Tag Archive for: Local Pre-Approval

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Why a Doctor Loan?

For a new physician excited about the possibility of buying a home but carrying the weight of heavy student debt, a physician mortgage can be a great springboard for entering the housing market.

The physician loan (also known as a doctor loan) is designed to help a unique population that often has a high amount of student loan debt and minimal savings, as well as a new job contract that is required by lenders.

These loans are available for doctors, dentists, podiatrists, ophthalmologists and veterinarians.

The main advantages of doctor loans are access to financing with little to no money down and no required private mortgage insurance.

For new physicians, doctor loans offer a fast path to home ownership that would not be available otherwise. Last year, 84 percent of graduates from medical school reported having student loan debt; the median amount was $190,000 (according to the American Association of Medical Colleges).

Here’s a of the program highlights.

  • 15-year fixed
  • No Mortgage Insurance
  • Loan amount up to $650,000
  • Minimum Credit Score: 700
  • Not available for Construction Loans
  • Not available for investment properties, second home or manufactured housing
  • Maximum 50 percent debt-to-income ratios

The perks of doctor loans are appealing for medical professionals who are ready to settle down after the grueling years in medical school and residency.

Physician loans are not a on size fits all option. It is important to sit down with a trusted mortgage professional and consider your individual situation to decide whether or not one is right for you.

For more information about doctor loans, visit www.michmortgage.com or contact one of loan officers. We’re here to help.

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How is the value of a home appraised?

You’re pre-approved for a mortgage, you found your dream home and put in an offer. It’s been accepted! Before you can take possession, an appraisal is necessary.

Will you be able to move forward with the purchase? That depends on the loan-to-value of the home you’re pursuing.

Here’s what Eric Ridlington, owner of Prestige Appraisal Service, had to say about the process.

Michigan Mortgage: How is the value of a home appraised?

Eric Ridlington: Simply put, an appraisal consists of a comparison of your home to the most similar, recent and nearby sales in a given area. The appraiser will view your home inside and out, and use that for the basis of selecting comparables.

MM: What factors do you look at when appraising a home?

ER: The appraiser should consider all features including – but not limited to – the site, design, quality, condition, size, room count, added features and overall appeal to the market. An appraiser should consider all factors of a home and/or property as the typical buyer would, but also with a professional eye because of their experience in their given market and neighborhood.

MM: Why is the appraisal value so important in the lending process?

ER: The value of your home assists the lender in determining to approve your loan or not, or to what extent to agree to lend. Meaning, how much money to lend you. They’ll use the appraised value to calculate loan-to-value.

MM: Thanks for the great information! If a seller is interested in increasing the value of their home, what updates or upgrades should be made?

ER: The most common updates which impact value are the big items such as siding, kitchens, bathrooms, etc. However, to get a big bang for your buck, flooring, paint and light fixtures go a long way because those items cover such large areas and painting can be done without a professional in most instances, if you’re willing.

Not only is Eric Ridlington an appraisal expert, he’s also a professional member of our Service Rewards program that offers home discounts for honorable service. Why?

“The Service Rewards program appeals to me because it benefits many people who work in the community in careers which help so many people,” he said. “I see it as an opportunity to say thank you for their service.”

If you have questions related to the appraisal of your home, give us a call at 231-799-2606 or visit our website. As always, we’re here to help!

Could an FHA loan be the loan for you?

What is an FHA loan?

FHA stands for the Federal Housing Administration, which is a government agency. The FHA was created by the Housing and Urban Development Department (HUD) to increase homeownership in the U.S.

This loan was designed to allow more home buyers to qualify for home loans by allowing for lower credit scores and lower down payment requirements. FHA loans only require 3.5 percent down payment and in some circumstances, allow for credit scores as low as 580. The borrowers are required to pay mortgage insurance monthly (calculated at .85 percent of the loan amount) as post of the total payment.

