Matthew's Blog

Michigan Realtors: Writing a Great PA; or, Being your LO's Best Friend

Matthew Watts (Icon Mortgage Lending) — Wed, 28 Oct 2009 01:47:49 -0500

Occasionally, frustrations build as a file in processing begins to struggle a bit and the question may occur to you, "Why are these things arising now, when they seem like they should have been settled so long ago?" And as a good professional it will probably lead you to the next question, "What can I do to help prevent this with my future transactions?"

I would like to examine a few simple things that you as a Realtor can do to become your Loan Officer's best friend and subsequently write a Purchase Agreement that will be well appreciated by all involved.

Timeline. Obviously it will always be frustrating when files run into turn-time troubles and it begins to seem like it may never close. You end up feeling like you have heard the same response from the LO a dozen times, and you just want to know what to do.

We can prevent a lot of these headaches by having realistic and achievable expectations at the time the PA is set in motion. Obviously, this is mainly reliant on the communication with the LO, but in general you are going to need between 30-40 days to close a loan. It would, however, be extremely unrealistic to just blindly expect 30 days as an appropriate time frame on each and every PA. If you make adjustments for the specific factors involved in each individual file, you will greatly improve the chances of setting a proper expectation for your client. This may mean more work up front, but way less work down the road when it is more important.

Your clock starts ticking when the buyer signs the PA but for a Loan Officer we are very limited in what we can do until we receive the seller signed PA. For instance, I NEVER order an appraisal until there is a written agreement allowing the client to purchase the home. Doing otherwise is asking for trouble, no matter what someone may have told someone about how this certain bank responds quickly or how the listing agent said that they have all of the short sale terms are already agreed upon, or how you have a "verbal agreement". That means nothing until the signed PA is in my hand. So, if you write a PA dated July 1^st to close in 30 days and the bank takes until July 15^th to send it back approved, we will immediately be asking for a 15 day extension and the frustrations will begin. Simply compensate for this at the beginning if you are submitting an offer to a notoriously slow responding bank, or if it is a short sale, or any other complications you may think of. I personally put right on my Approval Letter that we need 30 days for underwriting from the day that a seller signed PA is delivered to our office. All loan officers may not do this but I can assure you that this is the case. No lender will be able to do anything other than a basic underwriting until they have a signed agreement between both parties.

Inspection Reports. I know there are a lot of people that are running into this for the first time now, but Lenders are scrutinizing the relationship between LO and Appraiser very carefully now at the behest of the Federal Government. A Home Inspection performed by a third party adds another layer of protection for the Lender to ensure that the Appraiser is not looking the other way on Property Standards in order to continue a relationship with the LO. Since you as a Realtor are typically present for the inspection or at least more aware of the scheduling, it is essential to communicate this with the LO.

If you really want to be "super agent" you can be present for the inspection and communicate to the inspector and client what should be for the buyer's information only and what should be included in the inspection report. Things that are not even an issue to the HUD Handbook or normal property standards WILL become issues if an inspector flags them. A perfect example: Inspector, in trying to provide good service, writes in his/her report that the buyer should probably have a radon test. The buyer says, yeah that's useful; we will do it after we close but before we move. NOPE! The buyer will now have to do it before they close. It may seem like this should be the buyer's prerogative, but if a Lender sees that an Inspector flagged a radon test as needed...it WILL be needed. Now just tack that on to your turn times and before you know it it's time for an argument over PA extensions and $100 Per Diem.

It is also important to discuss with the buyer whether or not they are actually going to have an inspection or not and to properly mark the PA. If you mark that the buyer will be having an inspection and they do not, then a couple of weeks into the transaction the Lender will be asking for a copy of the non-existent inspection and will require that the PA be amended to state that the buyer has waived their right to an inspection. This is just add another few days in tracking down the seller to sign the addendum, faxing it back to the LO...and so on. It may not seem like much, but that is still another two days to tack on to an already intense process.

Property Standards. We know that you are not an Appraiser, or an Inspector, but there are some obvious things that we all realize are going to be an issue when financing a home. Communicating these to your LO will not only make their day, but it will help them get you money faster.

A few of these things that I find astonishing that I have to wait until the appraisal comes back to find out about include: broken windows, busted locks, holes in walls/ceiling, unfinished flooring, missing toilets/sinks, broken plumbing, rusted out furnaces, missing siding on house/garage, missing handrails on stairways and a multitude of other visually obvious items. I'll address these things two paragraphs below, but for now let's look at the essentials in the not below.

***Special Note*** I hear this phrase all the time: "The bank will only accept Conventional Financing because (insert problem here) is wrong with the home." I, again, understand that you are not Lenders and do not know the guidelines but let me assure you, as a Lender that does mostly Rural Development and Conventional loans through Fannie and Freddie, that most problems with a Government loan are also true for a Conventional loan. So please stop the argument over the fact that you can close a home with no running water with a conventional offer. Cash offer yes, but any...repeat ANY financing will need the home to have the bare essentials. Government loans are in fact more particular, but most of the differences are easily fixable problems.

That's why I just forewarn you now- if you want to keep your Asset Managers happy- alert them to the fact that the basic utilities will have to be working if they expect to have financing on the property. It does none of us any good to argue for three weeks over how to get the power on in the property or who has to pay for it. If you want to take a financing offer for more money, you will HAVE to provide working utilities for an inspection of any sort. If you are a selling agent, eliminate the headache and note it right in the purchase agreement that the buyer will need these on to agree to purchase the property. Again, I personally put this right in my Approval Letter, but either way it will need to be done!

Now, as for the little things, I mainly do RD financing so it is much easier to deal with any other issues, because the buyer can do a post-closing repair escrow to fix them. This does require quite a bit of extra work and buyer preparation so it is best to alert your loan officer of the issues noted two paragraphs above before you write an agreement. If we have to wait until the appraisal comes back we are already 5-7 days in and just now finding out that the buyer has to make a bunch of repairs. We tell the buyer, the buyer plans on doing it that weekend since most folks work during the week, the buyers fixes everything, the appraiser goes back out to re-inspect the property and now we are 14-16 days in and we are just getting the appraisal back. Now underwrite the appraisal and the conditions that can't be submitted until the appraisal is done, wait until any further conditions come back and are then cleared, send to RD for a certificate, let the bank have 48 hours to approve a closing, and guess what we need... an extension on the PA.

Appropriate Documents. Specifically, if the buyer is applying for FHA financing, an FHA Amendatory Clause will be required so contact your loan officer for the form ahead of time. Having the document that you can find - Here - signed right up front can eliminate another step down the line. There may be others for certain loans but this is the most common. Again, a 1-minute phone call can save 2 days later on.

My Final Word. Teamwork is more essential now than it has ever been. If we are all honest with each other in the beginning we can set a realistic expectation for everyone involved and proved a rewarding experience for all. I hope I have helped, and Good Luck with your future transactions!

For more information, Call Today or Visit our website:

810-953-4266 or www.iconmortgagelending.com

First Time Home Buyer Tax Credit as Down Payment or: Dirty Deeds Done Dirt Cheap

Matthew Watts (Icon Mortgage Lending) — Fri, 29 May 2009 10:09:01 -0500

First Time Home Buyer Tax Credit as Down Payment or: Dirty Deeds Done Dirt Cheap

I think this is an important discussion to have so I am going to post this blog a few days in a row to make sure it gets out. There is a lot of confusion concerning the First Time Home Buyer Tax Credit especially now that FHA has approved the funds to be used towards down payment and I am looking to simplify things for you like I have been trying to do with all of my blogs.

