Danell's Blog

Even with Great Credit, There are No Low or No Doc. Loans Anymore!

Danell Merren (Providence Home Mortgage/ICCF) — Fri, 06 Nov 2009 15:24:02 -0600

It's been pretty common knowledge for the past 18 months that the stated income, no document, no income, and low document loans are gone. However, I think that a lot of great customers with really high credit scores- say 740 and up, don't know that in the past they probably got through the mortgage process easier because of something called alternate doc. I will list below the difference between a truly full document loan and alternate doc. (the norm of two years ago):

Full Document :

2 years W2s
2 years tax returns if you have any self employment income (even if we aren't using it b/c they want to prove you don't have a loss or anything adversely impacting your income)
30 days paystubs, current
2 months current bank statements, all pages; if your bank statements are business accounts, you will need the bank or credit union to put in writing that withdrawing the money does not adversely impact your business.
Most recent retirement statement, all pages
Full Verifications of Rent/Mortgage (if you do not rent from an apartment complex you will most of the time need to show cancelled checks), Deposits, and Employment. We must prove where the money came from, if gifts, that the gift giver had funds to give, and that you are employed, in writing by the employer- not just pay stubs. A verbal verification of employment will also be done right before closing to prove you did not lose your job between the time your employment was verified and closing date.

Alternate doc (no longer available):

W2s rather than tax returns
Paystubs rather than verification of employment
Bank statements only rather than verification of deposit from bank
Most often no verification of rent or mortgage per the computer approval

The all pages issue is a pretty big one- often people don't understand that if there is no significant info. on a page, we still need it! If it has a page # on it and if you exclude it because you know there's no info. on it, the underwriter doesn't know this- they will wonder what you're hiding! And you must explain all large deposits. This, too, is a pretty big one that people often don't understand. Even if you don't need the money in your account for your transaction, once it's disclosed we need to source where it came from- i.e.- even an inheritance. The banks want to know that your money is legitimate, that no one is incenting you to buy them a home, etc.

The paystubs need to be the most recent. If they aren't recent, the underwriter will NOT assume that because you're salaried your pay hasn't changed or that you still have your job. These days, good people are getting laid off left and right. They'll want the most recent paystubs, and they'll do a verbal VOE (verification of employment) right before close to make sure you're still working.

So in general, believe us that we share in the frustration. We share this information to help expedite the process as much as possible and to help set expectations from the beginning, keeping in mind that underwriters will often "condition" for information.

We know you are great borrowers, but now we have to prove it!

Homestead Exemption on Two Properties in MI

Danell Merren (Providence Home Mortgage/ICCF) — Fri, 06 Nov 2009 13:39:21 -0600

I recently learned that the MI congress passed a law stating that home owners who buy an owner occupied home and retain their previous primary residence while they attempt to sell can keep the homestead exemption for up to three years on both properties. This is a huge benefit to move up buyers who are having a tough time selling.

Condo Insurance- Dishonesty Coverage increased to $47,040- Fannie and Freddie Change.

Danell Merren (Providence Home Mortgage/ICCF) — Fri, 06 Nov 2009 12:57:18 -0600

We are seeing another Fannie and Freddie change, this time when it comes to condo coverage that the condo associations and/or management companies must have. It's regarding dishonesty coverage. Fannie and Freddie used to only require $10,000 dishonesty coverage. This is related to liability insurance. Horror stories are popping up all over the county where employees of the associations or management companies were embezzling the dues that was coming in.

See a related story below about what happened near Chicago.

http://www.nbcchicago.com/news/local-beat/willow-springs-condo-van-witz-management-complaints-56662742.html

$6,500 Tax Credit For Repeat Homebuyers! $8,000 Credit for 1st Time Buyers Will be Extended!

Danell Merren (Providence Home Mortgage/ICCF) — Tue, 03 Nov 2009 10:31:21 -0600

There's a lot of buzz that the first time home buyer credit of $8,000 may be extended. So far it's passed the Senate and now must pass through the House.

Some are saying it's helped the economy, some are saying it hasn't. I specialize in working with first time home buyers, and I can definitely say that business picked up for me personally all summer and this fall.

I found this article online that spells out who the repeat homebuyer credit may work for. Basically, a repeat home owner would need to have owned their existing home for five years in order to qualify.

http://www.christianpf.com/6500-home-buyer-tax-credit-extended/

I see several pros and cons to extending this credit for repeat homebuyers.

Pros:

May lessen the blow of the inevitable loss many homeowners are facing when selling
Can help replenish down payment current homeowners are saving to trade up whereas repeat homeowners used to rely the proceeds from the sale of their homes to buy the next home
Can help replenish an Emergency Fund for the repeat homeowner so that if the unexpected happens, they haven't depleted their resources to buy the next home
Stimulates the housing economy
With more competition for homes, hopefully values will stop falling, start to go up a little

Cons:

Increases deficit
Perhaps a repayable tax credit that wouldn't burden our tax payers would have the same impact?