FHA Credit Score Requirements

To qualify for a loan, the FHA may allow for credit scores under 580, but the borrower typically has to put more money down as most lenders do not wish to assume the risk, especially after the housing crisis of 2008. If your credit score is below 580, it is highly recommended that you improve your credit score before applying for a mortgage.

Who are candidates for FHA loans?

  • Borrowers with a low credit rating
  • Borrowers that cannot afford a large down payment
  • Borrowers using a gift for a down payment
  • Borrowers with high debt-to-income ratios
  • First time home buyers

Down Payment Requirements

Perhaps the most significant benefits of an FHA loan is the 3.5 percent down payment requirement. Many conventional programs require down payments ranging from 5 percent to as high as 20 percent.

As an example, if you are purchasing a $200,000 home, a private loan will require no less than 5 percent down, or $10,000. With an FHA loan, at 3.5 percent down, the down payment would be $7,000 for a $200,000 home.

Each home buyer has a unique set of circumstances that impacts the type of loan that will be best. Make sure you work with a local lender that spends the time to educate you so you are able to choose the best loan for your situation.

Exterior image of a beautiful home

Tips for Buyers in a Seller’s Market

Don’t let your dream home slip through your fingers. A solid pre-approval letter will give you a leg up.

Getting preapproved and having a dependable, air-tight written pre-approval from a respectable lender could never be more important than it is today.

In what is called “a seller’s market” multiple offers are being made days and sometimes hours after a property is listed on the market. We have seen purchase agreements that are tens of thousands of dollars more than list price.

This seller’s market has created some unique challenges that serious buyers need to be prepared for.

1. Standing out among the crowd. Anytime you have a competitive situation, you want your offer to stand out among all the others. The best way to do this is to submit your pre-approval letter with the offer. At a minimum, the pre-approval letter should tell the seller that the lender has reviewed your credit, income and assets.

2. Seller concessions. For a long time, seller concessions (i.e. a clause where the seller contributes to the buyers closing costs and prepaid costs) have been common place. However, in this market, sellers are getting more reluctant to except those terms. Aside from this reducing the net proceeds to the seller, sellers understand that many appraisals are not coming in at the contract price. Until comparable sales catch up with the market, this may prove to be an issue.

3. Large earnest money deposit. Another attractive strategy for buyers is to put down a large earnest money deposit. This says to the seller that you are serious about their house and are willing to put money on the table. If The buyer decides to walk away from this agreement, they would lose those funds. I have also recently seen buyers agree to have an earnest money deposit being non-refundable for any reason if buyer does not obtain financing.

4. Quick close date. Buyers are offering to close their transaction faster than other offers. This is attractive to a seller that is trying to purchase another property. Unfortunately, those promises are dependent on more than just the lender. To get from start to finish on a closing, there must be cooperation from appraisers, title companies, realtors, borrowers, sellers, as well as the lender. Nevertheless, in this market it has never been more important to have a lender that has all of their ducks in a row so that the buyer can get to the closing table as quickly as possible.

5. The added phone call. For many of my clients, I will personally call the listing agent after I send a pre-approval letter to let them know that this buyer is good to go. It’s amazing how far that will go to get your offer excepted.

6. Out of town or unknown lender. I’ve heard multiple realtors tell me that they do not except pre-approval letters from lenders they are not familiar with. Right or wrong, this is an important reason to get approved from a local reputable lender.

In a market where your pre-approval is more important than ever, it is imperative that borrowers connect early and thoroughly with the right lender. We’re here to help!

The Do List

The Do’s and Don’ts of Buying a Home

Are you thinking about buying a home but have no idea where to start or what to do? You aren’t alone.

First time home buyers are often bombarded with conflicting information regarding the home buying process, depending on who they are talking to.

The process is simple, given the right advice from the right professionals.

It is important to sit down with a trusted advisor that’s willing to educate you along the way. Have your loan officer analyze your spending habits and your budget so that you can make the best decisions for your unique situation.

