Posts Tagged ‘refinance’

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.

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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.

Ever wonder why you need an Appraisal for your Refinance Loan?

May 6, 2010

It is known that when you purchase a home you will have an appraisal conducted to determine the value.  More specifically an appraiser analyzes the value of your home and property compared to surrounding homes of similar size and style that have sold in the past 6 months.  So why is another appraisal required when you are refinancing your home?

The end result of the appraisal report is a dollar value that is used to determine the maximum amount a lender is willing to loan you.  A refinance pays off your existing home loan and establishes a new loan.  Criteria used to establish a loan for a purchase are much the same for establishing a refinance loan.  Therefore the value of your home and property needs to be confirmed.

Also consider that in the time you have owned your home so far, you have most likely made some changes.  Those changes can add value to your home and property.  Market conditions can also affect your home’s worth.  Are housing prices increasing or decreasing?  An appraisal done for a refinance loan will let you know the amount of equity you now have in the home.  The point is, anytime a loan is established the value of the collateral involved must be determined.

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.

What Can I Afford?

March 31, 2010

So you have decided that now is the time for you to buy a house.  Perhaps you’ve done some research on what area of town you would like to live, how many bedrooms you’d like, style of home, and other items that are essentials or mere wishes.  But have determined what you can afford?  If you have a monthly payment in mind, is this realistic for your budget?  How do you even determine this?

Calculating this mystical figure is really a simple mathematical equation – no smoke and mirrors.  Let’s start from the lender’s perspective.  They are looking at the percentage of income that your existing debt and future home loan will consume.  The idea is to make sure your new home loan payments do not overwhelm your monthly budget. 

Using industry averages, start by taking your total monthly income and multiplying by 38% (.38).  The answer represents the ideal amount of your new mortgage payment and total debts.  (Debts include installment loans like car payments and revolving debt like credit cards.) 

For example;  If you earn $42,000 a year, your monthly income is $3,500.  ($42,000/12 months = $3,500)

$3,500 x .38 = $1,330

$1,330 is the combined total of current monthly debt and projected house payment.

Take this number ($1,330 in this example) and subtract your total debt.  The answer is the targeted maximum amount of your new home loan payment.  Keep in mind this number reflects the principal payment, interest payment, taxes and home owners insurance.  If you are not using an escrow account for your taxes and insurance, this targeted amount should be lower.

Here’s another way to look at this.  Let’s calculate just a total monthly payment by taking your total monthly income and multiply by 28% (.28).  This again is an industry average where a range of 25 – 30% is the target. 

Using the same numbers as the example above; $3,500 x .28 = $980.  Again this answer represents a principal payment, interest payment, taxes and home owners insurance.

How about another perspective?  What you qualify for, may not represent what you can realistically afford.  Does either of these amounts you just calculated seem realistic for your budget and comfort level?  Depending on your approach to personal finances, this may seem high.  If you currently have a high debt load, this amount may be surprisingly low.  Nothing could be worse than to have the joy of new home squashed by discovering you are now “home rich” but “cash poor”.  

Qualifying amounts should be used as guidelines and not absolute rules.  Consider other factors that contribute to your monthly budget.  How many kids do you have?  Will any of them need braces, require extra medical care or want to go to college someday?  Do you like to travel, try new restaurants or attend sporting events?  Are you adventurous and want to get the “project” home that becomes truly your own? 

When considering what home to buy, also consider that you are committing to a loan that extends over a lengthy period of time.  Thirty (even fifteen) years are a large portion of your life, during which “life” is going to happen.  Be prepared for those occurrences by not over extending yourself with a mortgage payment that keeps you awake at night.

Our intent is to provide some guidance in helping you determine what monthly payment you can undertake based on your particular budget and needs.  If you would like to take this a step further to determine how much house you can afford with these payments, give us a call.  Our business is based on working for you and your long-term goals.  We also have a number of different calculator options on our website to help you make informed decisions when purchasing or refinancing your home.

What’s the Difference? (Part 3)

January 8, 2010

(Part 3 of 3 posts on terminology that can often create confusion)

What’s the difference between an “inspection” and an “appraisal”?

These terms can often get confused because they happen relatively close together in the loan process and because, at first glance, they seem to cover the same thing.  Obviously they are different (or this wouldn’t have been a topic of a blog) in what the purpose of each one is and even in when each is used.

An inspection is used for a home purchase and usually takes place shortly after the purchase agreement has been signed.  The intent is to allow the buyer to closely ‘inspect’ all areas of the home for quality and/or potential problems.  In many cases your purchase offer can be dependant upon your satisfaction with the results of the inspection.  Therefore, an inspection is usually required to happen within 7-10 days of the purchase offer being accepted by the seller.