What do you think?

Edit:

The Senate voted Thursday, November 5th to pass the legislation!

HUD HOMES- OVERBID PROBLEM & SOLUTION!

Danell Merren (Providence Home Mortgage/ICCF) — Fri, 30 Oct 2009 13:50:39 -0500

In the Greater Grand Rapids Area we are in a very depressed area with one of the highest foreclosure rates in the country. For us, it's mostly because of manufacturing job loss rather than due to exotic loans. Regardless, there are a lot of HUD REO properties. But we also have a lot of FHA borrowers. Recently, we've seen a trend changing where HUD has priced the homes so aggressively low that it's caused a competition situation where people are over-bidding. One might think this is a good sign that the market is changing. Perhaps, but in the short-term, what is happening is this is causing a problem where FHA buyers can't typically buy the HUD homes. This is because FHA requires we use the existing appraisal from HUD when buying HUD homes. This existing appraisal is good for six months. Then HUD usually orders another one. HUD usually appraises the home right around the selling price. If someone overbids and wants to use FHA financing, HUD requires the borrower to pay the difference between the overbid price and the appraised value. Most FHA buyers aren't sitting on that kind of cash. So, the deal goes south. It creates a situation where Conventional buyers and Cash buyers are the ones usually being able to purchase HUD homes. It's a little ironic as HUD states that they try to sell first to owner occupants.

When someone is overbidding on a HUD home, we try to explore and exhaust Conventional options as much as possible. This is often not realistic for the buyer due to a lack of assets. In this case, the MSHDA 80/20 Acquisition Rehab. loan might be a great way for a first time buyer to buy with little down and still go Conventional. See my previous blog at: http://activerain.com/blogsview/1266825/new-80-20-conventional-purchase-loan-including-costs-of-repairs-

To learn more, feel free to give me a call at (616) 719-4513.

Processing Timeline- Don't Expect Lenders to "Eat" Delays!

Danell Merren (Providence Home Mortgage/ICCF) — Fri, 30 Oct 2009 12:53:04 -0500

I have become increasingly frustrated when Realtors expect us to "eat" delays. I will go into detail. It's understandable for Realtors to be frustrated if no one is communicating with them and they simply don't know what is going on, but in my small shop, we are a three woman team, and between myself as the loan originator, my processor who has been in the business sixteen years, and our Assistant, we work super hard to communicate with everyone during the transaction. We communicate with buyers, the selling agent, the listing agent, title companies, etc. all to keep the transaction going as smoothly as possible.

First, let's talk about closing dates. If you call me on Thursday, the 3rd, and ask me if we can close by the 30th, and I say it's possible, but then you don't get me a PA until the following Tuesday on the 8th, don't expect us to "eat" those five days.I had a transaction recently where the Realtor was upset because we closed 30 days from the date we got the PA. If all the parties are hming and hawing for days, please realize this is time that if everyone is trying to expedite, we could have been using to order appraisal, title, VOEs, VODs, VORs, gift letters, the buyer could have been liquidating assets, etc. We can't order appraisal and title work until we know the end negotiation. We can't order those things with verbal agreements.

Next, let's talk about inspection delays. If you want to close in 30 days but dicker back and forth between the buyer and seller over inspections for 15 days, don't allow us to order appraisal until inspections are done, don't expect us to "eat" those 15 days.Once we order the appraisal, if it's Conventional, due to the new HVCC laws, please remember, we've lost control! We go online, order through some company that doesn't know us, has NO incentive to return the appraisal to us in a timely manner, and then we wait! The typical time to get the appraisal back to us is now at least one business week or more! We can't order before if the client doesn't want to risk the cost and if you don't know the final price due to repair negotiations. We can't deliver the loan to underwriters until the appraisal, title, and all verifications are in. With the banks being backed up due to the mad dash to the finish line for the 8K tax credit as well as all the refi's going on, the UW lineup is typically at least one business week right now. So, in this example, we've waited 15 days for inspections to get dickered out, the appraisal takes another five-seven calendar days minimum, the file sits in the UW traffic jam for five business days- wow! We're already at 29 days in to the 30 days. And please don't expect us to "eat" borrower caused delays. If borrowers are getting gifts, and the gift giver drags their feet on getting us the appropriate required documentation, please understand this, too, causes delays. Once it comes out of underwriting, they typically issue a "conditional" approval. We go back to the borrowers, title folks, Realtors, or whichever party we need to address and get additional minor items needed by the UW. Let's say we submit this to the bank the same day or soon as we have the info. Then it goes back in the traffic jam for two more days. Then GOD WILLING it comes back out of UW with a "clear to close", then we have to give the closing department time to prepare closing docs., and we can close two business days later. When you take a serious look at all the parties in the transaction, it's pretty easy to understand why your closing date got pushed back for reasons outside the control of the broker or lender.

Getting Little Kids to Eat- Try Take Out Dishes!

