- What is the down payment?
The down payment is the property value less the loan amount. It is not the same as the borrower’s cash outlay if some of that outlay is used for settlement costs. On a newly constructed home, the land value can be part or all of the down payment.
- If the appraised value of a home exceeds the sale price, can the difference be applied to the down payment?
No, the property value upon which down payment requirements are based is the lower of sale price and appraised value. An appraisal higher than the price is disregarded as our loan-to-value is always based on the lesser of the appraised value or purchase price.
- Can a home seller contribute to the buyer’s down payment?
No, because of a presumption that such contributions will be associated with a higher sales price. However, subject to limits, home sellers are allowed to pay purchasers’ settlement costs. The amount of the contribution varies depending on loan product and amount of down payment. This reduces the cash drain on purchasers, allowing more of it to be used as down payment.
- Can the lender contribute to the buyer’s down payment in exchange for a higher interest rate?
No, but lender rebates or “negative points” can be used to pay settlement costs as a possible alternative to seller contributions.
According to the Mortgage Bankers Associates, half of refinance applications and 30% of purchase applications are abandoned or rejected.
Do you want to avoid being rejected? Below are the top 6 reasons mortgage lenders reject applications.
- Income Issues. Most failed applications have income too low for the mortgage amount they are seeking; often a spouse’s credit issues can create this problem. Another increasing reason is the recent changes of the job market. As people who have changed their line of work or have changed from salaried employee to free lancer over the last couple of years can also have their home loan application rejected based on income.
- Muddled Money Matters. If the mortgage for which you’re applying plus your monthly payment on your credit card, car and student loan debt will comprise more than 45% of your total income, you could have problems qualifying for a home loan. You might also run into problems if you rely too heavily on bonuses, overtime, cash wages or rental income – all of these can be difficult or impossible to get a mortgage bank to consider, and if they do, they might not take all of it into account.
- Credit Issues. Today, the mortgage-qualifying FICO score cutoff falls somewhere between 620 and 660, depending on which lender and which loan type you seek. More than one-third of Americans, by some numbers, have credit scores too low to qualify for a home loan. Even if your credit score is high enough to qualify, if you have any late mortgage payments, a short sale, a foreclosure or a bankruptcy in the last two years, loan qualifying could be difficult to impossible.
- Property Didn’t Appraise. Since the whole industry had its hand smacked for allowing home values to skyrocket in a very short time, appraisal guidelines have tightened up – even more than overall mortgage guidelines. Therefore, nationwide, it is increasingly common to have the property appraise for a price lower than the sale price negotiated between the buyer and seller.
- Condition Problems. With all the distressed properties on the market, and with most non-distressed sellers barely breaking even, more home-sale transactions that ever are falling apart due to condition problems with the property. Many lenders will not extend financing on homes where the appraiser points out problems like cracked or broken windows, missing kitchen appliances, electrical problems, or wood rot.And in the world of condos and other units that belong to a homeowners association, if more than 25% of units are rented (rather than owner-occupied) or more than 15% are delinquent on their HOA dues, new applications for refinance or purchase mortgages on units in the development are likely to be rejected.
- Technical Difficulties with Application. Applications with incomplete or unverifiable information are doomed. If any of these mortgage loan applications glitches arise in your home buying or refinancing process, it’s critical that you connect with you mortgage lender to determine what course of action to take.
The Reinhart North Sales Office is hosting a free Halloween Maze on Sunday, October 30th from 2:00pm to 5:00pm.
You and your family are invited to join the Reinhart North Team for a family friendly spooky Halloween Maze. Guests are encouraged to come in costume.
If you have any questions about the Reinhart Green Road Halloween Maze please contact Marjorie Bolgos at (734) 669-5836.
Reinhart Green Road Halloween Maze
Sunday, October 30th
Charles Reinhart Company Realtors
2200 Green Road, Ann Arbor
2:00pm – 5:00pm
Buying a House? These tips can help make your house-hunting experience faster, easier and more rewarding.
- Importance of Location. Choosing a location is an extremely important decision when buying a home. Consider how far you are willing to commute to and from work. Consider the proximity to parks, shopping, dining and entertainment as well as the quality of schools. To help you find a community that best fits your lifestyle, use Reinhart’s new, cutting edge Lifestyle Search technology.
- Make a Wish List. Focus on the features you must have, what you would like to have and what you definitely don’t want. Share this with your Realtor to avoid looking at houses that don’t fit your wants and needs. Knowing what you want before you start looking will help you save valuable time.
- Get Preapproved. Rather than just guessing how much you think you can afford, speak with an Ann Arbor Mortgage Loan Officer. They will help give you a full assessment as well as help you determine how much your qualified to borrow from the bank.
That’s what the Fed’s Policy Statement proclaimed on August 9, 2011. Although the statement was rather downbeat on the economy and no hints of a QE3 on the horizon, they extended their current mantra of keeping lower rates for an “extended period” of time.
Because the Fed will keep the Fed Funds Rates at 0% for the next two years, home rates are not likely to shoot up either, but at the same time that doesn’t mean that home loan rates are going to get much lower. Should the current rise in Core CPI continue, currently at 1.6% year over year…rates (including home loan rates) will have to gradually rise as well.
All in all, now is a great time to purchase or refinance a home with unprecedented low rates readily available.
Kristen Cochran, Senior Loan Processor with Ann Arbor Mortgage, recently completed the Olympic Distance South Maui Triathlon (0.9 mile swim, 24.8 mile bike and 6.2 mile run) in Maui, Hawaii.