This one, I feel is of great importance because I hate to be the one to you know: burst the bubble, but as I hear folks industry wide rejoice at the possibilities of borrowers being able to use their tax credit as a down payment for their new home I would like at least make a few points to the contrary.

1. Premature Jubilation: Everyone right now is scrambling to get the info to you that you can now use your tax credit as a down payment for an FHA loan. The thing they don't realize is that until lenders roll out a program which allows you to use your tax credit in such a way, it makes NO difference whatsoever. So before you get yourself all worked up, we first have to actually have it available for you.

This is most easily show with this example- in July of last year FHA approved funding for the Hope fro Homeowner program in which they were going to refinance people that were having trouble making their mortgage payments. This was the program that was supposed to stabilize our housing market. Instead, no Lender ever even touched the program, and it was ultimately just discontinued in January 2009.

2. There's a Snake in that Grass. Please also understand that they are not just letting you use your money for your down payment. What they want to do is give you a loan that you can in turn pay back. Now, if that suits you, then fine. But understand that this is not the same as the free stimulus that it is meant to be. Ultimately you allowing someone to give you a loan on that money it is going to benefit you, not them. Just understand that it is NOT in your best interest to take free money and turn it into a loan. DON'T LET THE VULTURES GET TO YOUR MONEY!!!

So, I shouldn't take it? I am not saying that it can't help anyone...but use your head, weigh your options, ask more than one person, and always read the fine print. If you don not absolutely NEED to use the money as a down payment...DON'T.

You may not even be thinking about it now, but there are so many good ways to use this money, please do not get ripped off before you even have the chance! Here are just a few examples of what to do:

Pay down the principle balance of your mortgage. In fact, if you get $7500 and put it directly on your principle balance of a $100,000 mortgage, that one payment will cut 4 years and $60,000 in interest payments right off of your mortgage!

Pay down high interest credit cards. Pay that high credit card loan off, use the boost in credit score to get a better credit card at a lower interest rate, let the paid off card sit there open with no balance and enjoy a great credit score for quite some time and save thousand on future mortgages, credit cards, car insurance...you name it.

Invest it. Ok, so maybe the stock market isn't so hot now, but if you can find something safe that it sure to yield, it is a win-win for you my friend. Heck, even a high yielding savings account or a 2-year CD will make you great money.

Take advantage now, because the tax credit goes away if you close on your new home after November 30th, 2009. Happy Home Hunting to you all!

For more in-depth help, go to our website:

www.iconmortgagelending.com

*This has been an Emily inspired blog.

First Time Home Buyer: Conforming at a glance

Matthew Watts (Icon Mortgage Lending) — Tue, 26 May 2009 15:26:42 -0500

First Time Home Buyer: Conforming at a glance

The following was a general overview of the Conforming loan programs such as those offered by Fannie Mae or Freddie Mac and a guide to figure out if this is the loan program for you.

Availability: Available in all areas.

Type of Homes they finance: Single Family Properties and Multi-Family Properties will qualify. Site Condos are viewed the same as Attached Condominium Properties and are acceptable if they are approved condominium projects. You can search approved projects here: ******. Manufactured properties, Modular, Stick-Built, or BOCA-code properties are acceptable in some circumstances but not likely to be accepted. Working Farms, unique properties, and dome-homes will not qualify.

Down Payment Required: 10% or greater in conjunction with Private Mortgage Insurance. 20% to meet conforming loan standards. In general, funds for down payment can be a gift from family.

Private Mortgage Insurance: Emphasis on the "Private" since it is obtained through a private asset insurance company such as MGIC, PMI, RMIC, or RADIAN. Generally 1% is billed monthly, though some discounts can apply. No PMI is required with 20% down.

Interest Rates: Vary greatly between lenders. Careful shopping will be required in obtaining the best interest rates. With a 20% down payment, rates are generally lower than FHA or RD financing.

Maximum Loan Amount: $417,000.

Income Limits: No income limits apply.

Credit Requirement: Varies from lender to lender. In general, a 720 FICO and 3 credit references at least 24 months old with no late payments is required, though a lower FICO is required with a down payment of 20% or greater. 36 months from Bankruptcy or Foreclosure with 3 credit references established after the discretion.

Reserves: Varies between lenders, but in general, 2 months or greater of mortgage payments are required. Can come from retirement savings, checking or savings account.

Repair Escrow: Acceptable with certain programs, but good luck finding a lender that accepts them.

General Overview: For borrowers with great credit history and available down payment sources. Interest Rates will blow away government financing if you have the means to qualify.

First Time Home Buyer: FHA at a glance

Matthew Watts (Icon Mortgage Lending) — Tue, 19 May 2009 13:01:47 -0500

First Time Home Buyer: FHA at a glance

The following was a general overview of the FHA loan program and a guide to figure out if this is the loan program for you.

Availability: Available in all areas.

Type of Homes they finance: Most property types. Single Family Properties and Multi-Family Properties will qualify. Site Condos are viewed the same as Attached Condominium Properties and are acceptable if they are approved condominium projects. You can search approved projects here: ******. Manufactured properties are acceptable if they meet individual lender requirements. Modular, Stick-Built, or BOCA-code properties are acceptable. Working Farms, unique properties, and dome-homes will not qualify.

Down Payment Required: 3.5%. Can be a gift from family, friend, or employer. Down payment assistance is only available from grant programs.

Mortgage Insurance: 1.75% financed into your loan and and .55% is billed monthly.

Interest Rates: Vary greatly because of the great variance between lenders offering FHA financing and the Yields paid to those making the loan for you. Careful shopping will be required in obtaining the best interest rates.

Maximum Loan Amount: Varies by county. Most counties in Michigan fall at $278,000 or lower.

Income Limits: No income limits apply.

Credit Requirement: Varies from lender to lender. In general, a 620 FICO and 2 credit references at least 12 months old with no late payments is required. 36 months from Bankruptcy or Foreclosure.

Reserves: Varies between lenders, but in general, 2 months of mortgage payments are required. Can come from retirement savings, checking or savings account, or as a gift.

Repair Escrow: Available on HUD-owned properties with no contingency plan.

General Overview: Available to all borrowers meeting credit standards, emphasis on credit requirements in regards to payment history within 12 months, credit discretions explainable to underwriter are acceptable, easy qualifying with acceptable credit references.

First Time Home Buyer: Rural Development at a glance

Matthew Watts (Icon Mortgage Lending) — Mon, 18 May 2009 16:01:49 -0500

First Time Home Buyer: Rural Development at a glance

The following was a general overview of the Rural Development loan program and a guide to figure out if this is the loan program for you.

Availability: Available outside of high-density urban areas. For a more detailed area of qualification contact your lender or view our website: www.iconmortgagelending.com

Type of Homes they finance: Most property types. Single Family Properties, Site Condos, Multi-Family Properties, Modular, Stick-Built, BOCA-Code, large parcels, and some unique properties will qualify. Attached Condominium Properties are acceptable if they are approved condominium projects, you can contact your lender to check on approved condominiums. Manufactured properties will NOT qualify unless they are newly built and permanently attached to a property. *Properties with in-ground pools will come under added scrutiny.

Down Payment Required: No down payment is required. Any down payment can be a gift from family, friend, or employer.

