Posts Tagged ‘home loan’

Tales of a Home Buyer – part 5

June 7, 2011

Written by Shawn DeVries

My Loan Officer now took my file (all 7,000 pages at this point) and submitted it to the underwriter for them to review and verify.  I was feeling a little more confident at this point that the loan would go through smoothly.  However, the first part of this process is not just for the underwriter to approve the loan, but to also to gather more information (called conditions) if needed to support their decision.  It’s kind of like the kid on the playground who says, “Oh yeah? Prove it!” when you say you can do a handstand or something else you can no longer do at age 39.  (There’s a whole other story there.  Don’t ask.)

I am happy to report; my loan was approved by the underwriter with minimal conditions.  Those were submitted and my Loan Officer and Title Agent were soon given the all clear sign to get the final documents ready for the closing.  If you think the papers you signed for your application were excessive, you haven’t seen anything yet.  Some of the documents are the same ones you signed for the application.  You get the privilege of signing those again.  Others are new forms that detail your loan and how you will repay it.  Then there are others that give you important information about the whole transaction, and then even more that verify you were given that information.  As you may have guessed, there were a couple politicians and lawyers involved in determining the process for buying (or even refinancing) a home.  I highly suggest a big breakfast before and a hand massage after the closing.

The day of my closing seemed to never come.  The dream of owning my own home was finally here after almost 3 years of planning and hard work.  The moment the keys to the front door were placed into my hand was, as they say, priceless.  Owning a home is not just the purchase of piece of property.  A home is where you raise a family, share memories, retreat from the world.  It is an investment unlike any other.  Stocks and bonds can never hold the emotional ties that a house does.  A home is not just brick and mortar; it is a part of who you are.

We, at Awareness Home Funding, have always said we had one of the best careers there is.  It is a high honor to help someone with the most significant transaction in their lives.  We’ve been through the process – not just as loan officers and processors, but as home owners ourselves.  We haven’t forgotten the feelings and emotions attached to the address.  I’ve shared my story, and you have (or will have) your own.  The point in sharing mine is that we understand, completely, and are here to help you with compassion and expertise.  We’d love to be a part of your unique story and happy ever ending.

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Tales of a Home Buyer – part 4

May 26, 2011

Written by Shawn DeVries

After getting the purchase agreement signed I again pulled the needed documents for my Loan Officer.  (Yes, all 4,000 pages because 3 months had passed and updated information was needed.  We really do understand what buyers are feeling.) My information was entered into that program again that analyzes the data and based on preset criteria makes a decision on whether or not to approve my loan.  This “little” program can really freak you out sometimes, and all for no apparent reason.  

Ironically the same feelings can occur when you are refinancing your home.  These transactions are big deals and are a significant portion of your personal financial status.  It is no surprise that a borrower will feel some angst that is in direct proportion to their emotional investment to the home.  Highly emotional people will be highly invested into the process.  (I would like to say at this point that in case you have not guessed, I am a passionate person.  My mom will probably describe me in other words, but let’s not get her anymore involved than she already is, okay?)  Fortunately, these results came back just fine too on my loan.   

The next part was to develop my case in order for my Loan Officer to submit my file to an underwriter.  At this point in the home buying process your lender has gotten to know you fairly well.  They understand your financial situation and know what your goals and dreams are.  At least your lender should want this home for you as badly as you do.  If not, find out why.  The underwriter however does not know you.  All they have in front of them are numbers to compare and analyze.  The documents you submit need to tell your story for you.  Share what you need to support their decision so they see you as a low credit risk. 

Shortly after my offer was accepted and the paperwork fun began, I had a full inspection of the home done.  I was relieved to know there were no major issues to resolve or problems to fix.  For a home that was over 45 years old it was in amazing condition.  Getting an inspection is a crucial step in buying a home.  You want an expert without emotional ties to give you an unbiased opinion of what you are buying.  Follow them on the inspection.  Look at what they are looking at, poke where they poke and ask lots of questions.  A good inspector will tell you what needs attention and what is good with the house.  They should be able to also tell you how serious an issue is.  Telling you your furnace is getting old isn’t very helpful.  Letting you know the average life expectancy of a furnace and verifying the age of your unit is helpful.  Letting you know where your unit is beginning to show signs of wear is also beneficial.  Take good notes while on the inspection, but also get their findings and recommendations in writing.

