Tag Archive for: Home Buying Tips

co-borrower

Benefits of Having a Co-Borrower

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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

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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®.
  • A 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.
  • A 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

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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.

Job Change

Can I change jobs while buying a house?

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After you’re pre-approved for a mortgage loan, any drastic changes to your credit score, debt and income can quickly derail the process.

When possible, we suggest our buyers avoid job changes, making big purchases and opening new lines of credit until after their loan closes.

If you’re interested in buying a new home or refinancing your current mortgage – and you’re contemplating a career change – here are a few things you should know.

Job ChangeBefore Applying for a Mortgage

Sometimes, job changes are unavoidable. If you’re on the hunt for a new job, for one reason or another, we recommend that you get settled before applying for a mortgage.

You’ll be asked to submit pay stubs for approval, so it’s best to wait 30 days before reaching out to a lender about financing. Most jobs changes should not impact your mortgage application if you haven’t applied for a mortgage yet.

According to industry experts, “You still need income that is reliable, stable and likely to continue in the future. And your new job should be an upward – or at least lateral – move within the same industry. As long as those criteria are met, changing jobs before you buy a house shouldn’t be a problem.”

While You’re in Process

When you apply for a mortgage, you’re approved based on the information you submit. If anything changes throughout the process – your income, debts, assets – please let your Loan Officer know immediately.

When you change jobs applying for a loan, we will have to start over again at the beginning. New documentation will need to be collected and your debt-to-income will need to be recalculated.

Best case scenario, you’re approved based on your new job after a short delay.

Worst case scenario, you’re denied based on your rate of pay or pay structure.

After the Loan Closes

After your loan closes, and you have the keys for your new home in hand, you’re free to change jobs. We will not reopen your loan or verify your income unless you reach out about refinancing in the future.

Your job change may impact your ability to refinance at a later date, but we can tackle that when the time is right.

Other Factors to Consider

Promotions: If you receive a promotion from your current company while in process, no need to worry! If your salaried or hourly rate-of-pay is increasing, and your pay structure is not changing, a promotion will likely increase your buying power.

Changes in Pay Structure: Commissioned employees may have the ability to earn more, but this pay structure can also complicate the mortgage process. Often times, commission pay cannot be counted as income unless it has been received for 12-24 months. The same is true for bonuses received.

If you have additional questions about your employment status and its impact on the mortgage process, give us a call. We’re happy to help in any way we can!

Meeting

Five Mortgage Interest Rate Factors You Control

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Did you know that over 30 factors go into selecting a mortgage interest rate? In this post, we look at five things you can improve – and two factors you can’t control at all.

MeetingWhen you’re considering a mortgage, your first thought is probably “Can I afford it?” A mortgage lender asks themselves a similar question: “Will this person be able to repay the loan?” To the lender, giving you a mortgage is a risk, no matter how great your credit history is or how much money you make. To offset some of the risk, lenders charge interest on the mortgage.

A mortgage interest rate is usually calculated as a percentage of your loan amount. It’s added to the amount borrowed; most of your monthly payments go toward the principal, but some go to the interest rate. This rate can be fixed (i.e. the same for the entire loan period) or it can be variable (i.e. the rate rises or lowers at intervals throughout the loan period).

So, what affects the interest rate a lender offers you?

Five Mortgage Interest Rate Factors You (Mostly) Control

As we’ve said before on this blog, mortgage interest rates are not just about the borrower. They’re also about the lender, the market, and the economy as a whole. But there are some things you can control – at least partly:

  • Credit Score. Your credit score is a big factor in determining your creditworthiness, or how much of a risk you represent to the lender. A credit score of under 640 can mean a higher interest rate; a score of 740 or above can get you a lower rate. Here’s how you can improve your credit score.
  • Debt Ratio. The amount and kind of debt you have will impact your credit score, but lenders also look at the debt ratio itself. As a general rule, no more than 43% of your monthly income should go to defraying debt (e.g. car payments, credit cards, etc.). The reason is simple: the more debts you have, the more likely it is that you’ll have a hard time keeping up the payments.
  • Down Payment / Loan Amount. A larger down payment can lower your loan amount, which means you could get a lower interest rate. If, for example, you pay 20% down instead of 10% down, you’ve removed some of the lender’s risk. Your reward: a lower interest rate and a substantial amount of savings.
  • Loan Type.  Different loan types come with different requirements, guidelines, and interest rates. Check out these types of home loans to learn more.
  • Home Location, Price, and Use. Ok, you may not have a lot of wiggle room on your home location or budget – but if you’re looking for value, you may want to shop around. Homes in different areas of the same city can be priced higher or lower according to demand; price impacts the loan amount, which affects the interest rate. And if you’re shopping for your primary residence (as opposed to a second home, vacation home, etc.), you’ll likely get a lower interest rate, too.

Two Mortgage Interest Rate Factors You Can’t Control

No matter who you are or what you make, the following factors are outside of your control. Unfortunately, they still affect your mortgage interest rate:

  • Local Real Estate Market Conditions. If home sales are slow in your area, there’s less demand for mortgages. This means mortgage lenders have to compete a bit for business, which translates into a better deal for you. On the other hand, moving into a hot market means higher prices, higher demand, and higher interest rates.
  • The Economy. During an economic downturn, mortgage rates tend to decline for the same reason as mentioned above: a lack of demand. During an economic upturn, people are more apt to start house shopping again, which drives up demand and interest rates.

So, if you’re shopping for a mortgage with a great interest rate, keep these factors in mind. Maybe you can increase your down payment or reduce your debt. Don’t forget to compare offers from different lenders; that too can help you find a better interest rate. If you’re not sure what your next move should be, talk with one of our mortgage specialists.

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.

home buying tips

Fall 2021 Home Buying and Mortgage Trends

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What can home buyers in Michigan expect during Fall 2021? In this post, we’ll look at five home buying trends and what’s causing them.

Are you smitten with the mitten? If you’re looking for a house in Michigan this fall, you’re not alone – the state’s real estate market has been extremely active. In other words, Michigan has become a seller’s market.

Does this mean you should postpone your home-owning dreams? Not at all. Just do your homework before you start searching. To help you, we’ll discuss five key trends in the Fall 2021 Michigan housing market.

home buying tipsMichigan’s Fall 2021 Home Buying & Real Estate Trends

1. Mortgage Rates Are Still Very Low

With mortgage rates around 3 percent, it’s not surprising that many would-be homeowners are taking advantage of this historical low; it makes mortgage payments more affordable. However, the National Association of Realtors forecasts a rise to 3.5% by the end of 2021.

Also, home values are appreciating – i.e. homes are worth more than they were 3 or 5 years ago. This can make getting financing a bit trickier, so make sure you know what you can afford and what your mortgage options are.

2. COVID-19 Inspired Some Changes

Quarantining in place and the uncertainty of renting have moved some people to consider buying their own home. Additionally, after months of restrictions, other potential home buyers are now making appointments to view houses in person. Thus, there’s a burst of activity in Michigan’s real estate market.

3. Home Buying and Lending Are Going Digital

2021 accelerated the trend toward home buying and borrowing. More and more home buyers are relying on digital platforms and apps to shop for homes. More and more borrowers are using apps like Michigan Mortgage’s Pro Snap and Fast Pass to complete their mortgage paperwork and conduct their closings.

4. It’s Not Just Southeastern Michigan

Most of Michigan’s population is in the southern half of the lower peninsula – specifically, in southeastern Michigan (e.g. Ann Arbor, metro Detroit, etc.) and in the Grand Rapids metro area (on the state’s southwest side). These areas have generally had the most active real estate market, thanks to all the amenities on offer.

Now, though, the state’s more rural northern counties are seeing a surge in home buying. This is driven by the availability of remote work, more affordable pricing compared to the southern parts of the state, and a desire to exit crowded cities for open spaces and smaller towns.