Danell Merren (Providence Home Mortgage/ICCF) — Fri, 30 Oct 2009 12:10:00 -0500

I saw a tidbit on the Today Show Recently that I thought I'd share because I tried it to get my toddler and school aged kids to eat better. My hubby and I have a weakness for a local Thai food place. We love their noodles. We've gotten this quite regularly recently, and my middle daughter noticed that we get "take out" more than they do. She thought, rightfully so, that it was a little unfair. So, in an effort to stick to a budget and to waste less food, last night when I was ordering take out on the way home, I suggested to my hubby that he make up something quick for the girls and serve it in individual take out containers that we had left from previous orders. It was a win/win. We've thrown less plastic containers away or in the recycle bin- instead we reuse them, and the girls each got individual containers of chicken and white rice- a perfectly bland meal for picky little kids. They were ALL SMILES! They ate most of their meals and even tried ours. The show made a good point- everyone likes presentation. Next up- we're going to try this with lunches we send to school!

Credit Tip- While Paying off Collections, Keep Paying Other Bills On Time!

Danell Merren (Providence Home Mortgage/ICCF) — Fri, 30 Oct 2009 11:55:53 -0500

It never ceases to amaze me that every once in a while, maybe every two years or so, a customer who is paying off collections in an effort to become mortgage ready, stops paying other bills on time in order to have the funds to pay off old collections. I can't quite understand how this makes sense to the customers. At that point, I've explained that collections have had an adverse impact on credit score, so one would think that new collections, late payments on installment loans, or past due amounts on other debts, would, too, have an adverse impact on credit. But without fail, every once in a while someone says, "I did as you instructed- you told me to pay off collections, so I did". Then they proceed to tell me, "I made payment arrangements on my car loan to have the money to pay off the collections." Well, this would be fine in theory if the lender reported you on time to the credit bureau, but I've never seen this happen.

NEVER STOP PAYING CURRENT BILLS TO PAY OFF PAST DUE BILLS. ALWAYS PAY YOUR CURRENT DEBTS ON TIME!

NEW PAST DUE AMOUNTS ARE JUST LIKE A COLLECTION!

ROLLING LATES ON CREDIT CARDS, STUDENT LOANS, AUTO LOANS, ETC. WILL HAVE AN ADVERSE/BAD IMPACT ON YOUR CREDIT.

DO NOT PUT STUDENT LOANS IN DEFERRMENT AND STOP PAYING THEM B/C A CUSTOMER SERVICE REP. GAVE YOU A VERBAL THAT YOU CAN NOW STOP PAYING. WAIT UNTIL YOU HAVE THE DEFERRMENT IN WRITING.

Listen folks, these are all RED FLAGS to underwriters that you are walking too thin a line with your current obligations to be able to afford a debt that is going to have unexpecteds- i.e.- some day as a home owner, things will come up that you didn't expect- like property maintenance, increase in taxes, increases in insurance, etc. BUYING A HOME COSTS MORE THAN JUST YOUR HOUSE PAYMENT. Other unexpecteds could happen like job loss. An underwriter wants to know that you are resourceful. They don't want to ever think that when times get tough you'll just stop paying your debts on time.

New 80/20 Conventional purchase loan including costs of repairs!

Danell Merren (Providence Home Mortgage/ICCF) — Fri, 02 Oct 2009 16:04:45 -0500

I am so excited to report that MSHDA has rolled out a new program called the MSHDA/NSP 80/20 loan. Features of the program include:

80% first mortgage, no PMI
2nd mortgage up to $25,000 with repairs, 10K if no repairs
Only 1% down requirement from buyer!
Property type must be bank owned/foreclosure.
Repairs allowed- repairs can be minor or more significant- examples of repairs that will work include but are not limited to- Appliances (except washers and dryers), roofs, furnaces, kitchen or bath remodel, carpet, deferred maintenance, air conditioning, siding, handicapped accessible ramps, alternative energy
Max CLTV is 103%
Seller contribution up to 6% allowed
A HQS Quality Inspection is required- i.e.- an inspector must determine what must be repaired and estimate the cost
Repair funds are held in escrow at MSHDA
Lenient income guidelines- up to 120% of Area Median Income- i.e.- family of 4 can typically make up to $73,700 in outer county areas in Kent County or higher in targeted areas (like GR)
Manual underwrite, no requirement of computer approval
No minimum credit score technically, however, 620 is preferred. Lower than 620 requires good compensating factors.
30/41 debt to income ratio guidelines, 45 max on exception basis
Two months reserves required

The target areas are broad, but the federal government requirements state that the area must have a foreclosure risk of 6 or higher. The target area maps are a bit confusing. I am happy to look up an address to determine if it qualifies. Many townships, cities, and entire counties qualify. Please call me at (616) 719-4513 directly for more information or to walk through a scenario!

Your Credit Report is like a Permanent Record!