Mortgage Insurance: 2.04% financed into your loan, no monthly mortgage insurance is required.

Interest Rates: Little variance between lenders, though some shopping may still be required.

Maximum Loan Amount: No maximum loan amount.

Income Limits: Income limits vary by County. You can view income limits for Michigan Counties here: *********.

Credit Requirement: 620 FICO with no minimum credit requirements, though this may vary by lender. 12 months from Bankruptcy or Foreclosure.

Reserves: No reserves required.

Repair Escrow: Available on all properties with contingency plan.

General Overview: For moderate income borrowers, easy qualifying with 620 FICO score, $0 down, Repairs can be included.

Mortgage Payment Chart

Matthew Watts (Icon Mortgage Lending) — Fri, 15 May 2009 15:05:47 -0500

Purchase Price	MTG PMT @ 5.5%	Taxes	Insurance	Total Payment
$ 30,000.00	$ 170.34	$ 150.00	$ 50.00	$ 370.34
$ 35,000.00	$ 198.73	$ 150.00	$ 50.00	$ 398.73
$ 40,000.00	$ 227.12	$ 150.00	$ 50.00	$ 427.12
$ 45,000.00	$ 255.05	$ 150.00	$ 50.00	$ 455.05
$ 50,000.00	$ 283.90	$ 150.00	$ 50.00	$ 483.90
$ 60,000.00	$ 340.67	$ 150.00	$ 50.00	$ 540.67
$ 70,000.00	$ 397.45	$ 150.00	$ 50.00	$ 597.45
$ 75,000.00	$ 425.84	$ 150.00	$ 50.00	$ 625.84
$ 80,000.00	$ 454.23	$ 175.00	$ 50.00	$ 679.23
$ 85,000.00	$ 482.62	$ 175.00	$ 50.00	$ 707.62
$ 90,000.00	$ 511.01	$ 175.00	$ 50.00	$ 736.01
$ 95,000.00	$ 539.40	$ 175.00	$ 50.00	$ 764.40
$ 100,000.00	$ 567.79	$ 175.00	$ 50.00	$ 792.79
$ 105,000.00	$ 596.18	$ 175.00	$ 50.00	$ 821.18
$ 110,000.00	$ 624.57	$ 175.00	$ 50.00	$ 849.57
$ 115,000.00	$ 652.96	$ 175.00	$ 50.00	$ 877.96
$ 120,000.00	$ 681.35	$ 200.00	$ 50.00	$ 931.35
$ 125,000.00	$ 709.74	$ 200.00	$ 50.00	$ 959.74
$ 130,000.00	$ 738.13	$ 200.00	$ 75.00	$ 1,013.13
$ 135,000.00	$ 766.52	$ 200.00	$ 75.00	$ 1,041.52
$ 140,000.00	$ 794.91	$ 200.00	$ 75.00	$ 1,069.91
$ 150,000.00	$ 851.68	$ 200.00	$ 75.00	$ 1,126.68
$ 160,000.00	$ 908.46	$ 200.00	$ 75.00	$ 1,183.46
$ 170,000.00	$ 965.24	$ 200.00	$ 75.00	$ 1,240.24
$ 180,000.00	$ 1,022.02	$ 200.00	$ 75.00	$ 1,297.00
$ 190,000.00	$ 1,078.80	$ 250.00	$ 75.00	$ 1,403.80
$ 200,000.00	$ 1,135.58	$ 250.00	$ 75.00	$ 1,460.58
$ 210,000.00	$ 1,192.36	$ 250.00	$ 75.00	$ 1,517.36
$ 220,000.00	$ 1,249.14	$ 250.00	$ 75.00	$ 1,574.14
$ 230,000.00	$ 1,305.92	$ 250.00	$ 100.00	$ 1,655.92
$ 240,000.00	$ 1,362.69	$ 250.00	$ 100.00	$ 1,712.69
$ 250,000.00	$ 1,419.47	$ 250.00	$ 100.00	$ 1,769.47
$ 260,000.00	$ 1,476.25	$ 250.00	$ 100.00	$ 1,826.25
$ 270,000.00	$ 1,533.03	$ 250.00	$ 100.00	$ 1,883.03
$ 280,000.00	$ 1,589.81	$ 250.00	$ 100.00	$ 1,939.81

Just something for you buyers to print out. It can come in very handy when you are out shopping around for houses and can't refer to a mortgage calculator.

First Time Home Buyer Tax Credit as Down Payment or: Dirty Deeds Done Dirt Cheap

Matthew Watts (Icon Mortgage Lending) — Thu, 14 May 2009 15:21:03 -0500

First Time Home Buyer Tax Credit as Down Payment or: Dirty Deeds Done Dirt Cheap

You may not even be thinking about it now, but there are so many good ways to use this money, please do not get ripped off before you even have the chance! Here are just a few examples of what to do:

Take advantage now, because the tax credit goes away if you close on your new home after December 31st, 2009. Happy Home Hunting to you all!

For more in-depth help, go to our website:

www.iconmortgagelending.com

*This has been an Emily inspired blog.

Michigan Real Estate Purchase: Lending Update

Matthew Watts (Icon Mortgage Lending) — Tue, 12 May 2009 11:33:57 -0500

So, regardless all of the jibber-jabber out of Washington lending is continuing to tighten. I figured I would write just a general overview of some of the significant changes or non-changes here in my blog in case any of these issues may affect you.

First Time Home Buyers: Most of the news for you is good. So much is aimed at finding you and inspiring you to help get the economy moving again, that your business is still in demand. The current change is that banks are looking for a little more investment on your part to ensure that they are making a good investment with you. This doesn't necessarily mean a down payment, but do expect to be accountable for past credit discretions and to able to show paperwork on where you are getting the money to pay for your appraisal, down payment, or other requirements. This can still be a gift from family, but expect to show proof of where you are getting it. More emphasis if being put on the 620 FICO phenomenon on a daily basis. Those borrowers over 620 will succeed on those under will continue to face more and more hardships as time passes. Open new credit...first and foremost. Always continue to strive to a higher FICO by managing current credit properly and you will be fine.

Buying a Home when you already own one: This is where some of the more significant changes have been made over the last year. If you want to move into a new home as your Primary Residence and already own a home, you will come into a lot of restriction. Even if you have a good reason- such as job transfer, more space, or just want better home at a better price. The banks see you as a huge risk of buying a new home and letting the other home go into foreclosure...and rightfully so. This doesn't mean that it can't be done; you will just need to meet the extra requirements. You will need to be able to afford to make the payment on both houses and the rest of your bills within the normal guidelines of 41% of your gross income. You will also need to have 6-12 months of both payments in savings (this can include 401k accounts too, so if you have one that hasn't been raided by AIG or Countrywide you are in a decent position to obtain financing).

Buying and Investment Property: Ah the Catch 22. Affordable prices driving investors to the market and tightening credit restriction driving them away. Well, let's face it, if you do not have some cash to work with you are not in a position to invest anyways. The good news is that prices have gotten so low that putting 25% down on a $30,000 property only means about $10,000 out of pocket including closing costs. If you have taken care of your credit over the years you can borrow most of that from sources outside of the mortgage and still leverage the majority of your investment as long as you can show your invest as liquid for two months prior to the purchase- meaning you can get a loan but have to deposit the cash for a few weeks before you find your property. I understand that Michigan is a down economy but I can't express to you how much I hate seeing Californians being the ones gobbling up our properties when buying the home next door is so much better of an investment for our own neighbors that have the means. Maybe it's time to weigh how much you are losing in your 401k or stock investments against how much risk you are willing to take...think about it people, you are losing cash hand over fist where it is now.