Title work is another major piece in the process.  The title agent confirms that there are no liens against the property that would prevent the house from being sold.  It also confirms who the rightful owner(s) currently is (are), that property taxes are current, and prepares the paperwork so that there is a smooth transfer of ownership (among many other steps).  Title agents are also a great partner to have when buying a home from a trust (like I did), out of a foreclosure or short sale or any other transaction that may involve a bit more documentation.

The third significant step that happens at this point is having your home appraised.  Your lender wants to know the true market value of the home you are buying.  This doesn’t mean they are checking on how well you negotiated and if you got a good deal.  They are looking to protect their investment in you.  This house will be the collateral on the loan.  A lender does not want to lend more than what the property is worth.

After a slow start in finding my dream home, the loan process went very smoothly.  Supporting financial documents?  Check.  Good inspection?  Check.  Appropriately appraised home?  Check.  Title clear and without liens?  Check and check again.

Tales of a Home Buyer – part 1

May 11, 2011

Written by Shawn DeVries

Let me start by saying that this was not my first time.  Not only have I purchased a home before, but I have obviously been on the selling side of the process.  I have experienced a refinance and even rented for a period in my life.  I now work in the lending industry and know the process of buying a home and what to expect.  Yet, I still experienced the same stress, fear, anxiety, worry, excitement, joy, anticipation and ultimate relief that every other home buyer and owner experiences when going through this process.  My emotional range may have something to do with me doing this as a single buyer this time, but I felt it all just the same.

If you are considering purchasing a home, you may wonder just what this journey is all about.  I thought you might like to know.  If you fully understand this process please don’t disregard this series, for I know you will find warm memories and at the very least some great humor as I relate my story to you.

My story really begins nearly three years ago.  After a divorce I relocated back home to start my life over again.  Let me set the stage very clearly by adding that “moving home” was taken quite literally by moving back into my parent’s house.  Oh yeah, I did it.  God bless my parents, for despite their honest intentions and good will, I really don’t think either of us knew what this would all entail.  Most of my belongings were packed into storage with the remaining pieces finding basement corners and emptied closets.  I was prepared for this journey to start over to take some time, but not quite this much time.  Let the fun begin.  Oh, did I mention I have two children in tow?  (I told you my story would have humor.  Ha!)

Fast forward now through the past three years as I find a new career, pay off debt, and save some money all in preparation of buying my own home.  When January of this year finally came, I was ready to go home shopping!  I thought this day would never come.  I knew to take care of my credit over this time and felt it was in great shape.  I had money set aside for the down payment, plus some for reserves.  I had crunched the numbers and knew not only what I could afford, but what I wanted to afford.  Yes, I am a little anal about details sometimes, but I was preparing to buy a home and I wanted no surprises.

Knowing that the first step in buying a home is to get pre-approved I started by gathering my documents (yes all seemingly 4,000 of them) and verifying the information (just short of the blood work) for my Loan Officer as he prepared to pull my credit report.  Despite having a good clue of what to expect, that 15 seconds between him hitting “submit” and seeing the actual report can feel like eternity.  What are my scores?  Did I really behave?  Will that oops from 5 years ago show up now?  What surprises will he find?  Oh please, oh please let my score be above that golden 640 so that I can shop for a house.  See?  Even people who work for lenders have real emotions and understand the angst our clients endure.

Well the report appeared.  Great scores, good behavior paid off, no glaring marks, no surprises, and above the benchmark score needed.  Whew!  My information was then entered into a program that analyzes the data and based on preset criteria makes a decision on whether or not I could be approved for a loan.  However to the borrower the answers feel like: go away you are only kidding yourself; we had better have someone else take a look at this because we’re not so sure; or yeah, we can do that… provided nothing weird happens.  I was relieved to learn that my information was approved.  My pre-approval was then written and off I went to find my house.  This would be a snap.

