Posts Tagged ‘purchase’

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.

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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.

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. 

Not all Bones are Worth Barking at

July 13, 2010

The Home Buyer’s Tax Credit program has not only received much attention, but also much success among buyers who were able to take advantage of the incentive to receive up to $8,000 in tax credits.  The program was so successful that it was granted two extensions.  The first extension happened this past winter allowing more time and more buyers to get in on the action.  And thousands did!  The second extension was signed into action just 11 days ago by President Obama.  This second extension moves the deadline to close on these home loans from June 30 to September 30, 2010. 

While this may sound good on paper, did it even help anyone?  Were home buyers just thrown the proverbial dog bone?  The second extension affects home loans for purchase agreements that were finalized by April 30 of this year.  That means these contracts are now over 60 days old with most written to close within that time frame.  If a buyer takes another 90 days to close on their home loan, it will have taken 5 months to close their loan!  Are sellers even willing to wait that long to close on the sale of their home?  What affect with that long of a wait have on a sellers next purchase?

Perhaps the underlying question is why didn’t the home loan close in the first place?  You can make the argument that with all the home buyers flooding the market, lenders, appraisers, title companies, etc were suddenly backlogged with so much business they could not possibly keep up.  For some this is probably true, but is the extension too late?  Remember that the extension only changes the closing date.  The binding purchase contract still needs to be dated on or before April 30, 2010.  If the contract was written to close by June 30, 2010 and it did not, that contract is now void.  A written addendum to change the closing date changes the purchase agreement and while the buyer and seller may agree, it also means a final binding agreement was not in place by April 30.

The other challenge we have heard is that buyers were not properly qualified before they even made an offer on the home.  Unfortunately, many lenders only pre-qualify a borrower which means you have only verbally discussed your financial situation for purchasing a home.  A stronger case is when a borrower is pre-approved.  This means actual documentation on income, assets and debt load has been reviewed and verified.  Pre-approved borrowers have fewer surprises when their home loan is processed. (Awareness Home Funding always prepares our clients.)  Unfortunately, many home buyers wanting to take advantage of the Home Buyers Tax Credit are failing to close due to challenges that should have been addressed before they even began to shop for a new home.

The Home Buyers Tax Credit program was a good program that really worked, really helped buyers and really moved home sales.  This last extension just helps very few and was put into affect way too late.  But let’s not leave this post on a down note.  There is still a home buyer’s incentive program in place, one that has been there for some time – the Mortgage Credit Certificate (MCC) program.

The MCC program is a Federal tax credit on the mortgage interest you pay on your home loan over a calendar year.  While this does not reduce your monthly mortgage payment, it is a dollar for dollar reduction from the amount of your Federal Income Tax liability.  Not every state offers the MCC since it is state run and funded despite being a federal program.  However, for states that do, it effectively reduces your annual interest rate.  Awareness Home Funding is committed to using the MCC program wherever available in the states we are licensed to conduct business.

The main point is this, while the Home Buyers Tax Credit program has ended, help is available for home buyers.  Call us today (866-982-9273) to see how we can help you.

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.

First-time Home Buyers Still have Options

May 13, 2010

The home buyer’s tax credit program has ended.  While many were able to take advantage of the savings; we also know that many more did not.  Perhaps the timing of the program didn’t fit with your current financial picture.  Do you feel left out and like the opportunity to buy your dream home is gone for good?  While this particular program may be over, what if something else existed to help?  Wouldn’t you want to know?  Fortunately one does!

The Mortgage Credit Certificate (MCC) program is a Federal tax credit on the mortgage interest you pay on your home loan over a calendar year.  It effectively reduces the annual interest rate on your loan. 

This is not a limited life program or something offered for just a set period of time.  The MCC credit remains in effect for as long as your home continues to be your primary residence and the original mortgage loan remains in place.  Only if you refinance your home loan, sell your home or purchase a second home that becomes your primary residence, will the credit end.  Plus in select targeted areas you do not need to be a first-time home buyer to qualify.

Unfortunately this program is not offered in all states.  In the 5 states we currently do business only Michigan and Indiana offer the MCC program.  (This would be a great question to ask your state senators and representatives about if your state does not offer this program.)  Even more amazing though is that not all lenders participate in this program.  Awareness Home Funding does and will continue to do so for every state we conduct business in when available.   

