The Do List

The Do’s and Don’ts of Buying a Home

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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

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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

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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.

Image of a family hanging up an American flag

Benefits of VA Loans in Michigan

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One amazing benefit for veterans and qualifying military is a VA loan. It’s amazing how many eligible VA borrows are not advised of this product when shopping for a loan. Many lenders do not provide a VA loan or do not have a working knowledge of the benefits this product offers them and their families.

A few benefits include:

1. Zero down. Purchasing a home with no out-of-pocket money can sometimes mean the difference of being able to buy now or having to wait. For some, a zero-down option is the only way that they can ever purchase a home if they are on a fixed income. For others it is a way they can save their money for home improvements or other investments. Regardless of the reason, the VA loan is one of the few loans that allows a zero-down option.

2. Truly $0 out of pocket. On a VA loan, the purchase agreements can be structured whereby the seller pays the closing and prepaid costs (setting up escrow). This allows for a truly zero out-of-pocket loan.

3. No monthly mortgage insurance. The VA loan does not require any monthly mortgage insurance (PMI). When compared to FHA or conventional loans, this can be $100-plus a month savings depending on the loan amount. While VA has a funding fee (which can be rolled into the loan), that fee is waived if the Vet is VA disabled at least 10 percent.

4. A lower credit score is allowed. There is, often times, a misunderstanding that VA loans are difficult to obtain. This is simply not the case. Because the borrower does not have to document cash to close and because the credit criteria is flexible with the VA, these loans tend to be easier to approve and often times are faster to close.

5. Additional incentives. Michigan Mortgage has created a program called Service Rewards whereby we and participating vendors give discounts for things like closing costs, realtor fees, title work and home inspections as a way to show our appreciation for their sacrifices and service!

To learn more about VA loans or our Service Rewards program, call one of our mortgage specialists today.

Image showing a graph being analyzed

What determines my mortgage interest rate?

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In the quest for a home, one of the first questions a borrower asks is: What is the interest ratee today?  The answer often times has to do more with the borrower then the lender. Surprised?

Here’s how borrowers can impact their interest rates.

  1. Credit Score: Lenders use your credit scores to predict how reliable you will be in repaying your loan and is the most significant variable in deciding your credit score. In general, consumers with a higher credit score receive a lower interest rate than those with buyers with lower credit scores. Mortgage rates vary considerably between credit scores of below 640 and above 740.
  2. Down Payment:  Because mortgage lenders see a lower level of risk when you have more stake in the property, a larger down payment can mean a lower interest rate. With 20 percent or more down, your interest rate will be lower. There are loans available with good interest rates that require PMI which is mortgage insurance to protect the lender in the event a borrower stops paying their loan.
  3. Loan Amount: Depending on the size of the loan, home buyers can pay higher interest rates on loans that are particularly high or low. The lender will have to adjust the rate due to the costs of a smaller loan and the risk factors that come with a large loan amount.
  4.  Loan Term or Duration: The term or duration is how long you to pay the loan back to the lender. Typically, shorter term loans have lower costs and interest rates, with higher monthly payments. Longer term loans will have monthly payments because they are spread out over a longer time period. Your Michigan Mortgage loan officer can analyze your unique situation to guide you to the best loan for you.
  5. Loan Type: There a number of loan types to choose from, all having different eligibility requirement.  Rates can vary significantly depending on what type of loan is chosen. The most common types of loans are known as conventional, VA, RD, and FHA loans. You can learn more about the different loan options by visiting our website at www.michmortgage.com.
  6. Home Location: Often times, lenders offer slightly different interest rates depending on the state they live in.  whether you are purchasing in a rural or urban area can also be a factor. So, it is important to talk to a local lender versus a national lender to get accurate rates.

There is no cookie cutter process to determine your interest rate. By understanding how your interest rates are determined will give you a better understanding of the best loan and interest rate for your unique situation. Michigan Mortgage’s highly knowledgeable loan officers can guide you to the very best loan for your needs.

Tips to improve your credit score

How to Improve Your Credit Score

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In today’s world, your credit score may be the most important number impacting your buying power. Can you purchase a home? Can you buy a car? Do you qualify for a credit card? Ask your credit score.

Whether you’re in the red or in the green, your credit score is key.

We sat down with our in-house credit expert, Loan Officer Jill Dobb, to talk more about credit scores and the impact they may have on your home-buying experience.