Danell Merren (Providence Home Mortgage/ICCF) — Thu, 20 Aug 2009 13:02:35 -0500

I met last night with a newly married couple. They were really neat and quite entertaining. I thought the gentleman said it best when he said, "Your credit report is like your permanent record". I'd never heard it referred to that way, but I think he put it best! I have had the following happen to clients:

They had collections that were almost seven years old. Rather than fall off, the creditor sold the debt to a new collection company, and the seven years started all over again!
A client had a judgment that was almost ten years old. She thought it would "fall" off her credit report. Because she was of means and able to pay, she got re-sued, and the debt started all over again- she agreed to a Consent Judgment in order to get reasonable terms.

The moral of the story- don't assume a bad debt will ever go away unless you truly pay it off or settle it!

Score Changes- It Happened To Me! When did you need a 760?!

Danell Merren (Providence Home Mortgage/ICCF) — Wed, 19 Aug 2009 14:40:59 -0500

I've always prided myself on knowing what goes into a good credit score- see my previous blog on Credit Score Tips (http://activerain.com/blogsview/765125/credit-score-tips-). Well, sometimes we need to "do as we say" and not as we do!

I should have remembered that length of credit is 15% of your score! I knew it impacted your score, but I seriously forgot how much! I kept thinking it was like maybe 5%, 10%, etc. Well now that I come to think of it even 5% could easily drop you 40 points!

Well, I went from a 793 to a 738 in the course of a year. Several factors impacted this:

My credit was run six times- this is too many! But I had to have it run twice as a Principal Officer at my mortgage company when we applied for our FHA license, once when I refinanced, once when I thought about refinancing my home equity, and seriously regarding a couple pulls, even I couldn't figure out why the banks ran my credit (I learned about these when I went to the free/non score hurting service at- www.annualcreditreport.com).
I canceled all my credit cards but one. The magic number I've always been told to keep (per my credit bureau contacts) is two. I made an informed decision to cancel because like many other Americans this year, I was informed my rate was increasing astronomically. I was not willing to take my card with a 3.16% rate (tied to the LIBOR index) to a variable at 17+%, not when I was paying off a balance. To me, the risk of my score dropping from an increase in debt to credit ratio was worth it. I kept my long-term goal of having no credit card debt at the forefront- when this debt is totally gone in about another year, I'll have an excellent score again without having paid extra interest.

The downside though was that the credit card I did keep just sent a notice that they, too, are increasing my rate. They were blunt when I called that when they issued cards tied to the Prime index, they didn't expect it to hover around 3.25% for months. So, they sent a notice that the new rate would be Prime + a Margin of 3-11 percent. In the mortgage world- margin + index= rate. So, I knew that my rate would be 3.25% plus a minimum of 3% more, so it'd be at least 6.25%. This seems reasonable considering the hit banks, credit unions, and mortgage companies have taken. But my rate went up to 7.25%. I know this is still good, but I was curious, "why didn't I get the best rate?". Well because my score went to 738. So I asked the customer service person, "what's the magic number, 740?". And she replied, "No, it's actually 760 now." Whoa! I figured this was coming, but it sure came quick! A year ago anything over 700 would be considered excellent. Now 738 is just very good.

In the end, I'm really not too upset. Like I said, a 7.25% rate is still good in the world of credit cards. This card will be paid off in about five months, and then I'll be snowballing my payments and aggressively paying off that last elephant in the room. But borrowers beware, think twice before canceling a bunch of cards!

Clients, you made my day, my week, my year!

Danell Merren (Providence Home Mortgage/ICCF) — Wed, 19 Aug 2009 13:47:17 -0500

As we all know, the mortgage industry has had its ups and downs this past year. Each file seems to come with its own set of challenges, however, a positive outlook helps us to find solutions 99.9% of the time!

Recently I had an experience that just helped me stay in great spirits day after day! Suddenly within one week the following happened:

A past customer was on vacation, so she had a minute to drop off a box of cookies from the local pastry shop (Van's)- yum yum! Thank you, Melissa and John!
Another client, in the middle of her transaction, dropped off a homemade cake! She makes cakes and sells them out of her home for all occasions. Thank you, Josy! It was delicious! You can call her for special orders at 308-7819.
Another client sent me an ecard thanking me for all the work we are putting in on her transaction! Thank you, Valarie! You made my day.
And an ICCF donor that I've known for years began farming in Ada during retirement. He brought some peaches for her his farm. He asked me to call if they were good and to not if they weren't- ha ha. I called to let him know that they were so good that all our staff ate them, and I didn't even get a chance to try one. He dropped off an entire bushel the next week, and I got to try one, and they were wonderful. Thank you, Michael!

Folks like this make the challenges of the current mortgage market totally worth it! The successes outweigh the frustrations over and over!

This Isn't Burger King, You Can't Have it Your Way. Whenever there is a down payment you must prove where it came from!

Danell Merren (Providence Home Mortgage/ICCF) — Fri, 17 Jul 2009 13:56:59 -0500

We hear a lot these days and read a lot in sales books about "the customer is always right". While I believe that is true from a customer service standpoint, it certainly doesn't transcend to mortgage guidelines.