A state licensed inspector will carefully review all areas of your home including the plumbing, electrical and heating/cooling systems; roof, windows and foundation; drainage of the property; and even potential pest problems.    Even though you will be issued a complete written report of the findings, it is a good idea to tag along and learn the in and outs of your new home.  While not required, home inspections are now strongly recommended.  (A side note here.  Despite inspections not being mandatory, make sure that any inspector you do use is actually licensed by the state.  Oddly enough, not all of them are.)

An appraisal is a review of your home that analyzes the value of your home and property compared to surrounding homes of similar size and style that have sold in the past 6 months.  The end result is a dollar value used to determine your maximum home loan amount.  Appraisals are now completed on all home loan transactions including refinance loans.

So in review, an inspection critiques the quality and safety of your home; an appraisal judges the value of your home compared to those in the neighborhood.

Hopefully you found all three of these posts helpful to you.  In case you missed one, here they are again:

Part 1 – What’s the difference between a pre-qualification and a pre-approval?

Part 2 – What’s the difference between a closing cost and a prepaid expense?

If you have specific questions relating to home loans, the mortgage industry or maybe just a thought, leave us a comment.  We’d love to hear from you.

What’s the Difference? (Part 1)

December 31, 2009

(Part 1 of 3 posts on terminology that can often create confusion)

Don’t you just hate it when someone you are talking with starts throwing words around that you don’t fully understand?  We certainly don’t want that!  It is important that anyone involved in the purchase or refinance of a home understand the terminology used.  Especially when you consider this information involves not only your personal finances, but also something with high emotional ties – your home.

This series of posts will compare two similar terms but with very different meanings and implications that are used throughout the mortgage process.  This information will hopefully be valuable and not just industry jargon to pepper your conversation.  But either way, we thought you might want to know.

Part 1 – What’s the difference between a “pre-qualification” and a “pre-approval”?

Regardless of which term you are referring to, both words describe a lender’s review of your personal information in order to secure a home loan.  The process is typically used when a borrower is preparing to purchase a home.  (Incidentally, it is highly advised to take this step before you shop for a home, rather than shopping for a loan after you find your dream home.)

The significant differences are:  the amount of effort a lender puts into helping you determine how much house you can afford; and in how much documentation you provide a lender.  A pre-qualification means you have had a casual conversation with a lender and have verbally discussed your financial situation for purchasing a home.  You will only talk about your credit, income and possibly size of down payment.  You are given an opinion of your ability to secure a loan based on a hypothetical situation.

A pre-approval means you have provided actual documentation to verify your income and assets, have had a full credit report run, have discussed various loan options available and have a good idea of how much house you can afford.  You will also know how your home may be financed and what the payments can look like.  In a word, you are an informed buyer.

Gaining a pre-approval has significant advantages to both the buyer and to the seller.  As a buyer you know how to shop, can make an offer with a high degree of confidence and know that you have financing lined up.  Taking this simple step also gives you huge bargaining power over a pre-qualified buyer since your offer is more financially sound.  As a seller you know a pre-approved buyer is serious, prepared to make you a quality offer and you don’t have to worry if the deal is going to fall through.

If you are considering purchasing a home, call one of our Home Loan Specialists today (866-98-AWARE) and let us help you with a pre-approval so you can shop with confidence to purchase your dream home.

Coming soon – Part 2 – What’s the difference between a “pre-paid expense” and a “closing cost”?

The Power of Suggestion

December 13, 2009

“We just wanted to write and say, ‘thank you’ for all
your hard work in helping us buy our new home.  We are
so excited about our new life together in our new home.”
– The Wilson’s

Everyone knows how powerful a word can be.  Yes, as the saying goes, at times talk is cheap.  But the impact behind those suggestions and ideas from another can be invaluable.  Where we go, what we wear, and how we act, are often influenced by the suggestion of another.  Add to the equation, the variable of that suggestion coming from someone like yourself – someone you trust – and you have a mighty force to contend with.

This is why the feedback we receive from our clients is treated like gold.  We can tell you we are a trustworthy company, but having that recommendation come from someone who has gone through the process is more meaningful.  It has the “wow” factor that actually carries some weight.

 “Thank you so much for all of your help throughout this entire process!  You have been so helpful and I appreciate you so much!”
– Margie

If you have shared your experience with Awareness Home Funding with us and others, thank you.  If not, why not now? We invite you to post your own thoughts on our company, our staff or on the service we provide.  Our goal is to continually develop a life long friendship.

“Thank you for all your hard work with my loan application.  If I hear of anyone looking for financing I’ll send them your way.”
-Maria