Answer:  Yes, we are.  For those of you who are not familiar, this is a program that is set up through MSHDA, yet the grant funds can be used for most all types of financing.  The program allows first-time home buyers (or buyers who have not owned a home for 3 years) to receive up to $3000 to be used toward either their down payment or closing costs. If the buyer is a veteran that amount could be as high as $5000.  Funds need to be requested toward the end of the transaction and will be sent to the closing title company.  They are limited and are “first come, first serve” basis.  Of the $ 15 million allotted, there is still just under $11 million left as of today.  Call us for more information! UPDATE - ALL MSHDA GRANT FUNDS have been EXHAUSTED as of April 2013.

Answer:  Good question and one that comes up frequently.  On FHA loans, we do not have to count the student loan payments if it can be shown that the loan payments are deferred for at least one more year.  On ALL other loan programs, the student loan payments must be factored in even if they are still in deferment.  Lenders will request that the borrower obtain, from their loan servicer, evidence of what the payments will be once out of deferment.  If no number is available, lenders will use 5% of the outstanding balance as the monthly debt for qualifying purposes.  It is always a good idea to ask potential buyers if they have student loan payments and if they are being deferred as it may have a big impact on what they may qualify for.

Answer: The answer is MANY reasons.  We ask borrowers to provide 2 months of asset/bank statements (ALL PAGES) to verify the funds necessary to close the loan.  When we receive these, we look for several things-EMD clearing the account, payroll deposits, transfers in and out (online, ATM and telephone) and for “large” deposits that are not payroll.  In many cases, lenders may require additional information to satisfy underwriting conditions, such as an explanation and a copy of the deposit that is not payroll and/or an additional bank account statement that shows monies being transferred.  The large deposits are tracked by underwriting to make sure the borrower is not taking on new debt by taking an advance on a credit card, for instance.  Just this summer we have had several large deposits that required proof, such as:  Airline ticket reimbursement, church camp t-shirt reimbursement, volleyball league trip reimbursement etc…One more step.  The good news is that most people have online access to their accounts and are able to provide additional information without a lot of trouble.

Answer: Some government loan programs DO require additional elements be tested for the water test to be acceptable. USDA Rural Development requires the following elements: Nitrate, Nitrite, Coliform, E. coli, Lead and Arsenic. It should not be more expensive if you tell them ahead of time.

Answer: Some do, some don't. FHA, VA and Rural Development loans require escrows regardless of down payment amounts. Conventional and jumbo loans allow the waiver of escrows if there is a 20% or larger down payment. There is typically a .25% onetime charge to have the escrows waived and that charge is based on the loan amount.

Answer: The answer is yes, however there are different restrictions depending on the type of mortgage being obtained. If a conventional mortgage is being obtained, the clients may be able to close 30 days prior to starting their new position. If an FHA mortgage is being obtained, they may be able to close 15 days prior to their start date.

Answer: If we had to set some kind of static timeframe, our choice would be five calendar days as this amount of time gives the lender time needed if weekends/holidays are involved. It also gives the lender needed time if government case numbers have to be ordered and received, a step that can take an additional 48 hours. The case number has to be received before the lender can order the appraisal. If you would like to call us for appropriate time frame dates when setting up your offers, please do. We’re happy to be of service!

Answer: With today's extremely low interest rates, the ability for a new purchaser to assume a low interest rate mortgage in a higher interest rate environment may become a valuable selling tool. As an example: rates will rise, and when they do, the ability to take over a nice low interest rate mortgage will be sought after. FHA and VA loans are fully assumable with the new purchaser paying the difference between what is owed and what the purchase price is and the seller would be released of any liability. Because both VA and FHA are usually either 0% down or 3.5% down, respectively, the potential low down payment requirements only add to the desirability of an assumption.

Answer: Simple answer: no. A mortgage survey report simply shows the features of a parcel such as buildings, fences, drives, walks, decks and encroachments. It is not intended to show precise boundary lines. If your client wants to know the precise boundary lines a staked survey would be necessary. This is costly however running around $1,000 and can take a couple of months to obtain.

Answer: Ann Arbor Mortgage has developed a form that specifically addresses this when using the new contract. The form identifies the buyer, property and the date that they have applied. We also added a question regarding whether the appraisal has been ordered and who the appraisal order was accepted by. Most lenders will have a similar form that they can forward to all of the parties.