Buying a Second Home: Well, chances are if you are buying a Vacation Home, you have the resources to do so. You will certainly find that it takes a little extra down payment now, but any changes will not be significant enough to dissuade you.

Overall: Things are continuing to tighten, and they will follow this trend for a while. Don't believe everything you hear on CNN, it will not serve you well. Most serious buyers will not feel the crunch anymore than has been happening over the last two years, but those that are getting into the market with timid steps will not succeed. You need to have money down, proof of your benefactors, and as always a steady income. Borrowers that do have the means to repay will continue to qualify.

For more in-depth information call or visit our website today

810-953-4266 or www.iconmortgagelending.com

(First Time) Home Buyer’s Frequently Asked Questions

Matthew Watts (Icon Mortgage Lending) — Fri, 08 May 2009 13:02:23 -0500

I will be adding to this list as I go along, but I wanted to start a nice comprehensive FAQ for homebuyers. I put "first time" in parenthesis because really this can apply to anyone buying a home, but this will apply mainly to the questions I get from first time homebuyers.

Q: Why buy instead of rent?

A: Well, pride of ownership and having something that is yours to do with what you want. A home is also a long-term investment for your future. Don't let all of the exploding market talk scare you. Real Estate prices go up and down, but just like investing in stocks, you buy low and sell high based on when you enter the market. If you put yourself in a position where you have to sell within a very short period of time you had better make a sound investment or you will fail as many are now failing because they relied on an implied return without realizing preparing for a long-term goal. In addition to the equity investment, a home is also a valuable tax incentive. You can deduct your mortgage costs and property tax costs from your income taxes that you file each year whereas your rent is simply paid and gone forever rather than reinvested.

Q: What documents will I need when applying for a mortgage?

A: You can follow our guidelines laid out here: Documents for any documents needed to apply for a loan. A quick synopsis would be: 2 years w2s, 1 month of pay stubs, 2 months of banks statements, 401k/Retirement savings statements, driver's license, and social security card.

Q: What is my interest rate going to be?

A: A loan officer should never quote you an interest rate before they take all of your pertinent information. Beware of loan officers that do this, because they have no reason to keep their promise and all the reasons in the world to change it before closing. For more info read this blog: Deciphering Interest Rates.

Once you have given all of your information, and a loan program can be chosen, you should then demand some type of rate lock agreement. Even if it is in your best interest to float at the time of application, it is something that should be discussed with your loan officer as to when you will be locked in.

Q: What are the closing costs?

A: Any loan officer worth their salt and offering the truth to you, will offer a Good Faith Estimate of all closing costs. In fact they are legally required to, but the oversight of such practices is pretty light so many just don't even bother. For more info on what the GFE should look like, check out this blog: Closing Costs

Q: Once I am pre-approved will something go wrong?

A: There will always be the possibility of something going wrong after a pre-approval. If you are smart you will ask to be approved through AU before you actually make an offer on a property. AU or Automated Underwriting will render a pretty solid decision on your loan, and will give you added security but most loan officers will not offer this service to you because of the cost to them. If you have a less than perfect situation, it will be worth your time to find a loan officer that will offer you an AU decision before you get too far into the process only to be let down. AU is not the end all though because it will not be able to make any decisions about the property such as the title situation, the value of the home, or the validity of the collateral at all; but AU will ask all of the questions needed to close your loan in regards to your credit and ability to qualify for the loan.

Q: What is the best loan program for me?

A: Lots of options still exist to this day even though there has been a major credit crunch. The three main options that every loan officer should discuss with you regardless of any other factors are Conforming- though they require more down payment, it may be worth it to get the drastically smaller interest rates; FHA which has lower down payment requirements and greater qualification flexibility and is available in all areas; and RD (Rural Development) which is not available everywhere but requires even less down payment than FHA and has no monthly mortgage insurance. If a loan officer does not offer you all three of these options and describes the differences in detail, they are not the loan officer for you because they are either unaware or uneducated in all loan types available, or are simply steering you away from a loan that they can not offer. ALWAYS beware of a loan officer that says something like, "Oh that isn't even worth talking about." That is just a way for them to deflect a question about a loan they are uneducated about. If they say that, THEY aren't even worth talking about as an option for your financing. You can read more about each loan program here in my blog.

Q: My uncle told me that he got 4%, why am I hearing something different?

A: People love to give advice and share opinions we all know this. Generally when people talk about something that they are not trained in providing, they are only offering opinion and not fact. Once you have found your mortgage professional, it is important to listen carefully to what they tell you and look for some of the warning signs I point out in my various blogs. But once you feel comfortable with that person, you should be aware that many many people will offer random opinions based on their own experiences that may of may not have anything relevant to your situation. Bring these up to your loan officer but I do caution you against taking too seriously what someone that does not work in the business says about your mortgage. Take in into consideration, but listen to professionals that you choose to serve you for the answers. If the answers they give make you feel uncomfortable, then you can make your choice accordingly.

Q: What about this tax credit I heard about?

A: Well there are many situations arising that are less than clear in regards to the tax credit. For the simple questions though, you can check out this website for the answers: www.federalhousingtaxcredit.com

Q: How long does this take?

A: The simple answer is 30 days from the time a signed purchase agreement is delivered to your loan officer. Any longer than that and you are probably doing something wrong, however there are certain situations that will take longer. Discuss this with your loan officer before you apply and if things are taking longer without a decent explanation, it may be time to switch. For a more detailed answer, read this blog: Time Table

Q: What is closing a loan like?

A: Whew, unlike anything you will ever do. Basically it is 30 minutes of signing your name. You will be seated with your loan officer, real estate agent, and a closing agent and going through many important documents. It is a good idea to go through and read each document, and consult your loan officer and real estate agent for any questions you may have.

Q: What if I have trouble paying my mortgage payment?

A: I always tell my clients to contact me directly if this happens so that we may point them to the proper channels, however you may not get that answer from everyone. If not, there is always help available. Some important resources can be found in this blog of mine: Help for Homeowners

For more information you can call or visit our website:

810-953-4266 or www.iconmortgagelending.com

Where to go when you can't make your mortgage payment

Matthew Watts (Icon Mortgage Lending) — Thu, 07 May 2009 14:20:42 -0500

Life happens and along with it comes many challenges that we all face. These normal challenges can sometimes be magnified when you have a mortgage payment bearing down on you each and every month. There is always help available for you, but it is essential to remember a few things when you are having trouble making your monthly payment.