What is an APR and What did it do to my Rate?

March 10, 2011

After discussing some options and various programs with your Loan Officer you reach a plan that works for your situation.  You are satisfied with your interest rate and then you are handed that one piece of paper that shows in large, bold-faced type a number that is not what you recall discussing and the words, “Annual Percentage Rate” next to it.  Where did this number come from?  Did my interest rate change?  What will this do to my payment?

If you know nothing else about home loans and borrowing money, you understand that there is a cost associated with the money you are borrowing, specifically your interest rate.  However when presented with a new percentage and the words Annual Percentage Rate (or APR) next to it, you are left with more questions than answers.  Let us explain.

The interest rate is the cost percentage used to calculate your monthly payment.  However, there are other fees and charges associated with the set-up and origination of a loan.  The APR takes these fees and charges into account and provides the consumer with an effective rate (or total cost) of their loan expressed as a percentage.  The intent of the APR is for consumers to be able to compare competing lenders and various loan programs.

Lenders are required by law to disclose the APR to the borrower within 3 days of applying for a mortgage loan. In late 2008 further regulations were passed (effective in 2010) stating that if the APR changed by more than .125% from this initial disclosure on the Good Faith Estimate (GFE), the lender must re-disclose this information to borrower and wait another three business days before closing the loan.

The APR does not change your interest rate; rather it clarifies the true cost of your loan.  It generally includes points, origination fees, mortgage insurance and document prep fees.  It is not however, how your payments are calculated.  Your payments are still based on the interest rate you discussed with your loan officer.  We hope this helps.

Gaining Perspective

February 9, 2011


There are times when you need to view something from a different angle to better understand it.  We tilt our heads when appreciating abstract art.  We walk around a new car to take in all the lines.  We step back when we place an arrangement on the table.  Changing the view gives us new perspective in order to better understand what we are looking at.

 

The same can be said when looking at factors and indicators of the economy, housing sector and interest rates.  We have all heard that interest rates are at historic lows, but just how low is that?  Did you miss out on this recent refinance boom?  Is this refinance boom even over?  Just where are rates right now anyway?

 

Interest rates have been tracked and recorded for the past 39 years.  In that time if there has been one constant, it would be change.  Consider these facts on 30-year fixed rate loans:

 

  • The average interest rate from one month to another has only held unchanged 14 times in 39 years.
  • Interest rates have dropped 2.69 points from 1972 when the average rate was 7.38% to 2010 where rates ended at 4.69% on average.
  • Over the past 39 years interest rates climbed as high as 11.07 points above the yearly average of 1972.
  • Interest rates have dropped as much as 14.22 points since their highest in October of 1981 when that single month boasted rates at 18.45%.
  • The highest yearly average interest rates occurred in 1981 at 16.63%.
  • The lowest rates on record happened last year in 2010 at just 4.69%.
  • Over 39 years the average interest rate was 8.92%, almost double 2010’s yearly average.

So yes, we really are at historically low interest rates!  Yes, this is still a fantastic time to review your current home loan to see if refinancing makes sense for you!  No, you most definitely have not missed out on these low rates!  And yes, it is a fantastic time to buy a home.  Not a bad view from that perspective.  Give us a call to review your current loan or to help you with a pre-approval for your new home.

Repair Escrows – a nice solution

December 8, 2010

What is a repair escrow and why would you need one?

When purchasing a home there are certain expectations and requirements for living conditions that must be met.  Most of these requirements address the overall health and safety of the home.  Different loan programs have different standards.  For example, homes purchased through an FHA or Rural Development program require that any and all health and safety repairs be completed prior to closing on the home.  If you are purchasing a home from a private party this can usually be negotiated, scheduled and resolved before the closing date. 

However, making repairs before the closing date can sometimes create a challenge.  For example, repairing brick work on a home can be a bit of a challenge with a foot of snow on the ground.  A repair escrow can easily resolve this challenge; and most lenders offer this option. 