I lost a deal this week. This is very rare for me. I have been doing loans for over five years and I have never had a buyer walk away simply because they were upset about the mortgage guidelines or because they refused to cooperate with the rules. I've had buyers walk away for things totally out of our control. The deals I have lost included:

A buyer's grandpa recently decided to buy her a house with cash! Good for her! Can't compete with that one.
A deal fell apart a couple years ago because the house was in probate and sellers couldn't agree on price or who had rights to sell after a purchase agreement was already signed.
A buyer was buying a HUD home and had an epiphany while waiting for the lead abatement that the home was a money pit and that it wasn't a good decision. Good for him that he had this "a-ha" before he closed!

But never have I had someone who outright just wouldn't tolerate or cooperate with the mortgage guidelines.

This young woman was buying a "flip" FHA. She needed 3.5% into the transaction. The seller was paying all closing costs. When she came in for her application, she had the 3.5% saved in her checking account. She never indicated she would be using a gift or retirement funds for down payment.

I have buyers sign a "Do's and Don'ts" document (http://activerain.com/blogsview/917658/top-dos-and-don-ts-in-the-mortgage-process-). This spells out that the buyer should call prior to making unusual large deposits! After this experience, I have instructed my processors to add a line to that document that states "unusual deposit is any deposit over $50 that is not obvious from payroll".

All loan types that require a down payment require that we prove where the down payment came from and that the "giftor" had sufficient funds to gift. In this young woman's situation it appears she spent her down payment. So, she decided, without telling us, to use retirement funds. So, we needed proof that she got the money from retirement. She also got a gift for almost $500 from her brother. She said she had "lent" him the money and he paid her back. So, in her mind, it appears she felt it wasn't a gift. But that isn't how underwriters would see this- unless we could trace the money she originally gave him, then we'd have to have him fill out a gift letter and prove he could gift money to her.

The FHA guidelines say that the 3.5% down payment can come from:

Buyer
Gift of a relative, friend, or a grant program
Employer

And the guide also says we must prove they could gift.

It's kind of that old adage, "don't shoot the messenger". I had an underwriter once say, "I don't write the mortgage guidelines, I just read the regs." Good point!

Sometimes people get frustrated, and it's our job to try to teach them the logic. What I learned in my loan officer classes was that ultimately, the reason we have to prove where down payment came from was that the government can seize a home if they believe it's a drug house. And then the buyer could get foreclosed. This might be extreme, but let's face it, an underwriter's job is to see the worst case scenario. If a person can't prove where the money came from then the underwriters will wonder what they are hiding. And with the collapse of the housing market, I say, who can blame them. The banks want to be sure that a buyer isn't obligated to repay gifts, so they want to be sure that the giftor was appropriate, i.e.- a relative and that they could gift the money.

It's unfortunate, but in an effort to prevent this in the future, I thought I'd write about it.

East Hills, a Walkable Community

Danell Merren (Providence Home Mortgage/ICCF) — Fri, 17 Jul 2009 13:04:41 -0500

It's something about Thursdays lately! I leave my office at 920 Cherry St., get in the car, put the sun roof down, and notice the amazing thing happening! I have seen countless people walking, running, riding their bikes, pushing strollers, and shopping the cool shops in the East Hills Business District. East Hills is a truly "Walkable Community".

It's so great to see a city come to life again. I leave here feeling like Grand Rapids is truly becoming a Cool City.

Thank you 1st Wok on Alpine! The best Chinese in Grand Rapids!

Danell Merren (Providence Home Mortgage/ICCF) — Fri, 17 Jul 2009 12:59:20 -0500

My hubby and I are big fans of 1st Wok on Alpine.We go at least a couple of times per month. I guess you'd call us "regulars". We typically go on Sundays because they have a great special where you can get soup and an eggroll complimentary with your meal. Our little kids love the Won-ton soup and Fried Dumplings. They are quite rambunctious. I have a saying that kids are either wild or mild. Sometimes I feel embarrassed like the kiddos are being too wild.

So, a couple of weeks ago on a Friday night I ordered take out. I came in to pick up my order, and I could tell the owner thought I was missing some wee ones. I said to him, "I left the little ones at home tonight. You know they are so wild and everything." He smiled and told me they are fine. The owner made some small talk with me and said, "What you do for a living?" I told him I was a loan officer. He asked, "You like your job? You got a card?" And at the same time, he said to the hostess, "when you get ready to buy a house, you go see her." I gave them my card and told them that, yes, I like my job, but that this market sure has had its challenges.

A few days later, he sent me a gift certificate for two complimentary lunches!I was so moved by his kindness. My hubby and I snuck out for a rare lunch without the kiddos and our usual waitress noticed we were without the kids. She acknowledged it was nice for us to get away without them for a brief time, but she assured us that our kids are well behaved!