Kristen is a member of Team in Training (TNT), an endurance sports training program that provides training to those interested in competing in a marathon, half marathon, century bike ride, triathlon, cross country ski marathon, or other endurance event. TNT members raise money to support the Leukemia and Lymphoma Society in exchange for certified coaches, training clinics, a personal fundraising website, event fees and lodging and air fare as well as support from staff and teammates.
175 TNT members from across the county traveled to Maui, Hawaii to participate in the triathlon, raising over $800,000 for the Leukemia and Lymphoma Society. Representing Michigan were 14 participants who raised over $80,000. Kristen personally raised over $5,300!
As a survivor of Hodgkin’s Lymphoma, Kristen is very passionate about raising money for Leukemia and Lymphoma Society through Team in Training.
For more information about Team in Training visit their website.
Figuring out whether you’re ready to buy a house — whether you’re a renter or are aiming to move up or size down — can be a daunting task. But there are signs that will indicate whether you’re ready to take the buying plunge.
- Are you familiar with the market?
A Reinhart agent can provide you with all of the information you need about the market, including neighborhood and school information.
- Do you have the money for a down payment and closing costs?
A down payment, which is a percentage of the value of the property, is determined by the type of mortgage you select. A Loan Officer with Ann Arbor Mortgage can help with your mortgage in addition to estimating how much you need for a down payment as well as your closing costs.
- Do you know how much you can afford?
Freddie Mac says that as a general guide, your monthly mortgage payment should be less than or equal to a percentage of your income, usually about a quarter of your gross monthly income. A Loan Office with Ann Arbor Mortgage will be able to help you determine a price range that you can afford.
- Do you know what additional expenses will come with owning a home?
This includes homeowners’ insurance, utility bills, and maintenance costs — roofing, plumbing, heating and cooling. A Reinhart agent will help you identify an estimate of your additional expenses.
- Is your credit in good shape and do you have an accurate credit report?
Potential lenders will view your credit history — how much debt you’ve accrued, how many accounts you have open, whether your payments are made on time, etc. — to determine whether they’ll give you a loan. You should order a report from www.annualcreditreport.com. Ordering through this site will not affect your credit; however you will not get a credit score without a charge. Using this site as an indicator of how one’s credit may stand is wise, as up to 75% of credit reports are said to contain errors. Contact an Ann Arbor Mortgage Loan Officer to help you navigate through the process.
This orginial blog was posted on Realtor.com by Michele Dawson.
From my experience as a Realtor, the vast majority of home buyers who want to view a home haven’t gone through the mortgage pre-approval process. It’s one of the first questions a Realtor asks a potential buyer and for good reason.
Many buyers have an idea as to what they can afford for a home. Some pick a number out of the air while others check with an online source. Sadly, most haven’t seen a local bank or mortgage broker.
As Realtors, we shudder at the thought of showing an unqualified buyer a home. First and foremost, an unqualified buyer may not be able to afford the home or homes they’d like to see. That, in and of itself, makes the buying process a nightmare for the buyer. It’s difficult for the buyer to look at more modest priced homes after seeing homes they can’t get a mortgage for.
Secondly, let’s imagine the unqualified buyer has just seen the perfect home and they want to write an offer to purchase that home. Let’s also imagine that other buyers have also seen the home and are writing an offer. Which offer would you consider if you were the seller? Would you accept the offer with a pre-approval letter or the offer without?
Finally, Realtors know that a qualified buyer has the best chance of getting the home of their dreams. It’s our legal duty to help our buyers attain that goal; therefore, that’s why we hope you take a few minutes to get pre- approved.
Ann Arbor Mortgage is just one of many local mortgage bankers out there who can point buyers in the right direction and put them in a loan program that best suits their needs. Conventional, Federal Housing Administration, Veterans Affairs and Rural Development loans are just a few loan programs available to buyers. So, call your favorite lender and find out a loan program that best suits your needs.
Your comments are warmly welcomed. I can be reached at 734-223-5656 or www.ricktaylorrealestate.com.
Ann Arbor Mortgage President Bill Holmes presented Mary Frisinger, Senior Loan Officer, with the Highest Production Award. Mary has been with Ann Arbor Mortgage since 1999. Throughout her career, she has closed loans in excess of $100,000,000. Mary is an active member of the Ann Arbor Area Board of Realtors and is involved with United Way, the American Cancer Society and Making Strides Against Breast Cancer.
Mary has always exhibited a high degree of professionalism and salesmanship. Her hard work, high ethical standards and great personality have contributed greatly to the well-being of Ann Arbor Mortgage.
According to the U.S. Department of Justice, approximately 1.6 million households have experienced some form of theft when it comes to their financial accounts. Below are 6 tips to help you avoid becoming a victim of identity theft.
- Just the Facts. Don’t give unnecessary information like your date of birth and income level when you’re filling out things like warranty cards or supermarket club cards. Share only what’s really necessary in every situation.
- Navigating the Net. Never post your address or your full date of birth on any social networking sites because both are significant pieces of information needed to steal your identity.
- Searching for a Job? Never give a potential employer your Social Security number on an Internet job site. Also, thoroughly read the privacy policies of any online job boards to make sure they won’t sell your information.
- Safe Keeping. Never keep your Social Security number in your wallet, glove compartment or any other easy-to-access place. Also, never have it printed on your checks or use it as your password.
- Shred It. Remember, when you’re ready to get rid of old documents that contain important information, shred them with a cross cut shredder.
- Protect Your Mail. If you have to mail something that contains sensitive information, use a secure mailbox, not the one at the end of your driveway.
Remember, when it comes to your personal information, share it on a need-to-know basis only!
Source: Loan Tool Box