Answer: The answer depends on the program. Here are some numbers: for FHA up to 6%, for VA up to 4%, for RD up to 6%. For conventional owner occupied with less than 10% down up to 3%, for 10% to 25% down up to 6% and more than 25% down up to 9%. For investment properties, seller may only contribute 2% toward costs. Any amount contributed over and above the true closing costs, prepaids, etc. will be considered a sales concession and will result in a dollar for dollar increase in the purchaser's down payment as the excess would be viewed as an inducement to sale. As always, please let us know if you need more clarification and thanks for using Ann Arbor Mortgage.

Answer: Lenders require that all large deposits (generally $500 or more or at the underwriter's discretion) be fully documented and two months worth of bank statements are required. We need to make sure that there are no borrowed funds in the transaction. For instance, we recently had a client that had a couple of deposits going into their checking account. After talking with the client we learned that they had sold a car and received an expense reimbursement check from their employer. Our client had to provide copies of these checks along with a copy of the title to the car and a statement from his employer confirming the reimbursement check. Problem solved. This is a very important part of the approval process. If your clients mention any large deposits they plan to make, have them talk to their lender right away to make sure everything is documented appropriately.

Answer: All of our appraisers have given us feedback that, especially if value is a concern to the listing agent, they would like to meet the Realtor when the inspection is done and get a list of properties the agent feels are strong comps. They also make a point of noting that a list of recent improvements / updates should be provided along with any related documentation available. Appraisers are sensitive to the fact the local market seems to be headed in an upward direction. However, they need as much positive information as possible to justify this trend within an appraisal. If you ever need help with this, please give us a call. We’d love to help!

Answer: Communication is key going forward. I would ask the lender involved, but to be on the safe side, 7 days is a reasonable time frame. We have created a form that states the borrower has made formal application and the appraisal has been ordered. We will also try to include the name of the appraiser or company that the appraisal order has gone to. Finally, we felt it was extremely important to add to the form the actual date of the contingency, so that we are all on the same page.

Answer: Pretty simple. Go to www.hud.gov and click on the Resources Tab. Then select HUD Approved Condo Projects. Click on that and enter the condo info and hit Send. Voila! There's your answer. The info at the site is updated everyday. Even though a complex may show as approved, lenders still have to obtain a completed Limited Questionnaire for Recertification every time a new mortgage is requested. If some of the answers are unacceptable, the condo may not be eligible for FHA financing. Please let us know if you have any questions.

Answer: Of Course! The Rural Home Loan has gained tremendously in popularity over the past few years and continues to expand as a program. The loan has some specific rules that have to be adhered to, one of which is that the home has to be in a “rural” area, but this can be deceiving. The areas that are not acceptable for Rural Home are truly more urban and there are maps for each county in the United States. In Washtenaw County, you can use the program for any house in downtown Dexter and downtown Chelsea, for example. If you would like to do your own property search, you can go to http://eligibility.sc.egov.usda.gov and search under the Guaranteed Home Loan for “Property Eligibility”. If you prefer, just give us a call and we’ll do the leg work for you. Also, there are printable maps available on the website, or just ask and we will e-mail them to you. We’re here to help you!

Answer: If you received the $7,500 first-time homebuyer credit for the purchase of a home in 2008, you must begin repaying the credit by adding $500 each year to your tax bill – for 15 years – starting with your 2010 return. The $8,000 credit for first-time buyers and $6,500 credit for long-time residents who bought homes in 2009 and 2010 does not have to be repaid…unless you stop using the home as your principal residence within three years of the time you bought it. If you move out of the place before those 36 months are up, you have to repay the credit with the tax return for the year you leave the house. Note: You never have to repay more than the profit on the sale of the home.

Answer: Indirectly, yes. Investors move monies back and forth from the stock market to the bond market. As the stock market rises, monies are frequently being diverted from the long-term relative safety of the bond market into the shorter term profit taking availability of the stock markets and vice-versa. In short, when we see a surge in the stock market we many times see mortgage rates or the costs associated with a particular rate rise. Conversely, when the stock market dips we many times see an improvement in mortgage rates or the costs associated to get a particular rate.

Answer: Nothing to fear. A VA loan is actually pretty simple to get through the system. The advantages are zero down, high qualifying ratios, no monthly mortgage insurance and they are assumable ( a great selling tool when it comes time to sell). The seller may pay all of the costs involved and the rates are no different than any other mortgage programs.