Never Wait!!! Simply missing payments is the worst thing you can do. It is important to be as on top of you payments as you can be, and that does not always mean making the payment. Recognize as early as possible when you know you will not be able to make your payment and contact your lender to let them know that you are having trouble. Often times they will have a solution for you. Simply waiting and waiting and missing payments and avoiding the situation will only further the difficulty in helping you out of your current situation.
Never purposely miss a payment. Many times you will hear advice from friends, family, your lender, or from advertisements from companies that claim to help you out of your current situation, or just out of your own anger over a certain situation with your lender. No matter what ANYBODY tells you, if you have the means to make your mortgage payment, the best course of action is to make the payment. Missing a payment will wreck your credit standing and force extreme difficulty on you including other creditors using your lowered credit score as an excuse to raise your interest rates on installment loans or credit card payments only furthering your troubles. Any program designed to help you out of a bad situation will not require you to purposely miss a mortgage payment.
Do not refinance your loan simply because you can not afford a singly monthly payment. Now if your monthly payment is too high and you need to lower it, it is a good idea to explore the option of refinancing. But if you can not lower your interest rate and you simply need to pay back taxes or get a month off from a mortgage payment because you are in a bind is not a good reason to refinance. In most cases you will end up with a lot of undue stress and extending your loan balance and term only to end up in the same situation down the line.
Read, review, review again, ask questions, and make sure that you FULLY understand the implications of any program your lender offers you that is based on missing a payment or rolling a payment in to the back end of your loan. Most lenders will fail to tell you that they will be marking your payments as late until you make up the missed payment. Meanwhile you are relieved from the payment you didn't have to make and your lender has ruined your credit and any chance of refinancing. Why would they do that? Duh, because if you can't refinance then you are forced to keep paying them interest every month!
If your lender can not help you, contact a HUD-approved debt counseling agency which are easy found here:
Be smart about it. If something seems too good to be true it probably is. If you do get yourself into a situation where you feel taken advantage of, tell your lender about it- you will be surprised how powerful your own words can be if you express yourself to your lender in a calm and confused fashion. If they seem to just run over your concerns with no resolution, don't be afraid to contact an attorney about the matter. Many attorneys will consult you on the matter without an up-front charge.

If you need further information check out some of these websites:

First Time Home Buyer: How to Demand Transparency from your Loan Officer

Matthew Watts (Icon Mortgage Lending) — Thu, 07 May 2009 12:18:48 -0500

There are so many ways for a loan officer to fool you and I have heard them all in my time in the business. Now I bring this knowledge to you in how to demand that your loan officer never fools you. I will also cite all of the documents that your loan officer is legally required to show you yet rarely will. I will make you as close to impenetrable as possible.

Interest Rate: Ah the interest rate. As a consumer it is always the first thing on your mind, and always the first tool you use to shop for the best deal possible on a mortgage. Of course, us in the "know" realize that there the interest rate alone rarely dictates a good deal on a mortgage. So how do you decode what your interest rate will be and if it is in fact a good value when a loan officer is so well equipped to talk his or her way around this subject? Well the value part will be covered under the APR heading below, but first let's talk about how to know what your interest rate is and what it will be at the time you close.

The Rate Lock Agreement: The rate lock agreement sounds like a form that you would have to sign and consent to. In fact most companies will have you sign a rate lock agreement, but this does not have to be a form according to Michigan law (MCMPA). In fact it can also be a verbal agreement between you and your lender. If a loan officer promises you a certain interest rate, it is literally against the law to change it. You can in fact, sue your loan officer if they made a verbal promise to deliver a certain interest rate and then changed it unless you yourself have provided misinformation or request changes to your loan program. Most people don't realize this. Just always require that your loan officer is honest with you, even if that means they tell you that they don't know what your rate will be. In most instances, the most honest loan officer will give you a fair range of current rates

Key phrases a loan officer will use in deceiving you about your interest rate:

Well we can't lock your rate because they change so often. (They change often but a loan officer should still be able to offer you a lock based on when you qualify)

I can get you that rate, for sure, but we need to see if you qualify first (a loan officer should never say for fact they can get you any rate until they know you qualify and if they do they are breaking the law and breaking your trust).

Oh yeah, like 6% (before they even know your name).

And ALWAYS be aware of any advertisements that come with an interest rate printed on them, no matter what the form they use. Any advertisement with an interest rate contains so many opportunities for a loan officer to lie to you that it is NEVER worth it in the end.

APR or Annual Percentage Rate: This is one of the most confusing numbers in all of mortgage lending and is even confusing for the very person that is meant to teach you about it if they are not properly trained. The APR is an expression of the "cost of your credit" as a percentage. In other words it takes in account all of the "cost of your credit" or fees you will pay in connection with getting a loan and breaks it down into a percentage. A lender is legally required to provide you with this figure in accordance to the Truth-in-Lending Act (TILA) within three days of applying for a loan. They come on a form referred to as the T.I.L. that features other important information as well, but the APR is the most prevalent feature.

Key phrases a loan officer will use if they are trying to confuse you when explaining this to you:

Nobody even really understands how this APR thingy works.

It's an awful government form, you know government, everything they do is stupid.

Don't worry about that APR it is not your interest rate and doesn't affect your loan.

In fact the APR is a useful tool in comparing one loan to another. It is certainly not the end all to loan shopping, but it is useful because it breaks down all of the charges that you do not carry from one lender to the next. So things like a credit report fee or an appraisal fee are not used in the calculation because they will be a part of your loan costs no matter what. The APR does use fees like origination charges, broker fees, and. The important things to remember her are: make sure your loan officer offers you a "TIL", make sure they explain the APR the way I explained it, and make sure they show you the charges that figure it.

The Broker Fee: This is important whether you are being charged one or not. The important thing to remember is that the reason a Mortgage Broker exists in the first place is that a broker does not need the mortgage lender to pay them to sit at a desk all day even when they are not originating loans. The broker does, however, have to pay to advertise or maintain an office of their own in order to get to you in the first place. So the ultimate end game is to compare if the broker fee is cheaper than what the bank will charge you. Again this is not the only factor to consider but it is useful because if your concern is upfront fees as opposed to monthly payment, you will want to compare the broker fee as opposed to the interest rate that your payment is based on. Any broker is required to explain this to you as mandated by the Michigan Consumer Mortgage Protection Act (MCMPA) via the Borrower's Bill of Rights. You have the right to know what your loan officer is making as a result of originating your loan the same way that your bank is required to give you this document and explain this to you as well. The problems mostly arise by the fact that a bank loan officer is not required to explain exactly how much they are making by originating your loan because they are considered an hourly employee of the bank. Obviously a bank loan officer will always be able to present their origination fee as cheaper than a broker. This is where the APR can be compared to your interest rate and used a tool to distinct which is a better value.

Whether or not you are qualified. This is the tough one to decipher. By law any lender is required to give you a credit decision within 30 days. Obviously, the process gets a bit muddier once the term pre-approval comes into play and even more so when you have a less than perfect credit or employment situation that makes qualifying difficult. The important thing to remember is that if someone is telling you that you qualify before they have seen a credit score, employment information, asset information, or heard your entire story- they are lying. It is impossible for someone to tell you what you qualify for without having taken a full application so be leery of anyone that does.

The Good Faith Estimate (GFE): This is a breakdown of all the fees involved in acquiring your loan. If you look carefully, you will see on the GFE which fees are used in calculating your APR. This will further your shopping power by realizing what will be charged by anyone and what will only be charged by a bank or what will only be charged by a broker. The big thing I feel is to be aware of things that are conveniently left off of a GFE but will be added later. Specifically those charges that are used to calculate your APR that some loan officers like to leave off of a GFE, or grossly under estimate in order to make the bottom line look better. These include Tax Escrows, Pro-Rated taxes(only on purchases), title insurance, title closing fee, days of interest, and processing fees. These will all always be charged regardless of lender and will always be able to be properly estimated (with reason) at time of application. So if you are comparing GFEs and you notice a large difference between these charges or that one has been omitted, it should immediately send up a red flag that one of your loan officers is not being honest with you.