However, a larger challenge can occur with the purchase of a foreclosure home.  With a foreclosure sale the seller is an institution who most likely has never seen the property.  For liability reasons, the seller does not allow access to the property for repairs to be completed prior to closing.  Plus you may not want to make repairs on a home you do not own yet.  Awareness Home Funding is a unique lender that offers you a repair escrow in this situation also.

A repair escrow is a temporary account with funds specifically set aside to pay for any required repairs that a licensed inspector has deemed necessary, and that must be completed within a certain timeframe.

How does it work?

When an appraisal is done on a home, the appraiser will include repairs that will need to be corrected.  Since the appraiser is not an inspector, he may require an inspection be done for certain areas, i.e., roof, electrical, etc.  The inspector will give a detailed report of the problem(s) that will need to be corrected.

Once you have this list of repairs, 2-3 quotes from a licensed contractor must be obtained for each area of expertise (mechanical, electrical, plumbing, general contracting).  The estimated cost of the repairs will determine the amount needed to set up your repair escrow.

An agreement will be drafted to be signed at close.  Funds for the repair escrow will be part of your cash-to-close.  Repairs must be completed within 30 days from your closing date, unless otherwise noted in the agreement.

What happens next?

After you have closed on your home the next step is to start on the repairs.  There may be repairs that are minimal that you can correct yourself, such as scraping and painting, replacing outlet covers, etc.  Please note:  any repairs that do not pass re-inspection will have to be repaired again, which can cost you more money.  It is always best to hire a licensed professional for any repairs that you are not completely familiar with and know how to handle.

Once all the repairs have been completed, contact your Home Loan Specialist at Awareness Home Funding.  We will request a re-inspection of the work required.  You will need to submit any invoices that are to be paid, which will be forwarded to Polaris Home Funding for payment.  Once Polaris has received the approved re-inspection report, invoices will be paid within three to five business days.  Any funds left over from the repair escrow account will be returned.

Additional Factors

  • There is a maximum limit on repairs of $5,000.
  • Individual bids or a combination of bids for different repairs totaling more than $5,000 are considered major structural and must be completed prior to the closing of the loan.
  • Roof “repair” is acceptable, but roof “replacement” is considered major structural and will not be allowed.

 If you have additional questions on repair escrows or any other home loan question, please contact us at Awareness Home Funding.  We are here to help you.

A Doctor, A Loan Originator & a Client…

November 17, 2010

What do a doctor and a mortgage loan originator have in common?  No, this isn’t some riddle solved by a humorous response, this is a serious question. 

We have grown accustomed to asking for referrals when it comes to our medical professionals.  Whom we choose to trust with our medical welfare and that of our families often receives rather intense scrutiny.  We may start with a referral from a trusted source, but we often keep going with some research into patient comments, legal challenges and valid licensing.  All of these are good steps to take when you need to trust someone else with help in managing your health.

Yet, how much time do we spend investigating the person who will be helping us with perhaps the single most important transaction in our lives – the purchase of a home (not to mention a refinance)?  Some consumers will hold due diligence in this matter, but more often than not we are swayed by the suggestion of advertisements.  Now don’t get us wrong, marketing has a specific use and place.  But when you need to provide someone with a significant amount of personal and financial information, shouldn’t you do a little checking first?

Let’s go back to the initial question of what a doctor and mortgage loan officer have in common.  Doctors have long since taken the Hippocratic oath upon receiving their degrees.  Believed to have been originally written by Hippocrates, a doctor recites this oath promising to uphold and respect the profession they are entering, the assumed authority given and for the people they will help.  Doctors promise to be accountable for their actions and to maintain an air of humility in a continuing desire to teach and be teachable.  A physician also promises to act in the best interest of their patients by doing what is best for the patient, guarding their privacy and understanding there is more involved than just the specific medical situation at hand.  In a matter of speaking, Mortgage loan originators now have the same set of standards too.