Many Veterans are not aware that they can use their VA entitlement over and over again. Ask your buyers if they are Veterans and you just might pick up a couple more deals. There will be many more opportunities to work with Veterans as they begin to return home from overseas. Hooray!!

SITE CONDO CLARIFICATION FROM BILL HOLMES: Conventional, FHA, RD and Jumbo loans all view a site condo as a stick-built home and do not require any extra types of approvals.

The VA is the only agency that views site condos as "true" condos and do require that the complex in which they are located be approved by the VA before they will place a loan in there. Ann Arbor Mortgage can help in obtaining the approval through the Veteran's Administration.

Answer: Yes, you certainly can. The buyer’s lender may be unable to answer your questions, because of privacy, but for certain questions, go ahead. Most commonly we have listing agents call to make sure they understand exactly what we did to preapprove a buyer, contingency dates/removals, appraisal timing and many other reasons. It never hurts to ask!

Answer: We, at Ann Arbor Mortgage, have designed a form to be used for that purpose. It has the buyer’s loan information, loan officer information, date of application and appraisal order. We also thought it was important to add the date that the financing contingency will be removed, so that we are all on the same page.

Answer: We shouldn't expect mortgage rates to get much better. An example of why: the yield on the 10-year note is nearly 2%, and inflation by virtually any measure is higher than that. What does this mean? That in this uncertain environment, investors are not even looking to get a return ON their principal, they are just looking for the return OF their principal. But this will change, and at some point investors will demand higher yields to take on the risk of buying US Bonds. With this in mind, we will guide our clients to lock when the time is right, and not hold out for markedly improved rates.

One other consideration...today's stronger Jobs Report has the market speculating that there may be no QE3. Too early to make that call, but something to consider.

Answer:  Two years ago, the FHA stopped allowing lenders to perform a “spot loan approval” for condominiums and required that the entire complex be formally approved for FHA financing. The FHA has also required that the complex renew that approval every two years so that risk can be effectively monitored and if the legal or financial health of the condominium complex changes significantly enough, the FHA can refuse to renew that approval. We will continue to review the current status of condominiums in our area, e-mail lists to our realtor partners and are always available to look-up the status of any complex for you at any time.

Answer:  More and more companies are using an online service for verifications of employment. The most common is called “The Work Number”. Lenders can go to this website and request information about the borrower. There are basically two levels of verification. The first gives a lender the employee’s date of hire and their title/position at the company. The second goes a bit further and breaks down annual and year-to-date income. These verifications cost under $20. So when you see that charge that is most likely what it is for.

Answer:  Yes, we do. More and more veterans are returning home or are still “active duty” and many are eligible for a VA loan. These loans are much more streamlined than they used to be and are one of only two options for a true “zero down” program. Happy Veteran’s Day!

Answer:  Yes, the "new" Good Faith Estimate form that was introduced in 2010 is hopefully being revised. Thus far we have seen a few examples that are far better that the current version. The forms that are being considered all have lines to show seller's concessions, EMD deposits and a borrower's signature line. Stay tuned!

Answer:  Good question! FHA and VA condo loans are either insured or guaranteed by the Federal Government. Therefore, a list of approved condos is easily maintained. Conventional condos are typically underwritten to Fannie Mae or Freddie Mac guidelines. Each lender that underwrites conventional loans keeps records of approved complexes. Every time a buyer seeks financing for a conventional condo, the process starts over.

Incidentally, even though a condo may be approved for FHA or VA financing and on their list, a new condo questionnaire must be completed for each new mortgage as the makeup of the complex may have changed. In some cases changes in condo circumstances may preclude a lender from loaning in an approved FHA or VA complex.

Answer:  Yes, we do! Homepath loans can be done with as little as a 3% down payment and no PMI. However, the rate gets much better once the borrower gets to 5 or 10% down payment. The two pros of doing this loan is that an appraisal is not required and there is no monthly private mortgage insurance. There are currently 112 houses in Washtenaw County available via Homepath, http://www.HomePath.com/ and up to $305,000. 

Answer:  We need to verify as much accurate data as possible that goes along with the property; this includes checking the MLS, cross-referencing the municipality website for the property taxes, updating a cash to close worksheet for the borrower with new purchase price, loan amount, property taxes and escrow account based on proposed closing date and update any necessary borrower info such as income and assets.