If you are looking to purchase a home, now or in the future, ask us about the MCC program.  We are very familiar with how the program works and more importantly, how it can work for you.

What is a Buyer’s Agent?

May 4, 2010

There are two general types of agency involved with the purchase of a home, the listing agent and the selling agent.  The listing agent is the realtor who has listed the property as being for sale.  The selling agent is the realtor who actually sells the home to the buyer.  In both of these instances, the realtor is ultimately working to sell the home.  This is after all, how they make a living.  However, you can make one simple step to ensure a realtor is working for you the buyer.  Get a buyer’s agent.

A buyer’s agent is a realtor that works exclusively for the buyer.  But there they are also so much more than that.  Only members of the National Association of Realtors can claim the title of Realtor.  And only members of the Real Estate Buyers Agency Council can call themselves an ABR (Accredited Buyers Representative).  An ABR has gone through intensive, specialized training in the process of buying a home. These agents hold to a code of ethics that hold the professional to high standard of conduct.

Having an ABR buyer’s agent work for you can lower your risk of losing money throughout the buying process.  He or she will make recommendations that will assure that you are buying a home that is safe, environmentally sound and priced fairly according to the current marketplace. 

Don’t be surprised if you are asked to sign a contract of commitment for a set period of time to work exclusively with this particular ABR buyer’s agent.  This can actually be a very good thing.  A Realtor does not get paid until the sale of your home closes.  This means your agent is focused on helping you meet your goals, or they won’t get paid.  Now consider that Realtors have information on homes in the marketplace that you the buyer do not, such as the latest homes for sale and price changes.  As a committed client, you will have access to that information first. 

Once you find that dream home, you will want a professional on your side helping you negotiate the finer points of the transaction; handling the forms, contracts and paperwork that needs to be processed; and dealing with any challenges that come along the way.  Don’t let the purchase of your dream home turn into a nightmare.  Work with a professional, Accredited Buyers Representative.  You’ll be glad you did.

Prove It!

April 5, 2010

Remember those days on the school playground when one kid made some bold statement and another kid made that challenging accusation back, “Oh yeah?  Prove it!”  These days it seems no matter what you do, you need to prove what you say and who you are.  You go through the checkout at any store, pay for your purchase with a credit card or even debit card, and you are asked to show identification.  Are you really John Smith like your card says?  Prove it.  You call your utility company to ask a question on your monthly statement.  Are you really Jane Doe at the address you say?  Prove it.

Have we become a society of disbelievers that no longer trusts anything that anyone says anymore?  Unfortunately, yes.  The sad reality is that people lie and in order to protect ourselves, we ask that information provided be verified as authentic and true.

But since we also like to see the other side of the coin, this can be a good thing.  Suppose you have worked to gain expertise in a particular area, your degree and licensing can prove it.  Those pieces of paper give you authority and build trust with your clientele.  Or if you have been responsible with your finances and now have zero debt and funds to purchase that new home; your credit report and bank statements prove it.  Those written documents show you can be trusted and are a low credit risk.

When purchase or refinancing a home there is a long list of items you need to provide to your loan officer:  your social security number, date of birth, bank statements, employment information, income, etc.  What does all this personal data prove?  How are these pieces verified?

Your social security number helps identify who you are.  By comparing what you verbally say with your check stubs, credit report and tax records, not only is your identity proven, but any errors or identity theft by others against you can be found and corrected.

Bank statements not only show how much funds you have but also whether or not they are fully available to you.  They help prove you are ready with a down payment, you have full access to your accounts and that there is consistency in your monthly cash flow.

Employment and income are closely related.  In order to be able to afford your home, you need an income and that means you need a job.  Verifying your employment with your employer proves you have steady employment, what you are paid and how consistently overtime and bonuses occur.  The income you earn is used to determine if you can afford the new payments.  (Our last post addresses this topic.)  Reviewing pay stubs proves what you are paid and how often.  Your lender reviews these items (verification of employment and pay stubs) to determine the likelihood that your income will continue in order to prove you can afford your new payments.

In early conversations with your loan officer, the two of you may recognize you are well qualified and prepared for a new home loan (for either purchase or refinance), but the underwriter who approves the loan doesn’t know you.  Your loan officer works to develop a strong case in your favor to prove this loan is a good thing – for you and the lender. 

Proving it doesn’t have to be intimidating or negative.  We work for our clients to help them with the loan process.  Let us “prove it” to you.