You can check out their great specials at:

http://www.firstwokgr.com/

Thank you 1st Wok for your outstanding customer service and the great food too!

MCC Tax Credit is Back!

Danell Merren (Providence Home Mortgage/ICCF) — Fri, 03 Jul 2009 14:36:12 -0500

The Mortgage Credit Certificate is the tax credit that keeps on giving! Unlike the First Time Home Buyer Tax Credit (www.federalhousingtaxcredit.com), MCC is a Federal Tax Credit that moderate income families can access year after year!

It is offered in most states, but each state operates the credit a little differently. From 1984 until 2007 the MCC was operated by MSHDA (Michigan State Housing Development Authority) in Michigan.

I am excited to announce that MSHDA is rolling out the MCC in Michigan again effective July 13th, 2009!

The MCC is combined with FHA, Conventional, RD, or VA Financing. It is operated by MSHDA in Michigan.

Here's how it works. The MCC is a 20% credit of the interest you pay. The borrower can take the credit every year in one lump sum at tax refund time OR they can take the credit in their monthly paychecks. So, it's like getting a raise once you buy!

Example: $100,000 mortgage X 5.5%= $5,500 in interest. $5,500 X 20% = $1,100 annual tax credit! Taken monthly, this reduces the effective house payment by $91.67 per month.

The MCC also helps borrowers qualify for more. In the example above, the reduction in payment would allow a borrower to qualify for $16,000 more in a home!

There are income limits, but the income limits are broad. For example, in Kent County in Grand Rapids a family can make up to $74,750 and purchase a home with a price up to $224,250. In Kent County in Wyoming, a family of 1-2 can make up to $63,800 or a family of 3 or more can make up to $73,370. In most other Kent County areas a family of 1-2 can make up to $63,800 and a family of 3 or more can make up to $65,000 with a price up to $195,000.

There are times that the tax credit does not work well because unlike the Earned Income Credit and the First Time Homebuyer Tax Credit, it is not considered "refundable". This means a borrower must have a true tax liability to get the money back.

I always recommend you seek professional tax advice, but I am happy to analyze tax returns to see if this will be a good fit for you or your borrower!

To learn more about the MCC, give me a call at (616) 719-4513!

Trusted Auto Mechanics at Mel Trotter Ministries!

Danell Merren (Providence Home Mortgage/ICCF) — Wed, 24 Jun 2009 09:01:12 -0500

My husband has worked at Mel Trotter Ministries in Grand Rapids for several years. Most people from our area know that Mel Trotter is a rescue mission, and they feed and shelter the homeless in the Heartside Neighborhood of Grand Rapids, near downtown.

They also have a drug and alcohol rehab. program.

One of Mel Trotter's best kept secrets is their car ministry that has now gone public! They now have an auto shop at 555 28th Street, SE in Grand Rapids. It is located between Madison and Eastern on the north side of the road.

We decided to take my VW Volkswagon in to give the mechanics at Mel Trotter Auto Sales a shot. We thought we needed a muffler and breaks. My breaks sounded so bad that I thought I needed rotors too. We figured the bill would be hundreds of dollars.

This was the first time ever that we paid for only 1 hour of labor! We walked out of there paying $83.30!

Here's why:

I didn't need a new muffler or exhaust. I only needed a clamp- part cost $3.30.
I didn't need breaks or rotors. I had two bad tires that were so low they were making my breaks sound bad. Cost- $40 for two perfectly good used tires that came off a Passat they had put new tires on.
Labor- $40 for 1 hour.

These guys told us the truth, charged us actual cost for parts, and they only charged for the actual labor time!

You can check them out at:

http://www.meltrotter.org/purchasevehicle.aspx

Or feel free to stop in at 555 28th Street or give them a call at:

Questions? Call (616) 301-1415 or (616) 301-1416

If you're in the greater GR area and need a trusted mechanic, give them a call! Save yourselves a lot of money!

A Warning to Sellers- You Can't Refi. When Listed

Danell Merren (Providence Home Mortgage/ICCF) — Mon, 20 Apr 2009 09:46:13 -0500

We have a number of people who call who would like to refinance, however, their home is currently listed. This is a major problem in the industry. It is standard to not allow a refinance of a property that is currently listed or that has been listed in the past six months. Exceptions used to occur, but with the declining market, banks don't want to take this risk. On rare occasion, some banks will still allow a refinance if the home has not been listed for at least six months. While refinancing may make sense to the borrower to take advantage of the current rates, I encourage sellers to see this issue from the bank's point of view- all banks pay loan origination staff in one form or another- if you go directly to the bank, they pay their Retail loan officers. If you go to a broker, the banks pay the brokerage a Yield Spread Premium most of the time. The loan officers at the brokerage then get paid in one way shape or form from this money their company collects. So the bank doesn't want to pay out these fees and then have the borrower turn around and sell the home; when that happens the bank does not collect the monthly interest they were expecting to collect. In these cases, the bank actually lost money rather than made money. We all know banks are not out to lose money.