Once that is complete we can issue a pre-approval letter to submit with the offer.

Answer:  If your purchase agreement is written such that the buyer is to increase the EMD after inspections, be prepared to give the lender a copy of the second EMD check, as well as proof from the buyer that both checks have cleared. It is important that both amounts show on the final HUD (Housing and Urban Development document).

Answer:  Yes, but only if the entire complex has been approved by the Veteran's Administration. The VA still looks at site condos the same as traditional condos. Remember, Michigan is the only state with site condos and the VA has not fully grasped the concept as of yet. All of the same documentation that would be required to have a traditional complex approved is needed by the VA, i.e. recorded articles of incorporation, master deed, bylaws, budgets, etc. One gathered, the entire packet is shipped off to Cleveland VA offices for review. They typically take at least 30 days to make an initial determination of project eligibility. There are only a handful of fully approved complexes in Washtenaw and Livingston at this time. We would be happy to work with you and any site condo project to get them approved for VA financing.

Answer:  Great question.  A complete purchase agreement package would include all of the following:

• Bottom-lined purchase agreement signed by all parties
• All associated disclosures (i.e. lead based paint, sellers disclosure)
• Copy of Earnest Money Deposit (EMD)
• FHA Purchase Agreement (PA) Addendum (if applicable)
• Any addendums making changes to the over-all price or seller concessions

Answer:  The most important parts are the payment history (35%) and amounts owed (30%). The length of your credit history comprises 15% and the types of credit used only 10%. The highest percentage - 65% of your score - has to do with paying on time and not having too much credit being utilized at one time. Using more that 30% of the available credit limit on a credit card will drop your credit score significantly.

Answer:  The change in the timing is not brand new, however, it is not like it used to be where the buyer showed up at closing with a new policy. The main reason is that underwriters want to review the insurance policy as part of the file-we all know PITI. Well, insurance is that last "I". There are times that the monthly premium can be higher than expected and can put that monthly payment ratio over the limit. Common items that can increase an annual premium, that are not known at the time of application include: jewelry, furs, coin collections, gun collections, art work, antiques, computer equipment and the like.

Answer:  45 ‘Calendar’ Days. It is recommended to write as the closing date ’30-45 days from final acceptance date of contract’. The mortgage process has only continued to be more arduous than ever and the more time, and planning, done up front – the smoother the transaction will go for everyone.

Keep in mind – if you re-negotiate an item after an inspection has occurred and the deal is held up while you negotiate you MUST extend the contract dates. Everyone comes out looking as professional as possible when we all work together and plan properly.

Answer:  RD requires a county well and septic inspection plus water test. The water test results must include nitrate, nitrite, coliform, e.coli, lead and arsenic levels. Please be aware that these requirements are more comprehensive than required for other loans. Please make sure that when ordering the test that all of the aforementioned results are included in the request or delays may occur.

Answer:  We still request 30-45 days. Our company goal is to keep underwriting turn times at 72 hours or less. Some loans we can close sooner depending on the type of financing. Typically FHA, VA and Rural Home will be closer to the 45 day mark, but there are exceptions to this time frame. Conventional loans are typically a bit easier to take from start to finish. Always ask us if there needs to be a rush on a closing and we will do our best to accommodate all parties involved.

Answer:  Lenders pull a credit report at application that is good for 90-120 days depending on the type of loan. Any “inquiry” from another creditor must be explained by the borrower. Each credit report has a section where they list any inquiries within the past 120 days. Using today as an example: My credit report is pulled today, June 3rd. That credit report will show any inquiries for the past 4 months or as far back as February 3rd. The loan officer will ask the borrower to write and SIGN a letter as to what went on with that inquiry. Underwriters are looking for the possibility of more monthly debt that has not yet hit the current credit report. New debt must then be counted in the overall ratios that one uses to qualify.

Answer:  Although all loan types require some type of in-depth clarification as to the status and health of condominium complexes, site condos are treated very differently. With almost all loan types, ie: Conventional, FHA or Rural Home, site condos are treated the same way as single family homes and require no special documentation regarding the association or neighborhood. Detailed forms that are used for condominiums are not required for site condos. The only exception to this is when the borrower’s financing is going to be a VA Loan. VA requires that the lender address 27 different questions related to the health and status of the association and neighborhood. The process is fairly complex and covers a wide variety of issues. Because we see a lower volume of VA Loans here in the local area, this situation arises only occasionally, but when it does, we have the experience to help you and your clients work through the issue quickly and efficiently. If you have a client that is approved VA and is interested in a site condo, just be aware that this issue exists and feel free to contact us any time to gain clarity. We are happy to assist!