Basic Legal Forms: There are a few basic forms that you are required by law to receive within 3 days of applying for a mortgage, so be leery of anyone that does not provide them. Good Faith Estimate, Truth-in-Lending, Borrower's Bill of Rights, Servicing Disclosure, Consumer Caution Disclosure, and the Closing Costs booklet.

If you follow these guidelines and are not afraid to walk away from a loan officer that does not comply with these guidelines, you will make the loan process much simpler for you.

For more information you can call or check out our website:

810-953-4266 or www.iconmortgagelending.com

Icon breaks top 10 USDA Originators for 2008!

Matthew Watts (Icon Mortgage Lending) — Tue, 10 Mar 2009 11:05:41 -0500

I am very excited to announce that Icon Mortgage Lending was informed early last week that we finished in the Top Ten of USDA Rural Development Loan Originators for Michigan in 2008. We have been originating RD loans with consistency for the last 5 years now, but this is our first year with such an increase in our production. We would like to thank all of our referral partners for keeping us so strong through these tumultuous times. Thank You.

Matt Watts

Senior Loan Officer

Icon Mortgage Lending

Rural Development Funding Still Available

Matthew Watts (Icon Mortgage Lending) — Tue, 10 Feb 2009 10:10:32 -0600

Hello all,

I, and pretty much all of our people at Icon have had many Realtors calling us over the past few days concerning the health of Rural Development loans. Apparently, some lenders are having problems dealing with the lapse in funding at the USDA.

Please be Aware that we are running business as usual with Rural Development loans.

Our main two RD channels are committed to closing and funding loans while new funds are in process of being appropriated for the USDA. There is no back up, there is no hold up, there is no closing issue. If you are having these problems you can always just call me over at Icon 810-953-4266 and I will take a look at whatever you need help with.

Thanks,

Matt

Rural Development Loans Still Readily Available!!!

Matthew Watts (Icon Mortgage Lending) — Wed, 21 Jan 2009 11:59:37 -0600

Hello all,

Please be Aware that we are running business as usual with Rural Development loans.

Thanks,

Matt

Michigan Rural Development Loans: Why it works

Matthew Watts (Icon Mortgage Lending) — Thu, 18 Dec 2008 09:52:13 -0600

I understand the skepticism of the Realtors I talk to. It seems too good to be true with everything going on. With the masses of lenders that let their imaginations run wild with all of the money they could make on unqualified buyers. So to hear that someone is still helping the very average buyer-the same as they have been for two decades- seems kind of...too good to be true.

But while FHA was running wild with 500 FICO scores and Non-Occupying Co-Borrowers, there was a mortgage insurer that never waivered from their original guidelines. Now that the bottom fell out from under the others and Steve Preston scrambles to wrangle FHA in yet continue to lend...there is the stolid conservationist guidelines that have served median income borrowers for a while now.

Oh, it's still a United States Government backed program. It's called the USDA and it is here to stay.

They have never swayed to lower scores, client base, or lower standards. The only thing lower is the rates. They had lower income borrowers' best interests at heart without compromising their own principles of what makes a good borrower.

Is it any wonder that they are still lending with fervor while FHA is dying and has no idea?

For more information Call Today, or visit our website:

810-953-4266 or www.iconmortgagelending.com

Michigan Rural Development Loans: Interest Rate Update

Matthew Watts (Icon Mortgage Lending) — Thu, 18 Dec 2008 09:34:02 -0600

Michigan Rural Development Loans: Interest Rate Update

Just a note for you and your clients, if you think those FHA or Conventional rates are good, how would they feel about 5.00% with no...yes NO MORTGAGE INSURANCE.

If you are thinking we need a large down payment to deliver such financing, you are wrong. Rural Development loans are the last 100% financing available.

I have been originating these loans for Mid-Michigan clients for the past 4 years and am pleased at the emergence of their importance. I am always available for any questions about the processing of these loans whether you are using me or another loan officer.

For more information Call Today, or visit our website:

810-953-4266 or www.iconmortgagelending.com

Michigan First Time Home Buyers: Preparing Your Docume

Matthew Watts (Icon Mortgage Lending) — Fri, 12 Dec 2008 12:46:15 -0600

I find that the first hurdle a First Time Buyer faces is getting their paperwork together. I am not sure why, but honestly this simple task dissuades many people when they start to apply. Perhaps following this list and having it ready at the outset will help the process seem smoother.

Last two years of W-2s or Tax Returns. If you can't find them, you can always contact your employer, your tax preparer, or the IRS for a copy.

Most recent month of pay stubs. 1 month worth...the most recent available.

Most recent 2 Months of bank statements. If you don't get paper statements, you can print your online statements, but you will need to take them to your bank to get verified and stamped.

Most recent 401k statement. (If you have one.)

Copy of your driver's license and social security card. The Patriot Act requires us to check these.

Have these items ready to go before you look for a loan officer and DO NOT trust anyone that will try to quote you a payment or interest rate before they even see your basic documentation! That means they are making promises with no intention of keeping them, a true professional will verify your documents and approved you before making an guaranties.

For More Information- Call Today or Visit Our Website:

810-953-4266 or www.iconmortgagelending.com

Michigan First Time Home Buyer: An Overall Guide

Matthew Watts (Icon Mortgage Lending) — Tue, 09 Dec 2008 09:34:29 -0600

For a first time buyer, there is so much to worry about and so many levels of details to address, that I just want to provide a good general guide to how to start the process. You can refer to my other blogs for more detail, but I think this is a great overview.

Purchasing anything, will cost you money. A home is the biggest purchase you will ever make, but most people expect to spend less than when getting an apartment. Any decent complex will want first, last, and possibly a security deposit. That's at the very least $1000. Have this much before you consider buying a home.

Now, Before you do anything else, find a loan officer. Before you contact a Realtor, before you look at homes, you have to qualify. In today's market there are so many intricacies to qualifying that the first thing you need is to get approved. Approved, not pre-approved like so many tell you. Finding a good loan officer is finding someone that doesn't talk about pre-approval. Find one that runs Underwriting and approves you upfront. And do I really have to warn you about using 800 numbers in California or New York to get a loan? FIND HELP AT LEAST FROM THE SAME STATE!

Ok, now you can get excited and look for homes. Get a good Realtor, find what you want, and don't be afraid to pull the trigger. At the same time, don't over look the structural integrity of the home, just remember that you will ALWAYS have to paint a room or two to make it yours. Get a home inspection and listen.

Getting your loan will take time. Depending on your situation it can be anywhere from 20-40 days. Anything longer is too much, and you should start to ask serious questions around the 35^th day.

Don't be afraid to ask questions. Simple but rarely used. Just ask any question at any time and if your loan officer or realtor seems to never be available, ditch them. Ditch Them! Don't feel imposed upon or that you aren't being taken care of, a lot of sales people are taught to show you how complex everything is to sell you on themselves. Really their job, THEIR RESPONSIBILITY, is to simplify things for you.

Closing will never be simple. Hopefully you have a good loan officer that will explain this to you upfront, but be patient and let those doing the work have time to do the work. If it was simple, you could do it yourself.

The final word: work hard to find people you can have complete face to face confidence in and have confidence in them. This is the most important part of anything you do. Assemble a good team of professionals that can put everything into perspective for you and will have YOUR best interests at heart.