If you are considering listing but are on the fence, and you're thinking about a refinance, do it now before you list.

Leaking Batteries in Children's Toys, Smells Like Burning!

Danell Merren (Providence Home Mortgage/ICCF) — Mon, 20 Apr 2009 09:11:33 -0500

I walked into my youngest daughter's room last night, and it smelled like something was burning! I was a bit alarmed but trying not to panic. I didn't see anything burning, and her room was quite messy, so I was moving things around, looking under toys, looking under the bed, etc. I walked around and felt all the walls knowing that sometimes electrical fires start in walls. Thankfully none of the walls were hot, so we concluded that wasn't the problem. I told my oldest daughter to quickly get daddy. My hubby was definitely the better investigator. He started picking up and all the toys and smelling them. He said that some of the toys were actually hot! He began opening them up with a screw driver (fortunately for our kids, most battery operated toys are now "baby proof"). Some of the batteries were actually leaking!

Our daughter is two, and as you can imagine, she has way too many battery operated toys. They included a Weeble House, a school bus, a flashlight, a Dora piano, a Disney Princess mirror, and on and on. Some were big. Some were small, but they all had batteries.

She even had two inexpensive dolls whose hair smelled like turpentine!

Needless to say, we took out all the batteries and threw away any dolls who smelled like chemicals.

Be careful to limit how many battery operated toys you allow your kids to have, and recycle the batteries every few months to prevent a bigger problem!

Sacred Sounds Concert at St. Mark's featuring GVSU Arts Chorale singing Requiem.

Danell Merren (Providence Home Mortgage/ICCF) — Sat, 04 Apr 2009 22:01:54 -0500

I am excited to share that today Sunday, April 5th, St. Mark's will be hosting the GVSU Arts Chorale singing Requiem with the GVSU Concert Orchestra. It will be a beautiful way to begin Holy Week. Featured vocalists will be GVSU faculty members Kathryn Stieler and Dale Schriemer. The concert begins at 5:00 p.m. St. Mark's is located at the corner of Pearl and Division downtown Grand Rapids. All are welcome and encouraged to come!

You typically need at least $1,500 to $2,000 in the beginning of your transaction in West Michigan!

Danell Merren (Providence Home Mortgage/ICCF) — Sat, 04 Apr 2009 21:56:45 -0500

Yes, there are two truly zero down programs left- Rural Development (RD) and Veterans Administration (VA), but let's face it- if you don't buy in a rural area and you're not a Veteran, you won't qualify.

With FHA, you can get into a home for 3.5% down, and with some HUD homes you can buy for only $100 down, BUT that does NOT mean you won't need any money into the transaction!

There are at least two times you will need money into the transaction:

For earnest deposit (in the industry we call this "I'm serious money"). This is typically $500 to $1,000. On a HUD home it's usually going to be $1,000 unless you buy a home for 50K or less. And it's typically nonrefundable. So please be sure you want this home before you put down an earnest deposit.
For an appraisal deposit- Conventional appraisals are usually around $300 in our area and FHA appraisals are usually around $350.This may be going up soon with additional addendums appraisers will be required to complete. This may also be more if you buy in a rural area and the appraiser has to drive a ways.

And there are likely two more times you will need money:

For a credit report. Credit reports are quite costly, and it is common to ask for credit report money upfront.
Inspections- inspections are optional, but most buyers want them. Expect to pay $300 or more. Because they are optional, they are not always on the Good Faith Estimate.

Grand total- $1,700 approximately for most buyers in our area.

What if you are getting a gift? Then be prepared to prove where the money came from! If you want credit for the above monies into the transaction, it is imperative that the gifter be willing to prove they had the money to give, that the money was deposited into your checking account via a check (not cash, money order, etc.), and that the gifter was an allowable source, etc.

The moral of the story- PLEASE be ready to buy with a couple thousand of your own funds no matter if you are looking for the lowest down program available. It will help your transaction go smoother!

Murals on Display at St. Mark's Episcopal Church, to Raise Awareness for Heifer Project International

Danell Merren (Providence Home Mortgage/ICCF) — Sat, 04 Apr 2009 21:43:36 -0500

Mark's children have worked on a pair of 6-by-9-foot murals since last fall that will be on display in front of the church, 134 N. Division Ave., for the next two months. They will be blessed on Palm Sunday.

The murals are tied to the Heifer Project International, an organization that donates livestock to needy communities across the world. St. Mark's plans to collect donations for the Heifer Project throughout the summer, said Renee Peggs-Monnier, the church's director of Christian formation.

Mural scenes depict warm family moments promoting agricultural awareness and goodwill: a cuddled lamb, a father and daughter hoeing the soil.

"We're doing it to help the people in need," said 9-year-old Megan Anderson.

The artworks will be mounted at the church at Pearl Street NW and N. Division Avenue today and will be visible for the Festival of Arts in June.