Answer:  The answer is NO. While an FHA case number remains attached to the property address for a full 120 days, a lender can set aside a "bad" appraisal. The following information came to us directly from FHA:

• FAQ:  Do FHA appraisals expire?
• Solutions details:  The FHA appraisal validity period is 120 days for existing, proposed or under-construction properties.

• FAQ:  When a case number is transferred with a completed appraisal, may a new appraisal be requested?
• Solution details:  When a borrower has switched lenders, the 1st lender must transfer the case to the second lender upon borrower request. A second appraisal may be ordered by the second lender when:

1. The 1st appraisal contains material deficiencies determined by the DE underwriter for the second lender.
2. The appraiser performing the 1st appraisal is on the second lender’s exclusionary list.

Answer:

• For FHA mortgages the seller may contribute up to 6%, of the purchase price, toward the buyer's closing costs, prepaid expenses, discount points and other financing concessions.
• For VA mortgages the limit is 4%.
• For USDA Rural Development Program the maximum is generally 6% of the purchase price, this may be exceeded in a case by case basis.
• For Conventional mortgages the limits are a little more defined:

  For a principal residence or second home:

  1. A loan with 10% or less down,  3% is the maximum sellers concession allowed.
  2. A loan greater than 10% - up to 25% down,   6% is the maximum sellers concession allowed.
  3. A loan greater than 25% down, 6% is the maximum sellers concession allowed.

Answer:  Not really. There are strict guidelines on converting a ‘primary residence into a rental’ for the purpose of buying a new home. The current primary residence needs to have 30% remaining equity; verified via an appraisal. And the borrower needs to have six months of ‘liquid or easy to liquidate reserves/savings’ to pay both the old mortgage and the new mortgage payments including the principal & interest, property taxes, insurance, home owners association (if relevant) and PMI (if needed). This can add up to a large sum of liquid money needed that can hinder the next purchase. Be sure to have your potential buyers – and sellers – check with us before attempting to make this move.

*Note: this is for Conventional Financing Only. Please call us for FHA scenarios as guidelines are slightly less stringent.

Answer:  That is a partial truth. Ideally, the appraiser is going to look back on the most recent three month period of time. They will look at recent sales surrounding the subject property (the same sub is best and they work their way out from there). The farther a comparable property is away from the subject property the less weight it may carry. If they do not have 3 comps in that three month period of time, they will look back further but those properties are not looked at in the same light as something more recent. Most investors feel that 3 months is “recent history” in the housing market. Anything older is considered less favorable and may not dictate current market trends.

Answer:  It is not available for Veteran's. However, the Tax Credit is available for some active-duty personnel. The up to $8,000 credit has been extended through April 30, 2011 for the contract date and June 30, 2011 for the closing date.

Answer: An enthusiastic YES! The FHA has recently reduced its repair requirements in a big way. Examples of minor conditions that no longer require automatic repair on existing properties include:

• Missing handrails.
• Cracked or damaged exit doors that are otherwise operable.
• Cracked window glass.
• Defective paint surfaces in homes constructed post 1978.
• Minor plumbing leaks.
• Defective floor finish/covering (worn through, badly soiled carpeting).
• Evidence of previous ƚnon-active) wood destroying insect/organism damage where there is no evidence of unrepaired structural damage.
• Rotten or worn out countertops.
• Damaged plaster, sheet rock or other wall and ceiling materials in homes constructed after 1978.
• Trip hazards (cracked or partially heaving sidewalks, poorly installed carpeting).
• Crawl space with debris and trash.
• Lack of an all-weather driveway surface.

Please take note of the fact that the word automatic is used in the guideline. That means that the condition of the items above is subjective and at the appraiser's discretion, however, we have seen a vast reduction in these types of conditions on recent appraisals. Whether you are showing or listing properties, we hope that awareness of this change will help you and your clients be more successful in your future negotiations.

Answer:  At least 2 years. With extenuating circumstances a maximum of 90% LTV or 80% LTV without extenuating circumstances. With 10% down a 4 year waiting period and 7 years for maximum loan of 95% LTV.