The SAFE Act of 2008 (Secure And Fair Enforcement for Mortgage Licensing Act of 2008) was developed “in order to increase uniformity, reduce regulatory burden, enhance consumer protection and reduce fraud”.  All of the items mentioned above that a doctor adheres to in the Hippocratic Oath can also be said of reputable mortgage loan originators.  Through the National Mortgage Licensing System (NMLS) uniform license applications, requirements and testing have been put into place.  This is actually an advantageous move for loan originators and consumers alike.  In the same way that you can confirm information about your doctor through state Department of Community Health websites, information about your loan originator can be confirmed through the National Mortgage Licensing System and Registry website.

Does your mortgage loan originator respect their profession and the authority they have been given? 

Does your mortgage loan originator respect you?

Is your mortgage loan originator accountable for their actions?

Are they trustworthy and reliable?

Does your mortgage loan originator have a teachable spirit – both to help you understand your loan and to learn more themselves?

Does your mortgage loan originator act in your best interest?

Does your mortgage loan originator respect the confidentiality of your personal information?

Does your mortgage loan originator understand your personal goals and that you are much more that just a set of figures?

They should.  Expect more, and use a mortgage loan originator who is committed to working for you.

We Should Talk

October 19, 2010

Unless you have been living under a rock for the past 18 months you know that interest rates on home loans have been at historically low levels.  The bad news is that you also know the effects the market has had on the value of your home.  Many homeowners feel they have few options available.  How can you refinance your home to take advantage of these great rates when your home’s value is less than before?  Well before you decide that living under a rock now sounds appealing, we should talk.

If you have taken care of your credit by paying your bills on time, watching your credit card balances and not overextending yourself there are options.  No, these are not crazy loan programs set to self-destruct in 3 years time.  We are Awareness Home Funding, we only offer solid loan programs that actually make sense and benefit you.  These are programs with exactly you in mind – designed to reward you for your efforts and good behavior.

We have programs to refinance Conventional, FHA and RD loans that allow borrowers to take advantage of the historically low interest rates without the need for a new appraisal of your home to be completed.

Here are the basics:

  • You need to live in the home you are refinancing. 
  • This cannot be a second home or an investment property.
  • You need to be current on your mortgage right now.
  • Your personal credit needs to be in good shape.  (We can help you get a complete credit report and score at no charge.)

If this sounds like you, we should talk.  We can help you determine the specific qualifications so you can make an informed decision without pressure, confusion or cost. 

Call us today at 866-982-9273.

Pam Teachout

August 26, 2010

We would like to introduce you to another member of the Awareness Home Funding Team, Pam Teachout.  Pam is one of our Home Loan Specialists who not only helps clients with their home loans but also makes sure all your questions are answered.  Pam wanted to share her thoughts on our company and approach to customer service.

OK…I want to say something about Awareness. 

I have worked many places over the “decades” of my life….and this is one of the best companies I have worked for in terms of “doing what’s right” for the customer.  We are expected and encouraged to go the extra mile for the client.  How refreshing is that?  So many businesses today, in order to survive, have to meet “the quota”, and cut corners to get there.  That is not the philosophy here at Awareness Home Funding.  We know if we do the right thing, the business will come to us. 

Are you unable to refinance or purchase a home because life has thrown you a financial curve? What if your credit is too low and you do not qualify for a home loan?  Well, we will help you understand what you need to do to make your credit healthy again, and give you a path to get there.  We spend time with you.  We help you where it hurts.  When you are ready, and we will keep checking on your status, we do hope we can provide you with that home loan.   

Although we are a business that like all businesses needs to make money; we don’t throw you out with the bath water if you are not ready or decide not to get a home loan.  We’ll check on you later to see if your circumstances have changed.  We want to be your one stop-shopping FOR LIFE for all your mortgage needs. 

I am so proud to work for a company that TRULY has the client at heart.  Would you like to hear the icing on the cake?   Awareness Home Funding will donate $250 to the charity of the client’s choice!  How cool is that?   Personally, I have purchased and refinanced only with credit unions in the past.  I never realized there was a company out there like Awareness.  I just thought a lender would cost me more money and a credit union would not “take advantage” on one of its members.  While I do believe in what credit unions do care for their customers, they could NEVER spend the amount of time with a client the way that Awareness folks do.  They say either you are approved or not approved; that’s it.  For that matter, so do most banks and lending companies.  That is what sets us apart. 