5. Homes Are Selling Quickly

With demand booming – and new construction not yet catching up – Michigan homes are selling much faster; a local news station reported that the average house spends 15 fewer days on market and sells in just 19 days. This means that potential buyers have to act quickly if they see a house they love.

Thank you for trusting us to guide you home!

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.

kitchen

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.

kitchenWhat 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 downpayment. 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 downpayment.

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.

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. 

Image of a family hanging up an American flag

Military Vets: Get a VA Home Loan

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In addition to being one of the country’s leading lenders to first-time home buyers, Michigan Mortgage specializes in helping veterans of the United States military and their families get into their dream homes.

Veterans Affairs (VA) mortgages make it easier for veterans to obtain financing for home ownership. VA loans are available to veterans and active military members. VA loans are guaranteed by the Department of Veterans Affairs and are somewhat easier to qualify for than conventional mortgages.

Image of a family hanging up an American flagVA Home Loan Benefits

VA loans are great because:

  • They can be obtained without any down payment.
  • Mortgage insurance is not required even if you put less than 20% down.
  • The VA does not require a specific credit score for a VA loan.

Although the costs of getting a VA loan are generally lower than they are for other types of low-down-payment mortgages, VA loans do carry a one-time funding fee that varies depending on the down payment and the type of veteran.

According to the VA, veterans who have taken advantage of the program have some of the lowest home ownership default rates, and that the agency also helped 80,000 VA borrowers avoid foreclosure in 2014, saving taxpayers $2.8 billion.

VA Loan Requirements

VA loans are offered to most active duty, reserve or National Guard and veteran service members and even some surviving spouses.

Veterans are able to borrow over $400,000 without any down payment on a principal residence home. According to the VA, almost 90% of VA loans have no down payment.

There’s also no minimum credit score requirement for a VA loan, while most home mortgage loans require a credit score of at least 620 for conventional loans or 580 for most FHA loans. A VA loan can also be used to refinance an existing loan.

VA loans do have specific requirements that most other loans don’t. For instance, all work on the home must be completed before the inspection. Also, there can’t be chipped or peeling paint inside or out, or termites or mold or loose handrails. In other areas, a VA inspection can be a bit more stringent. For example, while most home inspectors merely turn on the home’s furnace to see if it works, the VA requires inspectors to verify that the heat source can keep pipes from freezing.

Are you a vet? Reach out to one of our experienced Loan Officers to learn more. 

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. 

Appraisal Neighborhood

What is an appraisal and why do you need one?

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One of the most confusing aspects of obtaining a home can be the appraisal process.

Most people think when you buy a house that the selling price is the value of the home.  The truth is, the value of the home is primarily based on other properties that have already SOLD in the same market area.

Appraisal NeighborhoodA real estate appraisal is the process of assigning an objective value for a home.

The buyer is free to pay whatever they like for the home. If the buyer intends on getting a mortgage, then they are required to get some type of home appraisal. The opinion of value (the appraisal) is based on properties (comparable properties) that have sold in the past.

Why Is a Real Estate Appraisal Needed?

Appraisals are an important part of the home buying process. A real estate appraisal establishes a property’s market value—the likely sales price it would bring if offered in an open and competitive real estate market. Lenders require appraisals when buyers use their new homes as security for their mortgages.

What Is Comparable Property?

It is properties with characteristics that are similar to a subject property.  The appraiser is looking for similar square footage, floor plan, the number of rooms, type of rooms and location to name a few.  The best comparable could be the home next door or a few miles away. The best Comparable would be the house next door with the same floor plan, upgrades, view, everything exactly the same as the subject property that closed the day before the appraisal assignment.

When the home next door is not available the appraiser will attempt to find homes as close as possible and make adjustments.  The adjustments are added or subtracted from the comparable property in an attempt to equal the subject being appraised. If one comparable did not have a 2 car garage like the subject. The appraiser would add the approximate value of the garage to the comparable to bring it up to the subject.  If the comparable had a 3 car garage the appraiser would subtract from the subject the value of the extra garage.

Who Does the Appraisal?