Michigan Mortgage: What elements of the home-buying process are affected by credit score?

Jill Dobb: Credit scores play a big role in all aspects of the home-buying process. First, it determines whether or not you qualify. It also determines the type of loan you qualify for and the interest rate associated with that loan. Your credit score will also determine if you qualify for a loan assistance program or are able to get a better rate on private mortgage insurance.

MM: If a customer is interested in working with us, what should be their target credit score?

JD: Typically, we like to see at least a 620 credit score for customers pursuing an FHA loan. We can be a little more flexible with a VA loan and service customers with a 600 score. We ask that our Conventional customers aim for a 680, but with a good mortgage history, we may be able to offer Conventional financing to customers with a lower score.

MM: If buyers fall short of our target credit score, what steps do you suggest they take to improve their score?

JD: A credit card, also known as a revolving line of credit, has the biggest impact on credit if you desire a quick turnaround. If you have a credit card, use it wisely. Always make your payments on time and keep a low balance compared to your card limit. For clients who do not have a credit card, we recommend that you get one right way and start using it. Remember, credit cards are a great tool to improve your credit, but if used inappropriately, they can negatively impact your score.

Shopping for your dream home is far more exciting than credit scores and mortgage loans, but both are equally important.

“Many times, shoppers get excited about a home rather than a mortgage, which is totally understandable,” Dobb said. “However, when they are not able to move forward with the process of actually purchasing a home, it causes them a great deal of frustration.”

In today’s competitive market, it is especially important to speak with a knowledgeable lender so you can actually find the house of your dreams and obtain financing.

To avoid the letdown, our goal is to establish a healthy relationship with each one of our customers. We aim to educate and offer advice for each client’s unique situation.

Reimagine Challenge Logo

Supporting the #ReimagineChallenge

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The Reimagine Project is a community-wide initiative to rebuild the iconic Imagination Station in Grand Havens Mulligan’s Hollow. The goal is to reimagine the current play structure at Mulligan’s Hollow so that it will meet the needs of future generations, with accessibility to all, built with the best, most durable products. The saying “it takes a village”, couldn’t be more true in this beautiful community wide effort.

The project will be designed by over 100 local children, much like the original structure, constructed by 2,500 volunteers, 27 years ago. Over 1,500 volunteers will contribute to the construction and the community will fund the project 100 percent.

There are many ways to contribute to the Imagination Fund. Visit their website to learn how. Opportunities to give include: a picket for the fence, sponsor a component of the new play-space, purchase the Grand Haven-Opoly game, give through the Reimagine Real Estate Challenge or become a lead donor.

At Michigan Mortgage we are excited to have had the opportunity to participate in the Reimagine Real Estate Challenge, when we were challenged by Ryan Miller with Michigan Insurance Group to donate to the local fund. Thanks to Unsalted Living and Capstone Real Estate, who initiated this challenge to our local real estate and affiliated companies. Excited to accept the $500 Challenge, we in turn, challenged Jake Hoogeboom with @Home Realty in Grand Haven, who kept the ball rolling, by challenging Angela Hyde with @Home Realty. And, the challenge continues. We are so excited to see how much money is raised by our local real estate leaders.

Imagine living in a community so willing, enthusiastic and able to give when a need arises. We can’t wait to see the student lead designs moving forward! It takes a village of giving, industrious individuals to make change and we live in one of those communities! Michigan Mortgage loves West Michigan.

VA Changes Site Condo Rule

VA Changes Site Condo Rule

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In the past, the VA treated Site Condos like any other condo, requiring the entire project be approved by the VA. This is a lengthy and costly undertaking. On May 24, the VA announced, effective immediately, that it will treat Site Condos in Michigan similar to stick-built homes.

Here are a few details that will help your Veterans.

  • VA will no longer review legal documentation for site condominiums. Lenders will be responsible for ensuring that any site condominium proposed as collateral for a VA-guaranteed loan meet requirements for the state of Michigan.
  • Program participants no longer need to obtain a VA condominium ID or submit condominium association documents into VA for approval of site condominiums.
  • Appraisers are still required to use Fannie Mae forms 1073 for site condominiums and complete the Project Information Section of the condominium appraisal form.

If you have questions about VA’s Site Condo loan changes, reach out to Michigan Mortgage. We’re here to help!