular income. Or you have poor credit due to a financial crisis, but have good income and low debt.

Michigan Mortgage loan officers are better suited to be responsible and flexible for borrowers like these.

At Michigan Mortgage, you will never be just a name or number on a loan application. We manage every step of the mortgage process, from application to underwriting to closing, to make the process easy. We have been financing the American homeownership dream for nearly three decades. We can do the same for you.

Everything You Need to Know About MSHDA

Did you know that Michigan Mortgage was named the #1 MSHDA Lender in 2021?

In fact, our very own Dave Lehner was named the #1 MSHDA Loan Officer in West Michigan in 2021!

There are many MSHDA misconceptions in our marketplace – it’s a hard program to master. But our knowledge and expertise has set us apart from our competition.

Dave and Rob sat down with Alex Craig of the Dolinski Group to talk all things MSHDA and share their experiences over the past 25 years.

If you have questions about MSHDA, don’t hesitate to reach out! We’re here to help in any way we can.

co-borrower

Benefits of Having a Co-Borrower

It’s no secret – home prices in Michigan are on the rise. If you’re in the market for a new home and are wondering whether or not you can afford a home on your own, bringing on a co-borrower may be a possibility.

You may not need a co-borrower to qualify, but there are benefits to having one.

co-borrowerYou can enter the market sooner. In today’s market, it’s all about speed and strength. Having a co-borrower added to your mortgage application can increase your buying power and help you enter the competitive market with your best foot forward.

You can afford a bigger home. If you add a co-borrower to your mortgage application, it’s likely that you’ll be able to afford a larger home at a larger price point. Your Loan Officer will combine your income (if the co-borrower credit qualifies) to determine how much you can spend on a new home.

You’ll have more money for a down payment. Much like income, as stated above, if a co-borrower is added to your mortgage application, their assets are included in financing calculations. Between the two of you, you may have more money saved for a down payment.

Like all things, there are positives and negatives to adding a co-borrower to your mortgage application.

Here are a few things to keep in mind.

Your co-borrower must credit qualify. As mentioned earlier, co-borrower must credit qualify to be included on your mortgage application. We will verify your co-borrower’s income and credit before proceeding. We recommend that you have these conversations with your co-borrower before application is taken.

You are both liable for the loan. Before you add a co-borrower to your mortgage application, please make sure you’re comfortable with the long-term consequences. If a payment is missed or the home is entered into foreclosure, you’re both liable and your credit scores will be impacted.

Trust is key.

If you’re interested in purchasing a new home, we recommend that you sit down with an experienced Loan Officer to better understand your options. We’re here to help any way we can!

Realtor

How to Find the Right Realtor to Fit Your Needs

Choosing the right realtor can make your home-buying or home-selling process much less stressful. Here’s how to find the right Realtor for your needs.

RealtorBuying or selling a home is a big decision, one of the most financially impactful you’ll ever make. A little expert guidance would be very helpful – but how can you find an expert you can trust? One who’s both knowledgeable and ready to look out for your best interests? It’s all down to choosing the right realtor.

That may seem easier said than done. In most places, you can choose between several or even dozens of real estate professionals. How can you find one that works for you? That’s what we’ll answer in this article.

Realtor, Real Estate Agent, Real Estate Broker, or …

First, let’s clear up some confusion around who’s who in the real estate industry. According to Realtor.com:

  • “A realtor is a licensed real estate salesperson who belongs to the National Association of REALTORS®.
  • real estate broker runs an agency and has agents working under them. The broker must take additional courses and pay additional fees to maintain their state-issued broker license.
  • real estate agent is a state-licensed salesperson selling on behalf of the broker. Some states mandate that all real estate agents take additional coursework and pass another test to become associate brokers, who sell under a managing broker.”

It’s also good to know that there are usually two real estate agents involved in each transaction: a listing agent (who lists the house on behalf of the seller and represents them) and a buyer’s agent (who represents the buyer). While some states allow dual agency (one real estate agent representing both parties), it’s usually a good idea to have one person absolutely dedicated to your interests.

Regardless of whether you’re buying or selling, it’s important to find the right realtor for your unique situation. How exactly should you do that?

How to Choose the Right Realtor

First, do your own investigation. Learn about the real estate market where you want to live. Find out about current home sizes and prices. If you haven’t already, talk with a loan officer about your mortgage options and get a preapproval when you’re sure you’re ready to buy.

Next, research multiple realtors. You can start with referrals from friends or family or look online. Find out which ones have good reputations for communication, honesty, efficiency, and reliability. This person is going to act as your agent, so make sure they’re the kind of person you feel comfortable doing business with.

Create a list of at least three realtors and interview them. During the interview, try to determine their:

  • Local knowledge. Deep knowledge of the real estate market is a given, but a good realtor will have more than that. It takes more than a certain monthly payment and a certain number of square feet to love a house; your realtor should also know what neighborhoods will mesh with your goals and personality – whether you’re looking for a quiet and upscale setting, a family-friendly area with great schools, or so on.
  • Communication and people skills. How does the realtor handle negotiation? Are you comfortable talking with them? Are they happy to answer questions? Do they reply promptly to phone calls, texts, or emails?
  • Experience. How long has the realtor been in the business? How long have they been in the area? If you’re selling your house, ask about how many homes they’ve sold in the past year, their selling percentages, and how they plan to market your home to buyers.
  • Specialty. Does the realtor work mostly with buyers or sellers? If they focus more on one than the other, you might want to find someone with more expertise in your field. Also, what kind of properties do they mostly handle – commercial, residential raw land, special use? Again, if they focus on something other than residential, you might want to look elsewhere.

Finally, don’t forget to read any agreements or contracts between you and your realtor carefully. Make sure you understand everything and don’t hesitate to ask questions. A good realtor will be happy to explain things; a bad one will rush you into signing.

Florida Real Estate

Licensed to Serve Your Florida Real Estate Needs

Michigan Mortgage has served the lakeshore for more than 25 years. It’s been a wild ride and we have no intentions of getting off anytime soon.

We have, however, expanded our reach. We are now licensed in Florida!

“Many of our clients are buying second homes and investment properties in Florida,” Rob Garrison said. “I thought it would be helpful for me to be able to serve them with the care they deserve and are accustomed to.”

Rob and his team spent countless hours learning about Florida’s Real Estate Market and understanding the laws and regulations that make it unique.

As Licensed Loan Officers in Florida, we can do purchases and refinances on primary residents, second homes, and investment properties up to four units.

Florida Real EstateWe can finance condominiums, single family homes and modular homes.

And we promise to provide the exceptional customer service you’re used to.

“The entire process will be completed in our Michigan offices,” Rob said. “Clients will have direct access to me and our amazing team.”

Why Florida?

Because the market is HOT.

“Many people are moving to Florida as COVID-19 has allowed more folks to work remotely,” Rob said. “And like more of the country, inventory is low and appreciation has been high in the last 12 months.”

During the cold winter months here in Michigan, a little sunshine in the Sunshine State sounds magical!

If you have questions about purchasing a new property or refinancing your current mortgage in Florida, give us a call! We’re happy to help in any way we can.