At Michigan Mortgage, we created a list of the Dos and Don’ts related to the home buying process to help better navigate you through this exciting time. Our goal is to make your experience as smooth and painless as possible.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Last but not least, don’t sign anything you don’t understand or don’t feel comfortable with. Ask questions and expect answers. If you don’t understand, ask for a better explanation.

It is your home and your journey. Don’t let someone else dictate your decisions. Working with the right professionals will ensure that this process is actually fun, as it should be!

Exterior image of a beautiful home

Focus on Your Mortgage First

Assuming that you are good to go on the mortgage front can be risky.

Unless you are an individual financing the transaction with cash, your mortgage will dictate the home shopping process itself.

Don’t put the cart before the horse.

Without a mortgage from a reputable and trusted lender, you may not get a house in today’s market. While shopping with a reputable realtor is important, make sure you allot the time and attention to your home loan first.

A new study from Fannie Mae revealed that there is a “lack of mortgage focus” out there and that lack of focus is more prevalent among low and moderate-income borrowers.

In about half of the cases in the Fannie Mae study found that lack of research and planning meant they didn’t qualify for a loan at all. Those people were forced to go back to the drawing board. Some were asked to improve their credit score and other needed to add to their savings to qualify.

We get it! The loan process – and the work it may take to get you approved for a mortgage – isn’t anything like the fun of going out shopping for a new home. Picking out a neighborhood, paint colors, kitchen counters are WAY more fun than looking at your credit, your savings and your current and past job situation. Analyzing the not-so-fun stuff is necessary to avoid being sorry when you can’t buy the house of your dreams.

Remember, wasted time can actually end in a higher mortgage rate, a potentially higher home price and the possibility of missing out on a house that you really, really want.

The time you put in upfront can reduce the overall amount of legwork through the process and will increase your chance of getting the right mortgage and the right house…the first time around.

Bidding War Infographic

Bidding War? A Local Lender May Be the Winning Ticket

In one of the most competitive housing markets in history, a local pre-approval is not only a good idea, it is a necessity in giving buyers a competitive edge when competing with other buyers for their dream home.

Home purchasers seeking to stand out in this competitive housing market should consider a mortgage based on the area in which they are making the offer.

“In a housing market where bidding wars are common, buyers who need financing can strengthen their offers by working with a locally based mortgage broker or loan officer,” said David Riemersma, Coldwell Banker Woodland Schmidt (Grand Haven, Michigan).

Listing agents want to work with buyers whose lenders know the local market and have a proven record of getting deals done. The listing agent’s job is to make sure that the offer on their client’s home will close, and in a timely manner. In markets such as West Michigan, where buyers frequently go up against multiple offers and all cash bids, confidence that a sale will happen can separate a winning bid from the rest.

Borrowers have many options on line, but listing agents caution that a small difference in rates isn’t the most decisive factor in choosing a lender.

“Ability to close is the single most important factor Realtors are looking for from borrowers in multiple offer situations, and a reputable, proven lender gives us the most assurance that we will close,” Riemersma said. “The lender has ‘skin in the game’ unlike a remote lender who has no relationship with the borrower or the community they are purchasing in. Reputation matters.”

Speed is another factor when sellers are fielding multiple offers. The seller will choose a buyer that can close quickly. In a fast-paced market, local lenders have their processes in place to work quickly in a competitive market place unlike many outside, or online lenders.

A 30-45-day closing is often going to be beat by a shorter closing time table, provided by an experienced local Mortgage broker.

“When I see a preapproval from out of town, or from an online lender, a red flag goes up,” said Jeff Grysen, At Home Realty (Grand Haven, Michigan).

Finally, working with a mortgage lender who has an existing relationship with the buyer’s agent brings a level of personal contact, providing prompt answers to questions.

“You can call the lender on the weekend or send a text at 9:30 at night and get an answer, which is huge in this market.” Grysen said.

Online or out of town lenders often times are too slow to respond in a fast-paced market, causing a buyer to lose out and have to start from scratch.