"They're just really excited that it's going to be outside for two months and people are going to say, 'St. Mark's kids did that!'" Peggs-Monnier said.

"It's been pretty cool working with the kids," said Ellens, 22, who planned to coat the canvasses with a latex film to protect them from the elements.

The children's work is the culmination of a broader educational unit raising awareness about those who are less of those not as fortunate, Peggs-Monnier said. Students read "Beatrice's Goat," she said, a tale based on a true story of an African girl who wanted to attend school but whose family was too poor to send her. In the story, her family receives a donated goat, and they are able to sell its milk and, thus, fulfill Beatrice's dream.

"Not everyone owns a Wii or can play in a league or go to a really exceptional school," Peggs-Monnier said.

"I want them to know we're called as members of Christ's body to be servants and help people."

I am so proud to see my five year old painting above as well as my husband, Mike, assisting the kids! St. Mark's is truly an amazing place that we love to call home!

Why Appealing Taxes Works!

Danell Merren (Providence Home Mortgage/ICCF) — Sat, 04 Apr 2009 21:15:58 -0500

One service I offer clients is to help them appeal their taxes post close. I make no guarantees, but I helped so many families this year that next year I think I may contact past customers and offer a seminar!

Why is appealing your taxes worth it?! The process takes seriously less than about 30 minutes. When you get your annual assessment papers in the mail, typically between late January and late February, you will usually see a website for downloading appeal forms. The forms will ask for some basic info. including price, improvements you've made to the home, why you think your taxes are too high, etc. If you win an appeal, you could save hundreds if not thousands of dollars.

Here's a concrete example. I have some friends who bought in July of 2007 for $130,000. Their Taxable Value was about $74,000. Their Assessed Value was $84,000. The City of GR states that the Assessed Value must be approximately 50% of current market value. Based on the City's assumptions, their house would be worth $168,000! Well, it simply isn't. They paid $130K, and any appraiser and underwriter will tell you a home is worth what someone paid. So, their AV should have been around 65K. The next year their taxes, big surprise, jumped up- their TV uncapped and jumped to the 84K. Now their TV and AV were the same at 84K. The following year the City bumped up their AV to 92K. So, in this declining market their home was supposed to be worth a whopping $184,000? They bought at the top of the Michigan market or just when it started to dive.

So, they came in, we filled out the simple forms, my girlfriend drove the forms over to the City, and within two weeks they got a favorable response! Both their Assessed Value and Taxable Value are going down to $67,000, a much more reasonable and fair number. Now their taxes are going down, they're saving about $35 per month, and that makes us all very happy!

PMI Changes Again- Another Great Reason to go FHA!

Danell Merren (Providence Home Mortgage/ICCF) — Fri, 06 Mar 2009 14:17:06 -0600

As we all know, the past year has been a whirlwind of changes in Conventional and FHA lending. We've seen zero down go away, 3% down go away, and the PMI rules change month after month.

Recent PMI changes have included the following:

RMIC- Minimum of 740 Score, 90% LTV, no second homes

MGIC- Max DTI of 41%, 680 score, 700 for declining markets, and 720 for all of Florida, no second homes

PMI- Minimum score of 680, Max DTI of 41%

With all of these continued dramatic PMI changes, FHA is an excellent option! FHA has lower down payment requirements, and down payment can still be a gift:

3.5% down
Down payment can come from buyer, immediate relative, employer, gift from friend, or grant
Seller can pay up to 6% in closing costs and pre-paids

FHA is a tried and true product that has changed less than other products in this volatile time. Keep in mind that the best rates come to those with scores of 620 or better!

A theological critique of empire and a hopeful future! Guest speaker Dr. Jack Nelson-Pallmeyer at St. Mark's in GR.

Danell Merren (Providence Home Mortgage/ICCF) — Tue, 03 Mar 2009 13:24:51 -0600

My church will be hosting Visiting Scholar, Dr. Jack Nelson-Pallmeyer, who will be speaking at St. Mark's on Saturday, March 14^thfrom 9:30 to 11:30 a.m. The title of his speech will be, "It's the end of the world as we know it... but a soft landing is still possible.". Dr. Nelson-Pallmeyer is Associate Professor of Justice and Peace studies at the University of St. Thomas in St. Paul, MN. His books include, Is Religion Killing Us: Violence in the Bible and the Quran; The Politics of Compassion; and Saving Christianity From Empire.

In his words: "The U.S. faces an unprecedented crisis rooted in three interrelated problems. First, the U.S. is an overtly militarized nation and there are no military solutions to most of the country's and world's problems. Second, the U.S. is a declining "empire" and every effort to use military means to shore up power accelerates the pace of U.S. economic decline. Third, climate change threatens. He will explore these related challenges in light of a theological critique of empire, a hopeful future that is possible, the limits and potential of Barak Obama's presidency, and the need for a citizen based social change movement to encourage much needed changes.

This presentation will be free of charge at St. Mark's located at Pearl and Division downtown. Please come if you are interested!