I work for Harry Gribnitz.  And Harry, I do not mean to make you blush, but dang you are the influence that keeps this boat floating and makes me feel so good about coming to work everyday.  I get to help people get into their first home, or refinance to a lower interest rate!  But the best part is helping people “get there” if they have credit problems.  That is SO satisfying. 

It’s Baaack! (In a Good Way!!)

June 2, 2010

This past February we posted information on Rural Development (RD) home loans – what it is, how it works, why this is such a great program.  Interest in this program has really grown over the past few years because it is so consumer friendly.  We too have seen a steady increase in RD loans.  Our company continues to underwrite more RD loans than any other lender in the state of Michigan.

Unfortunately, by April of this year funding for the program had already been exhausted for the fiscal year that runs October 1 – September 30.  Kevin Smith, Area Director for Rural Development explained that, “Record demand, not only in Michigan but nationally, for the Guaranteed Rural Housing loan program lead to the full utilization of Congressionally appropriated funding at an early time frame this fiscal year.”

While more federal dollars have not be allocated yet, the US Department of Agriculture Rural Development has decided to continue the program again for the remainder of this fiscal year by issuing conditional commitments again.  What this means is that lenders can conditionally approve and close RD loans. 

The original article we posted on this loan program follows.  Of course you can always contact us directly to for more information (866-982-9823) too.

RD Loans – A Great Option to Consider

An RD loan is a Rural Development home loan offered by the Rural Housing Service specifically for moderate to lower income residents buying homes in rural areas.  A rural area is defined as a community with a population of 10,000 residents or less.  Although some communities located outside of a metropolitan statistical area can qualify with populations up to 20,000 residents. 

In plain English this means if you would like to purchase a home in an area that is not a large city there is a program available.  For most, when you initially think of what a rural area is you might envision acres of farmland or large acreage properties where your neighbor is a mile away.  Not so.  In many instances rural areas are just outside of major cities.  In fact in the state of Michigan, more areas qualify for rural status than areas that do not.  Many of these areas are cozy suburban towns with close knit neighborhoods and strong local schools. 

Another point to note is that the RD loan program cannot be used to purchase or refinance farms or large acre properties where the land far out values the home.  This is a program for consumers who meet the typical credit requirements of obtaining a home loan.  They are just in a slightly lower income bracket and do not have enough funds on hand for a 20%+ down payment.  If this isn’t a program that helps the “little guy” I don’t know what does!  The largest advantage of RD loans is that they currently remain one of the last true “zero down” home loan options.  (VA loans are the other zero down payment option.)

The basic guidelines for an RD loan include:

  • Loans may be used to purchase a single-family, primary residence.
  • On a refinance, the existing loan must already be an RD loan.
  • A borrower must lack sufficient resources to provide a down payment for a conventional loan (typically 20-25% of the purchase price).
  • The RD loan allows a borrower to finance up to 100% of the appraised value of the home without requiring private mortgage insurance. 
  • A one time funding fee is charged and may be financed as part of the loan.  (For purchases, 2% of the loan amount is charged.  On refinances, the fee is .5% of the loan amount.  See you Home Loan Specialist for specific details.)
  • The property must be located in a designated rural area, have all-weather street access, and have approved water and waste systems.
  • The value of the site may not exceed 30% of the total appraised property value.
  • Sellers may contribute up to 6% of the purchase price toward closing costs and pre-paids.
  • Gift funds are allowed.  (Consult a Home Loan Specialist for specific criteria.)
  • Currently, only above ground pools are allowed with RD loans.
  • The property may not be active farmland.

With comparable interest rates, high LTV (loan to value) allowance and no monthly mortgage insurance, RD loans provide a great option to home buyers who may have thought they could not qualify for a home loan.  Talk with one of our Home Loan Specialists (866-982-9823) about the specific details and how this program can work for you.