For more information Call Today or visit our website:

810-953-4266 or www.iconmortgagelending.com

Michigan Mortgage- Your Rights When Obtaining a Mortgage

Matthew Watts (Icon Mortgage Lending) — Thu, 04 Dec 2008 15:02:16 -0600

I thought it would be helpful to provide an online copy of the Borrower's Bill of Rights. This is a form that is required of a lender to provide to a borrower when they apply for a mortgage. If a borrower sees it at all, it is normally at the end of a big stack of paperwork and it is rarely read to them. Below you can peruse at your leisure.

"BORROWERS BILL OF RIGHTS"

1. You have the RIGHT to shop for the best loan for you and compare the charges of different mortgage brokers and lenders.

2. You have the RIGHT to be informed about the total cost of your loan including the interest rate, points, and other fees.

3. You have the RIGHT to obtain a "Good Faith Estimate" of all loan and settlement charges before you agree to the loan or pay any fees.

4. You have the RIGHT to know what fees are nonrefundable if you decide to withdraw your loan application.

5. You have the RIGHT to ask your mortgage broker to explain exactly what the mortgage broker will do for you.

6. You have the RIGHT to know how much the mortgage broker is getting paid by you and the lender for your loan.

7. You have the RIGHT to ask questions about charges and loan terms that you do not understand.

8. You have the RIGHT to a credit decision that is not based on your race, color, religion, national origin, sex, marital status, age, or whether any income is derived from public assistance.

9. You have the RIGHT to know the reason if your loan application is turned down.

10. You have the RIGHT to receive the HUD settlement costs booklet "Buying Your Home"."

Michigan Realtors: Why explore Rural Development loans?

Matthew Watts (Icon Mortgage Lending) — Thu, 04 Dec 2008 09:22:12 -0600

You've probably met me face to face and don't even realize it. If not, you've certainly seen my cards pass through your office in the last six years. I'm the guy that was in your office with a smile, a free pen, and a Rural Development (RD) loan flyer. I'm here again to tell you why you need to find yourself a great RD loan officer to refer client to.

RD eliminates the most common deal killer. "Cash to close" kills more deals than anything, I am certain of that. Whether it kills deals in process or stops potential buyers from proceeding, the money a buyer has to bring to the closing table is the biggest obstacle in Michigan. RD eliminates this by allowing your borrowers to finance closing costs even above normal LTV guidelines. We don't need concessions to achieve stress-free financing for buyers.

RD has no down payment requirements. RD sees other ways to protect their own investment, but for most Michigan borrowers these requirements are not an issue. The last 100% financing available is Rural Development.

RD is set up for a first time home buyer. First time buyers ARE our market right now. They control our business, or at least mine. RD truly is for first timers. RD understands limited credit history- something FHA and Conforming just don't seem to get. Fannie loves someone overextended to the max that has never really paid a bill. TONS of credit elicits approvals with other financing. Why do we have a crisis again? Oh, yeah.

RD would rather see someone that isn't in a position of failure. Buyers that can't seem to qualify elsewhere because of this, but want to own a home...they will fit with RD.

RD is available in far more areas than you realize. I know it seems weird but look at Fenton. Fenton is a huge town with far more "metropolitan" area than Flint, yet everything in the 48430 qualifies. Really anywhere except inside Flint and downtown Grand Blanc qualifies. Go Fig!

RD has the absolute best interest rates. I've had Realtors tell my buyers that I could not deliver on the rate I quoted; only to have the buyer laugh all the way to the bank. I've had to show Realtors how I could deliver and end up with undying allegiance.

This is about the buyers, thought. FHA, Fannie, Freddie, MSHDA are like jokes next to RD. Granted, RD only finances certain geographical areas, but they dominate the areas they finance.

The final word. Try it once and you won't go back. Non-believers become believers. Find yourself a good RD loan officer and try them out. Your clients deserve to know what a great deal they can get, and MORE IMPORTANTLY those buyers that got turned down by Dort Federal, Citizens, and Mclair deserve to have a chance at financing that doesn't rely on their archaic guidelines!

For more information: Call Today or visit our website:

810-953-4266 or www.iconmortgagelending.com

Michigan Real Estate Purchase: Choosing a Loan Officer

Matthew Watts (Icon Mortgage Lending) — Tue, 02 Dec 2008 11:34:08 -0600

Proceed with Caution: The weirdest part of talking to people about their loan experiences is that people usually are more particular about their Realtor than their Loan Officer. In reality, your Loan Officer is responsible for ten times more than your Realtor, especially in a foreclosure transaction.

They will be digging through every aspect of your life; they are exposed to some of your most sensitive information. They are responsible for organizing the entire transaction from open until close. Most importantly, this is the person that represents you, and your application to the powers that be, so you need to believe in them to portray your strengths and represent you well.

This is also a good time to realize that cheaper rarely means better. A good bit of advice I would give anyone...choose wisely, make sure your Loan Officer is making as much as your Realtor, and demand excellence.

Interview with a Vampire. No, it's not that bad. Actually the vast majority of bad loan officers and bad lenders are out of business or are being sued, but you need to do a thorough interview with anyone you may hire to represent you. Always ask the following questions.

How long have you been in business?

How many loans do you close each month?

Have you done a foreclosure purchase before? How many?

What type of loan is your specialty? This should be one or two, not many.

Where do you get your clients from? Someone that gets referrals from Realtors and other professionals, may be better than someone that just answers the phone at a bank...just and opinion.

How do you get paid? How much will you get paid? Someone that dances around this...whew you'd be hard pressed to convince me to use them for anything.

What do I need to pay at closing time?

If what I need to bring to closing changes, who will be responsible for paying it? Why?

When will you lock my rate, how often will you update me? *This is important because a foreclosure purchase will usually take close to or more than 30 days to close and fund. It is generally impractical to lock a rate for more than 30 days, and any good loan officer will update you when rates change and give you the option to chose when to lock while advising you based on market trends.

Are you available to me outside of banking hours? Most of you are working people, and the banking system is setup during to function 9-5. It is important to have contact info and know that your loan officer is available to answer your questions at any time, otherwise you will end up a very frustrated individual. It is best to test this theory right out of the gate by calling after hours and expect your loan officer to either answer the phone or call you back within an hour or two.

The final word is to keep a positive attitude, recognize that most likely the effort is worth the reward, demand excellence from those you pay and pay those you demand excellence from.

For more information, go to our website or call us today:

www.iconmortgagelending.com or 810-953-4266

Michigan Real Estate Purchase: Escrow Account

Matthew Watts (Icon Mortgage Lending) — Mon, 01 Dec 2008 11:33:11 -0600

What is it? An escrow account is basically a mandatory savings account to pay your taxes and insurance from. Every month you will pay your mortgage payment and a portion of that payment will go to the mortgage and a portion will go to the escrow account. When your tax and insurance bills come due, they will be paid from your escrow account company automatically. You will never see a tax or insurance bill, yet they will get paid.

Why do you need it? With almost all loans an escrow account is required by the lender you are getting your loan from. The same as with your mortgage payment, if you do not pay your taxes, you will face foreclosure. Instead of being foreclosed on by your lender, you will be foreclosed on by Uncle Same. The possibility of tax foreclosure threatens your lender's ability to ensure you repay them. Hence, they require that you have an escrow account so that you can't simply stop paying your taxes.