Appraisals must be conducted by a licensed, third-party appraiser who has no connection to the buyer, seller or lender. That way, all parties can be sure the determined market value is fair, unbiased and free of any influence from any party that could benefit.

The lender usually orders the appraisal, but the borrower is the one who usually pays for it. The appraisal fee is an upfront, out-of-pocket expense that will not be refunded if either party fails to move forward with the sale.

What Does the Appraiser Look For?

Appraisers look inside and outside your house. They look at the neighborhood, too.

Externally, here’s what they look for:

  • Neighborhood characteristics (i.e., urban, suburban, rural)
  • Percentage of present land use in the neighborhood (one-unit housing, two- to four-unit housing, multifamily, commercial)
  • Zoning classification
  • Lot size
  • Whether the property has public utilities
  • The type of driveway surface and any car storage.

Internally, they look at things like:

  • The home’s square footage
  • Number of bathrooms and bedrooms
  • Remodeled versus updated kitchen/baths
  • Foundation type
  • Whether there’s a full or partial basement, crawl space, or attic
  • Materials used for the walls, floors, and windows

Get Preapproved First

An appraisal is one of the final steps of buying a home. Your first step should be to contact a lender near you to get the process started.

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. 

Increase Home Equity

5 Tips to Increase Home Equity

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Your home is probably the most valuable thing you own. Increasing the equity you have in your home can go a long way toward increasing your overall net worth. Equity is your home’s fair market value minus how much you owe on it.

Rising home prices, combined with falling mortgage rates, have helped homeowners increase their home equity over the past few years. Nationwide, home equity is rising. In the fourth quarter of 2020, the average homeowner gained about $26,300 in equity over the course of the year — the largest average equity gain since the third quarter of 2013. See the image below.

Home equity increases in 20020.

First, let’s define what we mean by home equity.

Home equity is the amount of your home that you actually own. In other words, your home equity is equal to your home’s current market value, minus your remaining mortgage balance. For example, if your home is valued at $300,000 and you owe $175,000 on the mortgage, your equity is $125,000.

Here are five ways to build up home equity.

1. Increase Your Down Payment

The more you put down on a home, the more of it you own right off the bat. Let’s say the home you buy is valued at $200,000. If you make a $10,000 down, you will owe $190,000 on the mortgage and have $10,000 in equity. If, however, you increase your down payment to $20,000, you would owe $180,000 on the mortgage and have $20,000 in equity.

2. Make Extra Mortgage Payments

Since paying off your mortgage helps you build equity, you’ll grow it even faster (and be able to pay off your loan sooner) by making extra payments each month. Many lenders even allow you to set your own recurring schedule, so you can make extra payments at an pace you feel comfortable with. If, for example, you had a 25-year loan for $250,000 at 3.75% interest, your monthly payments would be about $1,285.33. Increasing this by one-twelfth would add $107.11 to each payment. All of that extra payment would go toward the principal, thereby increasing your equity in the home.

3. Make Home Improvements

When you invest in home improvement projects–like an updated kitchen or bathroom–you’re increasing its value and, thus, boosting its equity. Just be sure to choose upgrades that provide the biggest payback. This cost-vs.-value tool can help you figure out which remodeling projects provide the best bang for your buck.

4. Enhance the Curb Appeal

Improving curb appeal can boosts your home’s value by 3-5%. Even simple things like trimming bushes, putting in a garden, painting and power washing can make an impact.

5. Shorten the Loan Term

Refinancing into a short-term loan will increase your equity faster. You will have higher monthly payments, but more of your payment will be going toward the balance, which increases the amount of the home you own.

Home Equity Lines of Credit (HELOC)

One benefit of building equity in your home is that you can tap into that equity with a home equity line of credit (HELOC). A HELOC is a revolving line of credit usually with an adjustable interest rate, which allows you to borrow up to a certain amount over a period of time. HELOCs work in a manner similar to credit cards, where you can continuously borrow up to an approved limit while paying off the balance.

If you have questions, don’t hesitate to give us a call! We’re here to help in any way we can.

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.