How will this affect your closing? You will need to fund the escrow account with enough money to make not only the next upcoming payment, but enough to make sure you never get behind on future payments. The amount collected will change slightly depending on the time of year you close, but in general you should plan on 3 months of your monthly Home Owner's insurance payments and 8 months of your monthly Property Tax payments to be collected at closing.

These reserves, while painful at closing, will end up making you very happy in the long run though. When your taxes go up- as they inevitably do- this will cushion the blow to your monthly payment and make the hike a more steady increase and easier to deal with.

For more information, go to our website:

www.iconmortgagelending.com or call us at 810-953-4266

Michigan Real Estate Purchase: Pro-Rated Taxes.

Matthew Watts (Icon Mortgage Lending) — Mon, 01 Dec 2008 09:33:53 -0600

Pro-Rated Taxes: Oh, the agony! Nothing causes headaches the way pro-rated taxes do. What exactly are they? It's your tax bill...and yes...it is YOUR tax bill. In most places in Michigan you get two bills for Property Taxes. One for winter and one for summer. In the vast majority of places, you pay these taxes in advance meaning you are paying in July for the tax bill between July of that year and July of next year; same for the winter bill Dec.-Dec. If you buy a house, let's say in August, the seller has already paid for the taxes through July of next year. Even though they have paid through July, they will only own the home for one month covered under that bill and you will own it for the remainder of time covered by that bill. You will be required to reimburse them for the time that you will own the home- August through July for the summer bill and August through December for the winter bill.

How to calculate what you will have to pay. It's no secret; you can calculate this yourself to check it. Take your closing date. Count the number of days from that day until December 1^st. call this (a). Count the number of days from the closing day until July 1^st. call this (b).

Now take your winter tax bill and divide by 365, take your summer tax bill and divide by 365. Then you have the daily amount of each tax bill. Multiply the days you have by the daily amount and you can come up with the two amounts. Add them together and this is the amount of pro-rated taxes you will have to pay.

EXAMPLE: You close January 15th. So you have 320 days until Dec. 1 and 166 days until July 1^st.

The tax bills are winter: $565 divided by 365=$1.55 and summer: $1786 divided by 365=$4.89

320 days (a) x $1.55 = $496 and 166 days (b) x $4.89 = $811.74

$496+$811.74 = $1307.74 is your pro-rated tax bill.

Seems simple, why all the headaches? Well, with all of the foreclosure properties being bought now, there is rarely upfront truth about what the Property Taxes for your purchase are. Most times the MLS listing will reflect what the Property Taxes were before the bank took possession. When a bank owns a property they are unable to claim a Homestead Exemption like you and I. Think of the homestead exemption as a discount on taxes for you Primary Residence. The bank is not a resident, so they pay more. This also means that when you buy it from them, you pay more. Ask your Realtor upfront what the non-homestead tax amount is. This will help eliminate the possibility of a BIG surprise come closing time.

If you are still uneasy about whether the tax information provided is accurate or not, call the county tax assessor about the true tax amount you will be paying at closing time. Google: "county name" tax assessor to find the correct phone number.

For more information, visit our website:

www.iconmortgagelending.com or call us at 810-953-4266

Michigan Real Estate Purchase: Don’t Get Taken Advantage Of.

Matthew Watts (Icon Mortgage Lending) — Wed, 26 Nov 2008 10:07:08 -0600

It's so odd to me that so many people claim to have been mistreated by their mortgage lender. There is a litany of paperwork we are required to provide to you when you apply. I am sure there were plenty of less than reputable loan officers out there that didn't care to go through the numbers, but an even slightly educated borrower can't be taken advantage of. So, here's how to become an educated borrower.

The Good Faith Estimate. Make sure you get one, make sure you get one from several lenders, make sure you compare them row by row and not the bottom line. Some lenders may trick you by not providing certain numbers that will pop up later (read my other blogs), make sure you don't use anyone that leaves numbers off.

The Borrower's Bill of Rights. Make sure you get one, make sure you understand it. You can get it right here: Borrower's Bill of Rights, but don't trust anyone that doesn't give you one- you know since it's required by law and all. They are easily understandable, just actually read it.

You have the right to shop around, you have the right to know how much the lender is making. This doesn't just mean the fees, but how much they are making from the interest rate. Also, most people think only a broker makes money from the interest rate...and they are wrong. Banks make yield spread too, even when they fund the loan, so make sure to get IN WRITING how much they are making.

The HUD-1 Settlement Statement. This has all of the details of your loan, save the interest rate. All fees will be lined up for you and this is the FINAL document to calculate these costs. A major mistake most borrowers make is to wait until closing to see this. You have the right to see this before you sit down to close. Demand your loan officer provide it a day before closing.

Most importantly, don't accept the run around. There are a million and one excuses a lender can use to get around providing these documents in a timely manner. Unfortunately for them, you now know that they are required to do so.

Simply don't accept it. Look at more than the bottom line. Look at the integrity of the individual you are working with. If you can have faith in that person, you should do fine.

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Michigan Mortgages: Hope for Homeowners? This time it just may be true.

Matthew Watts (Icon Mortgage Lending) — Tue, 25 Nov 2008 11:42:20 -0600

Call me a softy and a nerd. It's hard to believe, but yes I was one of the few that sat and watched Steve Preston's address to the National Press Club this past Wednesday. Many of you may not know who that is, but he is one of the most powerful people in the nation right now because he is the Secretary of the U.S Department of Housing and Urban Development (HUD) and he is trying to create hope for thousands of Americans that are currently facing foreclosure, or are soon to be facing foreclosure.

Unfortunately, as powerful as he may be, he is still all but hog tied by private industry and private industry is not budging. How bad is it? It was said that in the first two weeks of October 42 people applied for the Hope for Homeowners and all 42 were denied. First of all...42? Nationwide 42??? That's a joke. A joke that Steve Preston did not find funny.

Why has it failed? Simple, the private markets are already strapped for cash and not looking to spend more. FHA's flaw is that it cannot move without lenders to make the loan that they will insure. Lender participation has been non-existent and has crippled the legislation set forth to help "Main Street."

So, what's going to be done? There are two important things to remember. FHA will be raising the LTV cram-down from 90% to 96.5%. FHA will be providing up front payment to second liens holders for immediate release of these liens. Both of these actions should provide enough incentive for current lien holders to chose negotiation over foreclosure.

Debt ratios are normally strictly 31% for your housing payment and 43% for your total debt with FHA. The Hope for Homeowners program will open up to 38% and 50% for those that can get down to 90%, again adding more qualifying applicants to the pool.

They also will open the program to longer loan terms. If your debt ratios don't quite qualify at a 30 year term, you can also use a 40 year term to qualify. I suspect this is something that will come to the normal FHA loan soon. 40 and 50 year terms have successfully brought homeownership to thousands of Europeans over the past three decades and it's very long overdue in America.

Lender participation will still dictate the effectiveness of FHA's proposed help, but hearing these changes delivered from a very poised and positive Steve Preston finally brought me hope for the Hope for Homeowners program.

At least now we will see once and for all which is the proper method for dealing with this crisis- government intervention or capitalizing private market. Let me assure you, this is the final straw. If banks do not take to these changes and start making new loans....your tax dollars for the "bailout" will have been COMPLETELY WASTED. These banks have made billions, the CEOs have made millions at least one of them needs to step up now and join the club in trying to actually help people...I'm looking at you Chase.

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